Corporate adoption of Vista could take a while

Analysts don't expect Vista to catch up to XP on business PCs until '09

Microsoft Corp. officials likely wish that all companies were like Sasfin Bank Ltd.

The Johannesburg, South Africa, commercial bank plans to start upgrading to Windows Vista by March and have all its 430 employees running the new operating system by the end of 2007. "We have a very spoiled user base," said Dawie Olivier, Sasfin's project manager for information technology.

As part of Sasfin's normal three-year hardware refresh cycle, Olivier plans to bring in new PCs with Vista preinstalled. But he also plans to take the unusual step of retrofitting existing computers with more memory and faster video cards to handle Vista's beefed-up requirements. "We've decided it's not cost effective for us to support multiple operating systems just because we're shy about cracking open a few PC cases," he said.

But Sasfin is the exception to what analysts predict will be the rule: Despite Microsoft's splashy launch today of Windows Vista, the operating system is expected to only slowly infiltrate businesses over the next two years.

By the end of 2007, less than 5% of installed PCs worldwide will sport some business-oriented version of Windows Vista, according to Gartner Inc. By comparison, 47% of PCs will likely be running Windows XP Professional, and nearly 10% of PCs will still be running Windows 2000 Professional, an operating system that will be seven years old by then.

The percentage of PCs running a business flavor of Windows Vista is expected to rise to 15% by the end of 2008. But that will still be dwarfed by the 40% of installed PCs still running Windows XP Pro.

Corporations may have deeper pockets than consumers, but they also have more at risk with major upgrades like an operating system. "Consumers may want the latest and greatest, but businesses are generally more conservative," said Michael Silver, a Gartner analyst.

Microsoft, naturally, is a huge Vista user, with the operating system now running on more than 60,000 PCs, according to Tom Ryan, senior public relations manager. The company is trying its best to nudge business customers to follow suit, touting Vista's easier deployment, manageability and stronger security as areas of potential savings for companies.

But most companies aren't likely to deviate from their normal routine -- extensive preupgrade testing that can take more than a year, and staggered three-to-five-year cycles for replacing hardware, Silver said.

"More than half of our clients are telling us that they're only bringing in Vista as part of their regular hardware refresh," Silver said. Indeed, he expects many corporations next year to exercise the "downgrade rights" in their Software Assurance contracts with Microsoft. That will let them order new PCs with Windows XP Professional, which they can upgrade to Vista in a few years when they are truly ready to move.

As a result, Gartner expects 22% of PCs sold next year to come with Windows XP Professional. Most companies won't start moving toward Vista until 2008, when 52% of new PCs worldwide are expected to ship with a business version of the operating system, according to Gartner.

The installed base will continue to lag, though. Only by the end of 2009 will the numbers of PCs running a business version of Vista equal those running Windows XP Professional.

In addition to companies unwilling to budge from their standard PC upgrade cycle, most are loathe to tinker with existing hardware, no matter what total cost of ownership savings Microsoft promises. That could be a problem: about half of PCs running in North American businesses today fall below Windows Vista's bare minimum system requirements -- 800-MHz processor, 512MB of RAM and DirectX 9 graphics card -- according to a survey by Softchoice Corp.

Nearly eight of 10 business PCs would need additional memory to run the premium features in Vista such as its Aero 3-D "glass" interface, according to data gathered by the Toronto technology reseller from more than 112,000 PCs at 472 businesses and organizations. "Generally speaking, any computer older than 24 months will be unlikely to support the Vista OS," read the soon-to-be-published report.

That's why companies such Sasfin and FranklinCovey Co. are such rarities. To get all 750 of its PC-using employees onto Vista next year, the Salt Lake City time management products maker plans to add RAM to about two-thirds of its PCs while replacing the rest, according to Dan See, director of infrastructure at FranklinCovey.

But even that company, which participated in Microsoft's Technology Adoption Program (TAP) for Vista, has its limits. See has no plans to upgrade the video cards in existing computers, which he acknowledged might prevent employees from taking advantage of the Aero interface. "The video features are nice, but the expense of updating all of the video cards is prohibitive," he said.

Some companies are moving forward on Vista to stay ahead of the pack.

"As soon as we identify a key new product, we like to be some kind of early adopter," said Sasfin's Olivier. Sasfin was part of Microsoft's TAP for Office 2007 -- though not for Vista -- and plans to move forward even faster with Office than Vista.

Others are doing so merely to stay current with their peers. "I can tell you that we will deploy Vista in some of our desktops right away," said Russ Donnan, CIO at Kroll Factual Data Inc., a business information services provider in Loveland, Colo. "The reason? Because some of our customers will."

Copyright © 2006 IDG Communications, Inc.

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