It's been a month of interesting statistics, many of which came out during Microsoft's annual Financial Analysts Meeting, which was held last week at the company's Redmond campus. I'm particularly interested in the figures around Windows 7, because I've been tracking how well Microsoft's latest OS is really faring with business deployments. I shouldn't have worried, however. It's through the roof.
Before understanding why this is so, let's step back a bit and crunch a few numbers. In a segment in which Microsoft was trying to explain why the consumer market is so important to it, the company instead provided further illustration of why the business segment is still most important to it. Microsoft said that the enterprise is its largest single business, generating 36 percent of its revenues, compared with 20 percent for small-to-midsized businesses, 17 percent for consumers, and 27 percent for sales via PC makers. While the PC market is split 65/35 between consumers and businesses, businesses, overall, account for more than 65 percent of Microsoft's revenues. It's almost twice as big.
A week earlier, Microsoft posted record quarterly revenues of $16.04 billion, crushing analysts' expectations. (The company also posted profits of $4.52 billion in the quarter.) Microsoft cited strong sales of Windows 7 and Office 2010 for the surge.
To date, Microsoft has sold 175 million copies of its latest client OS. That's 10 units every single second, according to the company, up from the rate of 7 units per second previously reported. Put another way, it's currently selling Windows 7 at a rate of almost 1 million units per day.
And get this, sales are picking up. As Microsoft has now noted a few times in response to silliness about their reliance on traditional but presumably disappearing markets (like PCs and servers), the PC market is in fact a growth market. (Sorry, doomsayers.) And Microsoft CEO Steve Ballmer pulled out a new figure at the Financial Analysts Meeting: Analysts at IDC and Gartner now expect PC makers to sell over 400 million PCs in calendar year 2011, up from the 360 to 370 million they'll sell this year. And since Windows 7 goes out on well over 90 percent of those PCs, the math is easy. Windows 7 is a blockbuster best seller and will continue to sell in ever-increasingly numbers at least through the end of next year.
This was all a pretty lengthy set up to that question I've been posing: Sure, Windows 7 is going gangbusters with new PCs, but two-thirds of those sales are consumer-based. And sure consumers love Windows 7—it has a "stunning" 94 percent satisfaction rating, according to Microsoft—but what about business deployments? Has individual excitement around Windows 7 broken through to the fiscally constrained corporate market? Or are we really stuck in a typical slow-boat deployment cycle where businesses are supposedly waiting for SP1? Or, worse yet, is Windows 7 just another Windows Vista, where talk about deployments eventually disappears as the reality of the situation becomes clear?
My fears, alas, are misplaced. According to Microsoft general manager Gavriella Schuster, Windows 7 is the new standard for commercially sold PCs and analysts tell them that most enterprises—about 65 percent, according to IDC—have already begun migrations.
Windows 7 is a better OS than its predecessor. And it comes with none of the serious compatibility issues that dogged Vista either, further easing the case for adopting a system that offers major productivity and usability benefits over the aging Windows XP. These are obvious issues. But they aren't the only reasons that Windows 7 is taking off.
Microsoft worked early on with partners (including PC makers, ISVs, and solution integrators) to educate them about the product at each development milestone, provide them with ever-updated deployment tools, get feedback, and generally be as transparent as possible. The results are fascinating in that Microsoft's partners were almost universally excited about Windows 7 early on. And unlike with Vista, its partners have aggressively rolled out Windows 7 internally.
Schuster told me that the difference between last year's Worldwide Partner Conference (WPC) and this year's (the event is held every July) was palpable. "Partners are very excited this year," she said, "and not just about Windows." This is key, she says, because partner engagement, like customer engagement, starts with Microsoft's core product—Windows. And when Windows is exciting to customers, everything else just falls into place.
With Vista, Microsoft suffered from some high-profile defections, where major partners publicly embarrassed the company by giving up on Vista deployments and sticking with XP. With Windows 7, things are quite different. Both Dell and Intel are fully deployed on Windows 7 now, Schuster told me. And across the board at WPC, she was told by partners that Windows 7 is already in use throughout their environments. At the WPC after Vista shipped, very few companies had deployed Vista, and even then it was to small subsets of the installed base.
Looking ahead, I asked whether the success of Windows 7 wouldn't cause some kind of a weird long-term problem, as has the success of XP before it. After all, XP continued to sell in surprisingly strong numbers after Vista arrived. What if Windows 7 has the same effect on Windows 8 (or whatever the next version is named)?
Not an issue, Schuster said. Modern deployment trends around the optimized desktop—where applications and data are separated from the OS—make mixed environments much less traumatic, management-wise, than was the case in the past. Consider a major application suite like Office 2010, which was designed to be deployed via App-V-based virtualization technologies as a fully supported deployment methodology. This is a new way of doing things, and Microsoft hopes it can convince customers to change the way they think about desktop deployments.
"Windows 7 will be highly adopted, but that won't prevent businesses from utilizing hybrid environments in the future," Schuster said. "Application virtualization and folder redirection make it easier to change out the OS in the future, in a way that isn't disruptive."
I'm hoping to speak with some Microsoft partners about their own internal deployments of Windows 7, and I'll report back when that happens. In the meantime, I'm interested in your own Windows 7 experiences. If you have any success or disaster stories to report, please do drop me a line.