Microsoft claims that adoption of Windows Vista and Office 2007 is chugging along nicely, with more than 88 million Vista licenses and 71 million Office licenses sold in the past year.
But these numbers belie the fact that some organizations just don't see the value in upgrading to Vista and Office 2007, and are perfectly content with XP and Office 2003. Many solution providers are seeing surging interest in downgrade rights, which Microsoft offers to business users of both Vista and Office, and which allow companies to use previous versions of Microsoft software.
Downgrade rights, which are only available through volume licensing, have existed for more than a decade with Office, and since 2001 for Windows. But system builders and other Microsoft partners say they're witnessing a large and growing number of customers exercising downgrade rights to roll back Windows Vista to XP Professional, and Office 2007 to Office 2003.
"Downgrade rights are a huge feature that a lot of customers are taking advantage of, particularly to downgrade from Vista to XP Professional," said Larry Piland, president of Datel Systems, a San Diego-based solution provider.
Ron Herardian, president of Global System Services, a solution provider in Mountain View, Calif., sees downgrade rights as a way for Microsoft to deal with the reality that Vista adoption hasn't been as steady or as fast as the vendor expected.
"The hardware just isn't there to run Vista, and Microsoft can't generate the kind of churn in PC hardware as we saw around Y2K. Windows doesn't make companies upgrade all their PCs in a short time frame," said Herardian.
Microsoft in June stopped shipping Office 2003, which is no longer available except through volume licensing. Many customers are remaining with Office 2003 because they don't like the changes Microsoft made to the user interface in Office 2007, according to solution providers. This trend suggests that customers are well aware that upgrading doesn't necessarily deliver more value, says Paul DeGroot, an analyst with Directions On Microsoft.
"The whole concept that you have to buy an upgrade so you can downgrade to an older version is perverse anywhere but inside Microsoft," said DeGroot.
Still, despite the resistance to Vista and Office 2007 that Microsoft channel partners are observing, Microsoft isn't seeing a trend toward more customers exercising downgrade rights, according to Eric Ligman, Microsoft's senior manager of community engagement for small business in the U.S.
Downgrade rights, which Microsoft offers for Windows Vista Business and Windows Vista Ultimate, enable organizations to move to Vista at their own pace, and helps companies that are buying XP-based machines avoid paying again when the time comes to move to Vista, Ligman said.
One Microsoft partner who requested anonymity said growing interest in downgrade rights is an undeniable trend, as is the "bizarre denial" from Microsoft over the slow pace of Vista adoption.
"For whatever reason, Microsoft executives have had their heads in the sand on Vista from day one. At the highest levels, there really seems to be a lot of denial over what's really happening with Vista," said the source.
While some companies that exercise downgrade rights for Vista do plan on eventually migrating to the newer OS, some companies may never switch, in part because Windows XP is such a solid OS, according to Piland, who notes that many companies are still running Windows NT and 2000 servers.
"Its going to come down to whether there's a compelling application or a security issue that essentially forces people to change over. If not, many organizations may decide they don't want to spend the time and money to move to Vista," said Piland.
Despite the cool reception Vista has received in the business market, some solution providers remain bullish on its future prospects. Tim Huckaby, CEO at Interknowlogy, a Microsoft Gold Certified partner in Carlsbad, Calif., says user interface improvements and integrated desktop search are features that can significantly improve business productivity.
"Vista changes the way people work and can make them more efficient. It's actually a great OS," said Huckaby.