Ballmer Expects Businesses To Jump On Vista

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Speaking at Nasdaq headquarters in New York for the global launch of the first versions of the Vista operating system, Ballmer said there will be a "stronger and faster" business upgrade cycle for Vista than for Windows XP, which launched five years ago.

"The truth is, we have a lot of customers in the business world anxious to deploy. We will have a stronger business upgrade cycle for Vista than we had for XP," Ballmer said. "That doesn't mean 60 percent of business desktops will switch in the next year. It will just be a stronger, faster upgrade cycle than before. Many businesses will deploy out of the shoot."

To that end, he said Microsoft will invest "hundreds of millions" of dollars in marketing funds to promote Vista and the Office 2007 productivity suite, which also launched Thursday, to businesses and consumers.

With Thursday's launch, Microsoft shipped business versions of Vista to volume-license customers only. As part of the release, the Redmond, Wash., company is making available Vista Business and Vista Ultimate to volume-license customers and Vista Enterprise to volume-license customers with Software Assurance.

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The mainstream business and consumer editions of Vista won't be released until Jan. 30. Microsoft said the big channel launch for OEMs and system builders won't come until late January, but partners and LARs that serve volume-license customers can begin pursuing business opportunities at once.

At the launch event, Ballmer highlighted the "breadth and depth" of innovative, new features in Vista and Office 2007 that simplify communication and collaboration; help business users search, find and analyze business data; enable better management and security; and empower business decision-makers.

Microsoft will bring to market more than 30 business applications -- both client and server - that are enabled by the core features in Vista and Office 2007, including SharePoint 2007 and Forefront 2007.

Still, some industry analysts and solution providers questioned Ballmer's sunny optimism about business adoption of Microsoft's next-generation products in 2007. Richard Warren, CTO of Channel Blade Technologies, a Virginia Beach, Va.-based solution provider, said many ISVs and IHVs haven't released the necessary drivers for their current products or launched new products optimized for Vista or Office 2007.

"While the RTM may signal more earnest levels of testing within corporations, I predict very few CIOs are going to be implementing Vista on existing assets anytime in the next two or three quarters," Warren said. "And I would argue that most won't even allow it on new assets for at least six months, while the rest of the market catches up to Vista from a compatibility perspective."

Vista's hefty hardware requirements and Microsoft's decision to back-port many of Vista's technologies to Windows XP may restrain business deployments and new PC purchases, according to analyst Paul DeGroot of Directions on Microsoft, a newsletter in Kirkland, Wash. What's more, those that buy new PCs may slip Windows XP back on, since businesses tend to move to new platforms more slowly than consumers and value consistency, DeGroot added.

"Bringing Vista in on the replacement cycle will be the most common approach. Close to it, and possibly more popular, will be to bring Vista machines in and re-image them with volume XP," he said.

Vista is a "fairly radical departure from XP," DeGroot noted. "Customers know that testing of the first release was compressed and that a service pack or even a full replacement a few years down the road will make a big difference," he said. "An extraordinarily high number compared with previous OS releases of new Vista technologies have been or will be back-ported to the current OS."

Nevertheless, Vista will drive a major hardware refresh in businesses, according to analyst Peter O'Kelly of the Burton Group. He said major user-interface overhauls, search folders, security features, performance increases and a new programming model will translate into meaningful business benefits.

"There will be a pop. It won't be overnight, but a lot of companies that do their refresh will do their hardware, operating system and office [suite] all at one time," O'Kelley said. "This is a more significant upgrade and more substantive user benefit than XP."

However, other industry observers said it will be difficult to measure the market reaction until the rest of the Vista versions are released in late January.

As of Thursday afternoon, the Vista launch had no positive impact on Microsoft's stock. The company's share price displayed at $29.51 on the Nasdaq ticker just minutes before the press conference began and dipped to $29.47 two hours later.