Getting Ready for Windows 7
Windows 7 launches this month, giving partners -- and Microsoft -- a subtle chance at a revenue boost. Partner-readiness resources abound.
- By Scott Bekker
- October 01, 2009
It's time once again for one of the great rituals in the IT industry: the launch of a Windows client operating system. Love Windows or hate it, the occasion is a time for comment from all quarters -- from those who say this, like every other, will be the biggest Windows release yet, to those who can reliably be counted upon to declare it the last major launch of a Microsoft client OS in a world that's moved on to a place where Windows no longer matters.
On Oct. 22, Microsoft will formally launch Windows 7. In fact, the product has been finished since its release to manufacturing (RTM) in late July. The time in between allows for the usual, furious activity which includes getting code to OEMs, who can then test it on new systems and ready them for shipment. Meanwhile, other parts of the channel work to package the release for retail; independent software vendors (ISVs) test their applications for compatibility; and solution providers, large account resellers (LARs), distributors and systems integrators (SIs) get their people trained and on-message for the official starting gun.
There's more riding on the release this time than there has been in years. Generally speaking, users passed on Windows Vista, leaving Microsoft with a large installed base of Windows XP systems that are getting long in the tooth. From both a support perspective and a revenue perspective, Microsoft, through its partners, needs to hit a home run with the Windows 7 release.
One of the biggest problems in the Vista experience was that a realistic feature set wasn't nailed down early enough for effective communication between Microsoft, OEMs and independent hardware vendors (IHVs). As major features crept in or out of Vista, OEMs and IHVs complained of a lack of reliable information. Later, those problems manifested as user complaints about driver support for Vista. Those lessons appear to have been taken to heart by Windows Division President Steven Sinofsky, who reportedly assumed early and iron-fisted control over the OS features and schedule -- a task certainly made easier when that Vista -- tinkering presence, Chairman Bill Gates, left the building in semi-retirement. Another student of the Vista experience is OEM Corporate Vice President Steve Guggenheimer, who has been in constant communication with the hardware community in the run-up to Windows 7's release.
With the recession lingering, the IT industry is hoping for any boost it can get from Windows 7. As Web applications have become the norm, the days are most likely past when an OS alone can spur a massive refresh cycle based on support for newer hardware with faster speeds and feeds. Nonetheless, the Vista- and recession-inspired backlog of older systems chugging away on desks around the world presents plenty of subtle opportunities for Microsoft and its partners.
The recession may be tamping down hype for Windows 7 as compared to a new release's usual level of hysteria. Reviews have been generally positive for the feature set, as well as for Microsoft's execution on delivery dates and the moderate scope of its technical ambitions for the release. Much of the industry anticipation for the October launch seems calm and realistic.
With nearly 7 million U.S. jobs wiped out of the economy since December 2007, there aren't as many desktops to refresh. One of the industries that was most aggressive about jumping to the latest technologies over the last decade -- the financial sector -- is among the areas most devastated in terms of both job loss and enthusiasm for tech. Modest expectations are the order of the day.
While preparing OEMs, IHVs and ISVs with accurate and timely information, Microsoft has also worked aggressively to prepare messaging, training and opportunity awareness for its service-oriented partners in the run-up to the release. When the product ships later this month, there will be plenty of support out there to help partners address whatever opportunities exist. And much of it is fairly subtle stuff, thus revealing Microsoft's recognition that going around yelling, "Hey, Windows 7 is here," isn't going to sell many systems.
One prominent piece of collateral for partners on the Microsoft Partner Network (MPN) portal is entitled "Objection Handling," and it gives a pretty clear indication of where Microsoft believes the market stands. Out of eight potential customer questions or comments on the sheet, three deal specifically with users saying they want to stay on XP, while only one comes from a user needing to be persuaded off Vista.
The question, "How is Windows 7 better than Windows XP?" gives the basic pitch. According to the sheet, Windows 7 Professional is "easier to use, more reliable, more secure and faster" than XP. The answer includes other standard lines, such as that Windows 7 supports all the latest hardware while the 8-year-old XP may not.
