Windows XP Sales Get a Reprieve

Published: October 3, 2007

by Alex Woodie

Faced with a January 31 deadline for the end of Windows XP sales, customers applied enough pressure on Microsoft to get Windows XP sales extended five months--to the end of June 2008--the software giant announced this week. To go along with the sales extension, the suddenly rejuvenated operating system also was the target of a new licensing program that allows resellers to sell licenses to customers that had inadvertently bought or used pirated copies of the operating system previously, and to do so through volume licensing channels.

While Microsoft hasn't been shy about sharing details of the incredibly hot start to Windows Vista sales earlier this year, it hasn't completely eroded demand for its predecessor operating system, Windows XP, particularly in emerging markets.

For these customers, Windows XP was "good enough." Perhaps more importantly, Windows XP doesn't need the latest, greatest hardware for a decent computing experience. A Windows XP computer is less expensive than a Vista PC, in part because it can get by with less memory, less storage, and slower CPUs.

PC resellers and direct OEMs in most countries will have until the middle of next year to sell Windows XP machines. But vendors in emerging markets will have until the middle of 2010 to sell PCs equipped with Windows XP Starter Edition. That was another change that Microsoft made this week.

Mike Nash, corporate vice president of Windows product management, explained the decision to extend Windows XP availability for another 150 days. "Most of our previous operating system releases were available for about two years after the new version shipped," he says, "so maybe we were a little ambitious to think that we would need to make Windows XP available for only a year after the release of Windows Vista."

Nash did his best to position the move against the backdrop of sales of Windows Vista, which he said was "on track to be the fastest-selling operating system" in Microsoft's history. Nash pointed out that the top 50 consumer applications are now compatible with Vista, and that there are more than 2 million devices that are compatible with Vista. "We are committed to helping customers of all sizes with the transition," he says. "Some need more time, and we understand and respect that."

While those numbers sound impressive, they gloss over the fact that there are deficiencies in drivers and application compatibility. Customers have reported all kinds of problems with audio drivers, graphics drivers, USB drivers, and wireless card drivers in Windows Vista. Most of these driver issues aren't Microsoft's fault--they're the responsibility of the software and hardware vendors targeting Windows. Similarly, the issues some software vendors have experienced in supporting Vista, such as the problems IBM has had with its terminal emulation software, are the result of much-needed security enhancements. All told, it's a more secure and more powerful--although more bloated--operating system than Windows XP.

But to say that the current Windows Vista ecosystem is in the best of possible conditions is to misrepresent the truth, which is that many vendors still have a lot of work to do to bring their applications and drivers for Vista up to Windows XP levels. The fact is that Windows Vista is still a little green, and its ecosystem is not fully baked, which makes the tried-and-true Windows XP environment look a little bit better to some classes of users.

Of course, Microsoft knows this, which is why it's taking steps to ensure the Windows XP ecosystem doesn't dry up faster than Vista's picks up. This is also the thrust behind the new Get Genuine Windows Agreement (GGWA) licensing scheme, which it announced this week.

With GGWA, Microsoft is trying to make it easier for businesses to obtain legal licenses of Windows XP, particularly in those all-important emerging markets, where as much as 80 percent of the software is pirated, according to the Business Software Alliance. Across all countries, the average rate of software piracy is 35 percent.

With GGWA, business customers--particularly those who discover they are using pirated software--can purchase full licenses of Windows XP the same way they acquire other software, through a Volume Licensing program offered through their reseller, Microsoft says. The hope is that this will encourage users to purchase legal copies of Windows XP.

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