Analysts: Windows 8 downgrade rights crucial to success

But if lots of consumers downgrade to Windows 7, that's a disaster for Microsoft

Downgrade rights will be critical to Windows 8's acceptance in the enterprise, but if they're exercised by consumers, it's a sign Microsoft's newest OS has pulled a "Vista," analysts said today.

For consumers, downgrade rights, which let customers replace a newer version of Windows with an older edition without paying for two copies, are available only in copies of Windows 8 Pro pre-installed on new PCs. On the other hand, corporations with enterprise licensing agreements, including the annuity-like Software Assurance, are always allowed to downgrade from any version of Windows to any previous edition.

Downgrade rights broke out of their enterprise niche to became a hot topic after Windows Vista's 2007 launch when many consumers rebelled and turned back the clocks on their PCs to run XP instead.

It was one of several signals that Vista was on shaky ground.

Compared to Vista, interest in Windows 7's downgrade rights has been minimal. Today, Windows 7 is the world's most-used version of Windows, with a share nearly two-and-a-half times that of Vista at its peak.

"For enterprises, downgrade rights are tremendously important [for Windows 8]," said Michael Silver, an analyst with Gartner. "Most of the traditional form factors -- desktops and notebooks -- will be downgraded. But if it gets so bad that consumers downgrade, that's a disaster for Microsoft. That means there's word in the public that [Windows 8] is just bad."

Exercising downgrade rights in business is not unusual, but they will be more important than in 2009, when Microsoft launched Windows 7.

"On the enterprise side, my thinking would be along these lines. I've just finished my plan to upgrade XP to Windows 7, and along comes Windows 8," said Michael Cherry of Directions on Microsoft. "This is the last thing I need right now. I don't want to stop to evaluate Windows 8."

Cherry has a point.

Most companies have either recently finished, or are in the middle of, migrating from the 11-year-old Windows XP to Windows 7. Even Microsoft acknowledges this.

"Today, approximately 40% of enterprise desktops worldwide are on Windows 7, and we see continued momentum as the remaining desktops upgrade from Windows XP over the next two years," said Peter Klein, Microsoft's chief financial officer, in an April 2012 earnings call.

By the end of the next quarter, Klein reported in July, the 40% had grown to 50%.

Rather than adopt Windows 8, companies with enterprise agreements will simply downgrade newly-purchased PCs to Windows 7, Silver and Cherry agreed.

"Those who have finished a Windows 7 rollout will probably want to stay homogenous," said Cherry.

Their expectations about Windows 8 and downgrades are due in no small part to factors outside the operating system's control.

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