Analysts Point To Tech Refresh From Windows 7

Microsoft’s Windows 7 operating system, due for general release on 22 Oct, could spark a massive corporate upgrade cycle midway through 2010, according to an analyst report from Jefferies & Company.

“It looks like the Win7 inspired upgrade cycle can start in late 2010 and run through early 2013,” Katherine Egbert, the report’s lead author, wrote. “We expect new hardware purchases to precede the software upgrades by about 6 months.”

Egbert estimated that some 70 percent of PCs currently run XP, which in turn could help impel a tech refresh: “Every upgrade from XP to Win7 requires a custom install; it’s easier to buy new hardware in most instances than to upgrade in place.” The difficulty in upgrading XP to Windows 7 will be the largest driver of new hardware purchases related to Microsoft’s new operating system, in her estimation.

Moreover, “when viewed from an ecosystem perspective, the period for upgrading from XP to Win7 looks to be fairly short, i.e. 30 months post the October 22nd [general release for Windows 7],” Egbert wrote. “We have used the end of support dates for Windows 2000, and the transition to XP (released November 2001) to look at how XP, an 8 year old operating system, might fare under declining support from hardware and software vendors.”

In other words, the inability to install XP due to a lack of processor and driver support, as well as independent software vendors (ISVs) gradually stopping support for XP version of their software, would likely cause declining ecosystem support for XP and the attendant migration to Windows 7.

“Given the so-far positive reviews for Windows 7, and its compatibility with systems written for Windows Vista,” Egbert added, “we expect most corporate customers of XP to migrate directly to Windows 7.”

Various reports over the past few months have debated the size and nature of a tech refresh. A report by Deutsche Bank suggested that companies, particularly those interested in virtualization and 64-bit computing, will use Windows 7 as an excuse to execute a massive tech refresh.

Deutsche Bank’s internal survey of 120 IT buyers around the world found that, “Win-7 penetration rates could exceed the levels achieved with [Windows] Vista and start to match the penetration rates that XP & Windows 2000 took two years to reach, potentially within 12 to 18 months.”

A hardware refresh would ostensibly benefit a number of companies within Microsoft’s ecosystem, including Intel, Advanced Micro Devices and Nvidia for semiconductors, Samsung and Micron Technology for memory, and Hewlett-Packard and others for hardware.

However, other reports suggested that companies, squeezed for cash in their IT budgets, could take longer to upgrade. A summer report by ScriptLogic estimated that six out of 10 U.S. companies would not immediately upgrade to Windows 7, although a large percentage planned to do so by the end of 2010. Enterprise acceptance of Windows 7, however, could also be stalled by a handful of background factors.

In order to encourage the enterprise and SMBs (small- to medium-sized businesses) to adopt its new operating system, Microsoft has initiated an aggressive marketplace push for Windows 7 that includes price cuts and promotional offers. As part of that initiative, Redmond is also offering a free 90-day trial edition of Windows 7 Enterprise for IT administrators and other professionals.