The most interesting addition is the feature called Windows XP Mode, which lets users run XP applications without modification. XP Mode is available from the Start menu or the Windows 7 Taskbar. The feature could prove of critical importance, especially if third parties are as slow to upgrade applications as they were with the launch of Vista.
But make sure that if you're a user interested in XP Mode, you're aware that the feature isn't automatically in every version of Windows 7 Professional or Windows 7 Ultimate. The feature has to be preinstalled by an OEM or downloaded and installed later. It also bumps up Windows 7 system RAM requirements by 1GB, making the requirements 2GB for x86 systems and 3GB for x64 systems (see "Windows 7 System Requirements" for a chart of the new OS's specs).
As for Vista, the official line in the "Objection Handling" data sheet on what's improved in Windows 7 isn't much of a mea culpa. Microsoft mentions strengthened fundamentals, user interface improvements, better wireless networking and "more comprehensive (and comprehensible) troubleshooting."
In Microsoft's mind, the key features, in addition to XP Mode, are Domain Join and Group Policy improvements; backup improvements; the Encrypting File System; settings for automatically turning off instant messaging and Outlook notifications during presentations; offline file synchronization; the ability to access documents and programs remotely from another computer; and a feature called Location-Aware Printing, which detects whether the user is at work or at home and sends a document to the appropriate printer. Some of these features are brand new, some were missed by users who skipped Vista, and others are new cracks at features Microsoft has been working on through several releases.
As usual, there's competitive information available as well. A minor flap emerged in September when a Microsoft slide deck, created to help Best Buy employees make a case for Windows 7 against Linux, found its way, in its entirety, onto a blog. While such competitive differentiation presentations are familiar to anyone who's poked around the Microsoft Partner Portal -- and hardly controversial for industry insiders -- the flap is evidence that such presentations exist for partners who could benefit from them.
Systems Integrator Opportunity
According to Microsoft, the best Windows 7 opportunities for SIs working with larger customers lie in combining Windows 7, the Microsoft Desktop Optimization Pack (MDOP) and Windows Server 2008 R2, which is shipping around the same time as Windows 7.
The MDOP is a package conceived in the Vista time frame. It gives Software Assurance (SA) customers a bundle of extras, such as application and desktop virtualization, advanced Group Policy management, asset inventory, diagnostic tools, recovery tools and error monitoring.
An area of the IT market that has weathered the recession better than others is the managed services provider (MSP) space. With the MPN overhaul of the Microsoft Partner Program that was unveiled in July, Microsoft appeared to do relatively little to encourage, identify or direct resources to partners in the MSP model. However, in a Windows 7 battlecard for systems integrators, Microsoft does identify MSPs as a top opportunity for the Windows 7, MDOP and Windows Server 2008 R2 combo.
Microsoft calls the opportunity "Reshape the Desktop," and describes it this way: "Plan for and undertake an update of the enterprise desktop platform working with an in-house desktop support team, or by providing a managed services solution."
Other key opportunities for SIs created by the new products include application compatibility and virtualization; reducing desktop and mobile PC total cost of ownership; improving security; branch management; training and support for an upgrade to Windows 7; developing new custom workloads; focusing on energy efficiency for Green IT; and looking for cross-selling opportunities with SharePoint or Office, including the forthcoming Office 2010.
Underpinning all of those opportunities, the Microsoft battlecard has a cogent, if bracing, summary of the significant changes to the SI business model: "As core enterprise business automation matures, margins are declining. Customers are demanding less complexity and higher reliability in the technologies and solutions they invest in. An SI must put more revenue and margin at risk to win business. And as the overall SI market growth rate declines, an SI must search for higher growth areas to maintain their own profitable growth potential. These changes are not incremental. They represent the redefinition of the role of the SI."
Similar pressures face solution providers that serve small to midsize business (SMB) customers. Microsoft acknowledges the pressure in a white paper for those partners, and the first tier of Windows 7 benefits that the document highlights surround help desk issues. Again, while the MSP model isn't specifically mentioned, the emphasis on the new OS's benefits highlights the shift away from break-fix-based revenues to higher demands for uptime and a motivation on the part of partners to keep customer systems running and to fix customer problems rapidly.
Specific tools in Windows 7 to help speed troubleshooting and recovery that can be used for third-party support include the following:
- Problem Steps Recorder: Records events leading up to a customer problem, reproduces them and sends them to the help desk.
