Sales Soar For VARs As Businesses Seek Windows XP Upgrades

The end of Windows XP support may have been a headache for end users, but it has generated sales growth of up to 40 percent for solution providers.

VARs and distributors at Harrisburg, Pa.-based D&H Distributing’s New England Technology Show in Quincy, Mass., said they’re looking at stratospheric top-line growth in 2014, due to the mass migration of businesses to Windows 7 or Windows 8.

Dave Hodgdon, owner of PCGIT in Portsmouth, N.H., said during a CRN roundtable discussion that overall sales and profits have climbed by 30 percent to 40 percent in 2014, thanks almost entirely to Microsoft cutting off upgrades and security protection for Windows XP in April. Though lucrative, Hodgdon said the upgrades have tested the resources of his 16-person firm. "It was very stressful for our technicians," Hodgdon said. "It was not pretty."

[Related: Windows 8 Adoption Hits Standstill ]

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More than three-quarters of customers at Computer EZ in Rutland, Vt., scrapped Windows XP by the end of 2013, said company owner Larry Gold. But Gold's remaining clients let the clock run down until nearly the April 8 deadline before taking action.

For that reason, Computer EZ is looking at revenue growth of 20 percent to 25 percent in 2014, more than double its average annual growth rate of 10 percent to 12 percent.

Gold wasn't the only one seeing customers waiting until the last minute.

In fact, more than four months after Microsoft cut off critical security updates to Windows XP, Microcosm in York, Maine, still sees at least one customer each day in need of an upgrade, said company owner Jeanette Movesian. Many of these customers have admitted to ignoring "end of life" messages that have been coming up for months, Movesian said.

Thanks to XP, she said she's seen a 30 percent to 40 percent jump in sales and profits this year.

Meanwhile, Compu-Tech in Weathersfield, Conn., has enjoyed a 10 percent growth in sales, with owner Jay Shah expecting to continue receiving XP upgrade requests until the end of the year.

And Land Computer Systems in Peabody, Mass., has been humming along at 30 percent revenue growth for each of the past three years, said Co-Owner Richard Trahant.

But it's not only partners cashing in on Windows XP’s swan song. D&H said lots of its SMB activity in recent months has been driven by the OS refresh cycle, and is only now beginning to subside.

"Considering that [retirement of XP] happened in April, it’s a pretty good cycle,’ said Larry Henry, Lenovo business development manager for D&H.

D&H launched in January online training sessions and a full-length webcast to help resellers and customers migrate from XP.

Demand for upgrades has come not only from businesses, Henry said, but also from school districts across the country.

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VARs, though, have been staying away in droves from Windows 8, the company's latest operating system. Instead, they’ve opted for Windows 7, which resellers agree has a similar appearance to XP and isn't bogged down with a slow touch interface.

Movesian and Shah said every single business they serve has migrated to Windows 7, while Hodgdon and Sue Trahant of Land Computer Systems said some 90 percent of their clients have opted for Windows 7.

Gold pushes Windows 7 to people with a business desktop that do not need touch capabilities, or about 70 percent of his customer base.

While many are still feeling the benefit of the XP expansion, solution providers can look forward to another Windows-related bump next year. Support for Windows Server 2003 is slated to cease in July 2015, and end users are just now starting to get the message, said Pat Donovan, D&H's senior director of inside sales.

Migrating from Windows Server 2003 to Windows Server 2012 will require customers to upgrade the whole backbone of their computer, Donovan said, which should generate a lot of continuing sales.