Musings on Windows 7

Well, Windows 7 hits the streets today, and I feel compelled to acknowledge the occasion with a post.

After the disappointment that was Windows Vista, Microsoft will seek to vindicate itself with this release of its flagship operating system. Technically, from what I’ve seen of Windows 7, I think Microsoft will be redeemed. I also believe the market will embrace Windows 7, giving Microsoft a boost in both credibility and revenue.

A Bloomberg story on Windows 7 got me thinking about a couple things. They’re somewhat connected, so please indulge my mental perambulations.

First, perhaps because of Apple’s successful television-advertising campaign that pits the laid-back personification of the Mac against the geeky Windows guy, the media is focusing unduly on how well Microsoft’s Windows 7 will fare against Apple’s OS X.

In my view, that’s just not a major issue for Windows 7.

From a Microsoft perspective, all Windows 7 must do is keep Windows users in Microsoft’s camp and generate some much-needed operating-system upgrades from the Windows XP installed base of enterprise users consumers. I really don’t think Microsoft, much less Apple, views Windows 7 as a serious danger to Macs and OS X.

The real drama in the operating-system space will play out in the developing world, where Apple isn’t a meaningful player. It’s in China, India, Brazil, Russia, Eastern Europe, and Latin America — all growing markets for computing and operating systems — that Microsoft will meet a critical test. In those jurisdictions, the threat to Microsoft will come from Google, with its lightweight web-oriented Chrome OS, and from similarly scaled-down operating systems, such as one China’s Baidu is developing.

Given that Windows 7, like its immediate predecessor, is somewhat bulky on netbooks and other low-end systems, Microsoft might find itself vulnerable to competitive incursions in the developing world.

That leads me into a related point, pertaining to periodic speculation as to whether Microsoft might decide to follow Apple’s example and produce its own Microsoft-branded PCs. I’ve written about this subject previously, a couple years back, and fundamentally I haven’t altered my position. For a variety of reasons, I just don’t see Microsoft attempting to roll out its own PC hardware.

In addition to all the reasons I adduced previously, a new one involves Google and Chrome OS. As we can see, Google will make its web-optimized operating system available to anybody that wants it. If the real threat to Microsoft isn’t high-end Apple but broadly focused Google, then it makes no sense for the braintrust in Redmond to alienate its established hardware ecosystem.

Remember, Microsoft might have slightly more than 90 percent operating-system market share in North America, but its worldwide market share is above 95 percent. That’s a huge percentage, and getting into a high-end slugfest with Apple by designing and producing its own PCs — which would compete with those of its hardware OEMs — just doesn’t make business sense.

In remarks he made last week, here’s what Microsoft CEO Steve Ballmer said:

“About 96 percent of the world’s computers are PCs and 4 percent are Macs, and thanks to their advertising I guess everybody kind of knows the difference. I like 96, they like 4, I guess. You can’t say they don’t have a good business. They actually have a good business, as do we.”

He’s right. Apple and Microsoft each have strong franchises, and each company should play to its strengths. Taking on Apple, to the extent of trying to follow the Apple business model, wouldn’t work for Microsoft. If Microsoft were to pursue that course, it would be incurring too much risk for too little reward.

That is particularly true when you think of emerging markets, where Apple isn’t much of a threat but others, including Google, are ready to pounce.

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