Windows 7 beat expectations says Microsoft

First birthday message from Redmond

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On the eve of the first anniversary of Windows 7's launch, Microsoft said the operating system has exceeded its expectations.

Analysts agreed that Windows 7 has been a success, especially after the lukewarm reception customers gave its predecessor, Vista, but cautioned that Microsoft's fundamental philosophy about operating systems may mean trouble down the road.

"I think Windows 7 has exceeded expectations," said Gavriella Schuster, Microsoft's general manager of Windows product management, in a statement the company issued today.

"We were in such a bad place economically," she added, referring to the recession that dampened computer purchasing in 2008 and 2009. "I didn't know how that was going to play out. I was nervous. But I feel really good about how it's all turned out."

Microsoft boasted today that it has sold more than 240 million Windows 7 licenses to date, an increase of 65 million since it last touted numbers three months ago during a quarterly earnings call.

The 65 million licenses sold in the last 90 days translates into a pace of 8.35 licenses sold per second, slightly down from the 9.97 licenses per second sold during a 29-day stretch from June 23 to July 21, 2010.

"I'm pretty impressed with Windows 7," said Michael Cherry, an analyst with Kirkland, Wash.-based Directions on Microsoft, a research firm that specializes in tracking Microsoft's moves. "It repaired a lot of things that got off track with Vista, so yes, it has exceeded my expectations."

Well, almost, added Cherry.

"If there's one thing that has not met expectations, it's that Mr. Ballmer keeps saying that it's Microsoft's tablet OS," Cherry said. "I have a fundamental issue with the two approaches [to tablets] that Microsoft and Apple have. The Windows 7 tablet approach is that all the apps that people would want on their desktop, they also want on a tablet.

"Apple says, no they don't," Cherry continued, giving Apple the nod as the smarter philosophy.

"It's hard to say that Windows 7 is not a hit," echoed Michael Silver, an analyst with Gartner Research. But like Cherry, Silver offered a caveat. "Windows 7 is doing much better [than Vista] but not every license they've shipped is being used, either."

Silver has a point. Microsoft may tout 240 million licenses, but many of those are accounted for by standing agreements that allow enterprises copies of Windows 7 that they may not actually deploy for months, or even years, as they retire older systems running Windows XP.

In fact, with all the success of Windows 7, the nine-year-old XP remains the dominant version of Microsoft's OS by a wide margin.

According to the latest statistics from Web measurement firm Net Applications, Windows 7 owned a 17.1% global usage share in September compared to Windows XP's 60%.

Windows 7 clearly has gotten out of the gate faster than Vista. While the former reached the 17% share mark 12 months after its launch, Vista didn't match that until April 2009, two years and three months after its debut.

If the pace of the last three months' of Windows XP's losses and Windows 7's gains continue, Windows 7 won't pass XP in usage share until the third quarter of 2012, two years from now.

Silver pointed to Windows XP's extraordinary longevity as one reason why Windows 7 hasn't done even better. "Organizations, especially ones that still have IE6 (Internet Explorer 6) are having problems getting all the applications their users need running on Windows 7," Silver said, talking about the aged edition of Microsoft's browser.

That's one reason why enterprise Windows 7 migration plans have gone off-track recently. "We believe that many migrations have slipped six months or so from where organizations had planned," Silver said in an e-mail reply to questions. "However, they continue working and many have dates to have Windows XP out by the end of 2012 or sooner."

Some companies, however, will be hard pressed to divest themselves of Windows XP before Microsoft retires the operating system from all support in April 2014, Silver added.

Not surprisingly, Microsoft sees Windows 7 momentum gaining steam. Even with an on-again, off-again economy, Schuster argued that Windows 7 remains one of the top three projects IT pros are considering. "It's just that important," she said. "That's a good outcome."

But Gartner doesn't rank Windows 7 in its top three, instead listing it as No. 7 in a top 10 list of IT trends earlier this week.

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