Analysts: Vista SP1 delay won't hurt companies

Large companies want service pack before deploying the OS

Although Microsoft Corp. may not have the first service pack for Windows Vista ready at the end of this year as some expected, financial analysts say that a delay should not have a negative effect on corporate adoption of the operating system.

Many large corporate customers have said they will wait for the first service pack for Vista to deploy the software across their companies. Some were expecting SP1 before the end of the year after Microsoft Senior Vice President Bob Muglia said in a published report last November it would be released with Windows Server code-named Longhorn, due by the end of 2007.

However, rumors swirled last week that the release of the pack would be pushed into 2008 after Microsoft said in a court filing dated June 19 that it would have only a test version of Vista SP1 out before the end of the year. According to the document, filed as part of an ongoing antitrust case with the U.S. Department of Justice, the software is to be released by then to answer a complaint by Google Inc., which claims the operating system's built-in desktop search capability interferes with the use of Google's competing search technology.

The rumors caused investors to worry about corporate adoption of Vista being pushed further out, and company stock declined 2.4% Friday, opening at $30.03 and closing at $29.54.

UBS Investment Research analyst Heather Bellini tried to allay investor fears in a research note published yesterday, saying that the end of the year release of a beta listed in the document "probably represents a 'drop-dead' date."

"The company most likely has accounted for the possibility of unforeseen delays in this timing," according to Bellini's note. "As such, we believe Vista SP1 could be available sometime before the end of the year barring any material delays."

Andrew Brust, chief of new technology at consulting firm and Microsoft partner Twentysix New York, who is familiar with the company's plans, said he also believes Microsoft will have SP1 out the door before the end of 2007. He would not disclose specifics, but Brust said that what he's heard "contradicts the chatter."

"Microsoft is quite aware of the need to get an SP out there; I promise you that," he said in an e-mail interview.

Through its public relations team, Microsoft said it has never committed to a release date for SP1, and confirmed the company will be releasing test builds of the software through the end of the year. Despite Muglia's comments last year, even a 2008 release for Vista SP1 should not be considered a delay because the company never announced a firm date for release, Microsoft said.

Companies are most likely waiting for the release of Windows Server Longhorn -- now known by its official name, Windows Server 2008 -- before deploying Vista, making SP1 less relevant to corporate deployment than some think, according to a research note from Citigroup Global Markets.

More on Microsoft Vista:

Windows Vista A to Z

Copyright © 2007 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon