Four ways Microsoft will make it increasingly difficult to stick with Windows XP

Enterprise installed base. Source: Forrester

When Microsoft (MSFT) launches Windows 7 next week, its biggest competitor — especially in the multi-user enterprises that are its target market — will not be Linux or Apple's (AAPL) Mac OS X, but Windows XP.

Eight years after its launch, and nearly three years after Microsoft began shipping Windows Vista (its putative successor), XP is still the operating system most likely to be installed on a new PC in 81% of IT departments, according to a new Forrester Research poll.

Microsoft made it easy for IT decision makers to do what they are naturally predisposed to do — stick with what they know. Steve Balmer is not going make that mistake again, judging from a report published Thursday by Forrester analyst Benjamin Gray.

"Factors are converging," he writes, "that will provide IT managers with a compelling reason to shake the status quo, finally ending Windows XP’s corporate reign."

Gray, who last year give his clients five reasons to switch to Vista, now offers the timetable by which Microsoft will make life increasingly difficult for anyone who wants to keep supporting Windows XP.

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Fasten your seat belts. There could be some bumpy nights ahead in the IT department.

When the information technology guys discover how painful it can be to upgrade their current PC hardware to Microsoft's (MSFT)  Windows 7 — the successor to the much-maligned Windows Vista — they may be tempted to switch to Linux or Apple's (AAPL) Mac OS X.

That's the conclusion of the product specialists at CRN's Channel Web — a publication geared more to IT professionals than to the typical Mac user — after running the latest Windows 7 beta through their Test Center.

"On both fresh hardware and on first-look upgrades from Windows Vista machines, Windows 7 met the world looking like a champ," writes Channel Web's Ed Mozen in a post published Tuesday. "Upon closer look, though, it appears as though Windows 7 could actually be more of a challenge for businesses than Vista ever was. The upgrade path from Windows XP – which is still the predominant desktop OS in businesses — can be described graciously as 'ugly.'" (link)

Part of the problem is that you can't install Windows 7 beta directly from Windows XP. Instead, you have to upgrade to Vista Service Pack 1 (SP1) or later before attempting an install — a process the Channel Web team found to be non-trivial.

Among the scariest quotes in their report:

• "While Microsoft has assured the world that if the hardware works with Windows Vista it will work with Windows 7, the reality is that is misleading at best."
• "We've almost lost count of the number of blue screens we've seen in the CRN Test Center during the Windows 7 evaluation process."
• "We tried to do the upgrade on an Acer TravelMate, but were stopped in our tracks by Bluetooth driver incompatibilities."
• "On a series of 3-and-a-half year old ThinkPad T43s, an IBM security processor refused to let the notebooks boot up with Windows 7. We needed to crack open a couple of four-year old desktops … to add memory just to try to get a system image."
• "Across the XP-Vista-Windows 7 landscape, Microsoft has fostered an ecosystem that now holds out the prospect of a mind-numbing number of incompatible drivers, unsupported devices, unsupported applications, unsupported data, patches, updates, upgrades, "known issues" and unknown issues."

Channel Web concludes:

"One at a time, these problems can be blown off as inconsequential or simply what happens during beta testing and an upgrade process. But, taken together, these problems are appearing all at once after Microsoft's botched XP-to-Vista upgrade and during the worst economic decline in generations….

"A solution provider can now expect to spend many hours, billable or otherwise, dealing with all the extra pain points brought about by having to navigate through a mine field of three concurrently used Microsoft operating environments.

"Or they could opt to give Linux or Apple's Mac OS X a try. That's not as crazy an idea as it may have been in years past." (link)

During his annual "strategic update" conference call Tuesday, Microsoft CEO Steve Ballmer told Wall Street analysts that while Apple "has probably increased its market share over the last year or so by a point or more," he was more focused on the competitive threats posed by Linux and Google (GOOG). (link)

In response to a request for comment, a Microsoft spokesperson wrote:

"Customers can purchase upgrade media and an upgrade license to move from Windows XP to Windows 7; however, they will need to do a clean installation of Windows 7."

Windows 7 is scheduled to ship in early 2010.

Microsoft (MSFT) Windows continued its downward drift and Apple's (AAPL) Mac OS X inched up to a record 7.95% in the market share survey issued Tuesday by Aliso Viejo, Calif.-based Net Applications.

The biggest gain, however, was recorded by the open-source operating system Linux, which jumped more than 16% in June — albeit from a small base — to hit 0.79%.

The iPhone held steady at 0.16%, reflecting a leveling off of what had been double-digit growth as buyers waited for the new iPhone 3G, which goes on sale next week. In a separate survey issued Monday, RBC Capital reported "unprecedented pent-up demand" for the new model. Data taken from 3,600 members in RBC's Technology Adoption Panel in early June showed that 56% of those planning to buy a smartphone in the next 90 days planned to buy an iPhone — up from 35% in March and more than double the interest in any of the other brands surveyed. See here for more detail.

The monthly Net Applications survey is conducted by sampling browser data from some 160 million visits to websites operated by the firm's clients. Although it describes the results as "market share," Net Applications does not actually measure share of market in the traditional sense by revenue or unit sales. It does, however, provide a consistent methodology by which to measure operating system trends.

To see their July 1 report, click here. The results are summarized in the table below.

Drilling deeper into the numbers, ArsTechnica's Charles Jade notes that the numbers for Intel Macs grew by a quarter of a percent to 5.26 percent, while PPC Mac's declined to 2.7 percent. In other words, Intel Macs increased at twice the pace of decline for PPCs. "The rapid decline of PPC Macs coupled with sharp gains for Intel Macs no doubt factored into the decision to make Snow Leopard Intel only," Jade speculates. His chart below:

UPDATE: Net Applications' model must be more dynamic than we knew. At sunrise in New York on Monday, Mac's June share was 7.95%. By 8:30 a.m. CT, when Jade posted his report, it had risen to 7.96%. By 3:00 a.m. ET Tuesday it had dropped to 7.94%. And these are last month's numbers!

"Developers," a VP at Electronic Arts once told me, explaining why there were so many me-too Windows applications, "will walk through the desert in their socks to get to an installed base."

True enough. But it doesn't quite explain the results of a survey issued last week by Evans Data Corp. The headline was that most developers are still not targeting Windows Vista when they write new apps. Only 8% of the 380 developers surveyed were writing for Vista; 49% were still targeting Windows XP.

That makes sense, given that XP still enjoys a 73% market share, compared with less than 15% for Vista, according the latest NetApplications report (link).

What is harder to justify, using the desert-and-socks rule, is the sharply increased interest in non-Windows platforms. The press release didn't mention it, but Evans Data CEO John Andrews did in an interview with Computerworld's Heather Havenstein:

"Open source alternatives like Linux continue to take on interest," he [said]. "As well, MacOS is also acquiring significant interest among North American developers. Although unlikely to displace Windows volume, MacOS experienced 50 percent growth as a primary development platform and 380 percent growth as a targeted platform during the period." (link)

We've asked Evans Data to clarify this quote, because in this form it's not particularly helpful. The 380% figure sounds suspiciously like a misquote, given that the size of the survey group was also 380. And that 50% increase is unanchored; it could mean 1 more developer writing for Mac or 100.

But any increase in Mac and Linux development is surprising — and encouraging — given that Microsoft (MSFT) still owns more than 91% of desktops, Apple's (AAPL) OS runs on 7.38% and Linux still hasn't cracked the 1% mark.

Could programmers be developing an interest in something beyond the size of the installed base?