Microsoft partners are taking a wait-and-see approach to IDC's latest projections for Windows 7-related partner revenue.
According to a recent IDC report, for every dollar of revenue that Microsoft gets from U.S. sales of Windows 7 until the end of 2010, partners will reap $18.51 in related products and services revenue. The overall partner ecosystem will sell about $110 billion in products and services around Windows 7, according to IDC.
In late 2006 during the run-up to Windows Vista's launch, Microsoft commissioned a study from IDC that estimated that for every dollar Microsoft earned from Vista, partners would earn $18 in associated revenue. Of course, Vista didn't work out as planned, and so partners could be forgiven for viewing the latest IDC figures with a certain amount of skepticism.
"We saw very little migration to Vista from our larger customers, and smaller customers either did the services themselves or needed very little help," said Larry Piland, president of Datel Systems, a San Diego, Calif.-based solution provider.
"Vista never met our expectations for driving partner services," said Matt Scherocman, vice president of consulting services at PCMS IT Advisor Group. "While I agree that Microsoft software drives plenty of services, I personally have never seen the ratios that they typically claim."
Microsoft declined to comment on whether Vista met IDC's 2006 partner revenue projections, saying only that it expects the macroeconomic environment to determine the health of the PC market.
"We are not making comparisons with Windows Vista in the recent IDC study because conditions are so markedly different as the economic landscape has changed," a Microsoft spokesperson said in an email.
Despite partners' wariness, there are plenty of signs that suggest that Windows 7 will fare much better than Vista. Although Microsoft executives have said they expect weakness in the PC market to continue for at least the next couple of quarters, the legions of companies still using Windows XP will have to upgrade eventually. That, combined with the positive partner response to Windows 7 thus far, could make 2010 a banner year for Windows 7 partner revenue, according to solution providers.
PCMS IT Advisor Group is planning on "a major uptick" in deployment services after the release of Windows 7 in October, according to Scherocman. And Neil Pearlstein, president of PC Professional, an Oakland, Calif.-based Microsoft Gold Partner, expects Windows 7 to be "a hotly requested upgrade" that will net his company around $40 per machine.
"This is real money for our business and a great opportunity, as many clients have put off upgrading their desktop operating systems due to the inadequacies of Windows Vista," Pearlstein said.
However, some solution providers feel it's difficult to separate the Windows 7 effect from broader industry forces. Even without the looming arrival of Windows 7, partner revenue around Microsoft products has been increasing organically, notes Matt Makowicz, principal at Ambition Consulting, a Somerset, N.J.-based solution provider that caters to the SMB market.
"Customers are demanding more end-to-end solutions that encompass a lot more than just operating systems and Office suites," Makowicz said. "We're selling offsite storage, remote monitoring, ticket tracking and reporting, as well as a slew of business-related consultancy services that have nothing to do with Microsoft."
Another promising sign is that Windows 7 has enough positive buzz around it to potentially become a virally marketed product, something that Vista never had a chance of being, says Mark Crall, president of Charlotte Tech Care Team, a Charlotte, N.C.-based solution provider.
"If Microsoft can effectively hold off negative press and counter advertising from Apple, while thoroughly seeding the SMB market via their eager partner base, we will see some serious sales this year," Crall said. "But if Microsoft leaves this push up to the OEMs, it's going to sound way too similar to the Vista launch."