News

Windows 7 To Drive 'PC Refresh' Cycle, Microsoft Says

• By Kurt Mackie
• 12/01/2009

A top Microsoft official answered questions about the state of IT spending and Microsoft's product offerings at the Nasdaq OMX 23rd Investor Program in London on Tuesday.

Neil Holloway, vice president of business strategy at Microsoft International, fielded a few questions from Adam Holt, an analyst with Morgan Stanley, at the event.

Holloway suggested that the world economy is getting more stable but is still uneven, with some places doing better than others. In terms of spending, IT budgets were planned earlier in the year, and while some departments may have extra unspent money by the end of the year, Holloway didn't think that they would spend it.

Still, he suggested that IT departments will eventually buy new PCs as part of a refresh cycle.

"Most people do expect that there will be a PC refresh. And I think one of the things that will hopefully drive that will be Windows 7," he said.

The server side presents a different picture. Holloway said that server hardware sales have decreased 20 percent. That market won't recover like the PC market because of consolidation technologies like virtualization.

In the next 24 months, an important trend will be getting more efficiency out of IT; Holloway said "reducing that cost is absolutely core." He expected that technologies from Microsoft's Business Division -- such as Exchange, SharePoint and Office -- would be key to achieving that goal because they will help facilitate decision-making within companies.

Businesses can be confident about running Windows 7 because there are about 850,000 apps that work with the new operating system, Holloway contended. For organizations, it's now no longer a question of whether to move to Windows 7, but when to move to Windows 7 -- a marked change from Vista, Holloway said. He added that upgrades are facilitated on older hardware because Windows 7 will run on PCs that are 2 to 3 years old.

Users will like Windows 7's ease of use, but IT departments will want it because it reduces the overall cost of ownership, he said. Holloway cited Windows 7's remote management capability as one of the big benefits for IT organizations.

In terms of the Windows 7 product mix, Holloway said that enterprises will prefer the high-end SKUs.

Holloway touted Office 2010 as offering greater choice to end users and IT departments. End users will have a choice of where they use it (on a PC or a phone). IT departments will have deployment options (on premises, in the cloud or some hybrid approach). GlaxoSmithKline and Coca-Cola are using hosted Microsoft solutions, whereas McDonald's uses a blend of hosted and on-premises solutions, Holloway said.

In terms of overall cloud computing strategy, organizations are now having a look at the technology, which promises reduced capital expenditures, Holloway said. Some organizations are taking the approach of keeping their applications both on premises and in the cloud so as to not have an instance in which those apps go down.

The final part of a cloud computing strategy happens when an organization decides to recreate its applications for the cloud. That part will take some time to achieve, Holloway said, adding that cloud computing requires something like a 10-year strategy.

An audio recording of the talk can be found at Microsoft's investor relations page here.