A Year of Change Ahead for Microsoft in 2009 - Page 2

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Windows 7 is Coming

Microsoft is likely to pull in its bullish horns as the new year progresses, however, as more IT shops fall under the budget axe. Indeed, a recent independently-funded survey found that 46 percent of IT shops are planning on sticking with Windows XP for now and then migrating directly to Windows 7.

Given that Windows 7 will not be for sale until at the very least the second half of calendar 2009 – which coincides with the first half of Microsoft's 2010 fiscal year – it is likely that the company won't see major revenue from Vista's replacement until at least the holiday sales period.

Worst case, shipment of Windows 7 could slip to the first calendar quarter of 2010, which Microsoft has said might happen. Although that is not expected to happen again – as it did with Vista – it's still in the realm of possibility.

If that occurred, it could leave many IT shops in a bad spot without a 'plan B,' particularly shops that are skipping Vista to go straight from XP to Windows 7. Part of their motivation is the age-old need to stretch budget dollars but this time in an abysmal economy.

"Without a specific or compelling business reason to migrate in this bearish economy the majority of corporations will opt to conserve their already constrained IT capital expenditure monies," Laura DiDio, principal analyst at Information Technology Intelligence Corp. (ITIC) and author of the survey report, told InternetNews.com in an e-mail.

In fact, she said, only 16 percent of IT shops will get a budget increase, and many of those will be what she categorized as "modest" increases. Meantime, 27 percent of firms said their budgets would shrink.

Microsoft at Your Service

At the same time, Microsoft also has to somehow maintain the relevance of full-function PCs and laptops, and to continue working to transition much, if not most, of its market to services that run on PCs, mobile devices, and the Web. Those are what executives call the three legs of Microsoft's services stool.

For the past three years, Microsoft has been banging the drum for its version of "software-as-a-service" – which it refers to instead as "software-plus-services." That subtle difference aims to help the software titan maintain its traditional revenue streams from sales of software, while moving towards a services-based revenue model.

The idea is to make a serious move into online applications and services that compliment each other as well as tie in with the company's evolving PC-based software.

Often referred to as Microsoft's cloud computing initiative, it is a grand strategy to offer a wide range of services, ranging from IT products like hosted versions of Exchange, SharePoint Services, and SQL Server Data Services to consumer services like ad supported free e-mail and other services such as free online storage, online photo management and calendaring. That includes Windows Live Search as well.

It also includes scaled down, Web-based versions of its Office applications suite that can be run online via Internet Explorer, Firefox, or Safari browsers. Dubbed Office Web, those applications do not have a delivery date yet.

Another key component of Microsoft's cloud computing play is the Windows Azure cloud services development platform, announced at the company's Professional Developers Conference in October. That is meant to provide a common underpinning for much of the cloud computing services.

Finally, Microsoft also debuted its Live Mesh services in 2008. Live Mesh is a cloud service that aims to link together all of a user's devices, contacts, and content in "the cloud" so that the user's information – whether files or music – is available wherever the user is, on whatever device the user has available at the time. It went into public beta this fall and is expected to ship sometime in 2009.