- Action Center: Provides a central location for notifications and troubleshooting to allow users to fix basic problems without IT, or partner, involvement.
- Windows Troubleshooting Platform: Automatically detects and attempts to repair problems. Partners can extend the baseline-troubleshooting platform with their own troubleshooting packs.
- Windows Recovery Environment and Startup Repair: Provides another way to fix problems when a Windows 7 system fails to boot.
Microsoft is also offering promotions specific to partners servicing SMB customers. Through one program, partners can offer savings to SMB customers with Volume Licensing for upgrading to Windows 7 with or without SA. That deal runs through Feb. 28, 2010. Another offer will allow customers with active SA coverage for Windows 7 Professional to upgrade to Windows 7 Enterprise and get rights to acquire the MDOP.
Where Will All the Money Go?
In a white paper prepared for Microsoft in July, market researchers at IDC shared the industry forecast that Windows 7 shipments would rise from 40 million in 2009 to 272 million in 2013. A chart near that projection shows that IDC isn't exactly expecting a boom in 2010. Overall Microsoft client OS shipments for 2009, including XP, Vista and a projected two months worth of Windows 7, should total in the neighborhood of 170 million licenses. The forecast for 2010 remains below 200 million licenses, with Windows 7 making up the lion's share of the overall Microsoft OS pie in that year.
IDC's worldwide growth forecasts were for IT spending to rise 3 percent to $1.489 trillion, packaged software spending to rise 3 percent to $311 billion, hardware spending to rise 2 percent to $570 billion, services spending to rise 3 percent to $608 billion and PC shipments to rise 7 percent to nearly 300 million.
"These increases from 2009 are modest; Windows 7 will be shipping into a relatively harsh environment," wrote IDC analysts John Gantz, Al Gillen and Amie White. "But the launch of a new and better operating system will necessitate new applications, new hardware, new planning, deployment and training, and new services. These will drive much-needed investment that will, in turn, fuel stronger growth in subsequent years."
All together, IDC anticipates that companies in the worldwide Microsoft ecosystem will bring in more than $320 billion in product and services revenues related to Windows 7 from the launch in October 2009 to the end of the 2010 calendar year.
IDC once again estimated a dollar relationship between estimated Microsoft revenues from Windows 7 and revenues to partners from Windows 7-enabled hardware, software and service sales. For every dollar of Microsoft revenues from Windows 7, IDC projects partners will make $18.52 on a global average. That figure is very similar to IDC's forecasts for Vista three years ago.
Breaking the number down by category, each dollar of Windows 7 revenues for Microsoft is forecast by IDC to generate $10.21 in hardware sales, $4.43 in software sales and $3.88 in services revenues. Because partners mix and match hardware, software and service sales, IDC also broke down its projections for Windows 7 revenues by partner type. For each dollar of Windows 7 sales, IDC expects product-oriented partners to reap $9.29, services-oriented partners to get $4.14, value-added partners to get $4.23, logistics-oriented partners to see $5.76 and retail-logistics partners to take in $6.42.
These revenues won't come to partners for free. According to IDC, ecosystem firms will invest $115 billion through the end of 2010 to develop, market and support their products and services that run on or work with Windows 7. That figure has a potential upside for IT employment, in and out of the channel.
"IDC expects that employment related to client operating systems will grow by more than 300,000 new jobs or more than 30 percent of total growth in global IT employment in 2010 solely because of the launch of Windows 7," the report stated.
Getting Ready to Go
When it comes to those Windows 7-readiness investments, what should services providers be doing? Microsoft has some ideas. The company's specific guidance for preparing for Windows 7 General Availability has three components. Microsoft recommends that partners learn about Windows 7, and provides the documents cited previously and dozens more for that purpose. Microsoft also is encouraging partners to run Windows 7 internally through the internal-use licenses available to Gold Certified Partners, Certified Partners and Microsoft Action Pack Subscription holders. Digital downloads of the OS are available in this launch cycle. Finally, Microsoft is also encouraging partners to leverage Microsoft planning, marketing and subsidized services to host customer events to spread the word about the benefits of the new OS.