Update: Microsoft Delays Consumer Release of Vista to January 2007

Business customers will still get the OS late this year

The broad availability of Microsoft Corp.'s Windows Vista client operating system has been pushed back to next year, Jim Allchin, co-president of the company's platform and services division, announced today.

Microsoft, however, plans to release Vista to business customers through its volume licensing program in November 2006, he said in a conference call.

In an interview in January, Allchin had said he would delay releasing Vista if the operating system did not reach a standard of quality he was comfortable with.

"Product quality and a great out-of-box experience have been two of our key drivers for Windows Vista, and we are on track to deliver on both,” Allchin said in a statement. “But the industry requires greater lead time to deliver Windows Vista on new PCs during [the holiday season]. We must optimize for the industry, so we’ve decided to separate business and consumer availability.”

Microsoft still plans to release to manufacturing all of Vista's six core editions at the same time in November, Allchin said. But PCs with the consumer versions preinstalled will not be for sale until January.

The consumer editions of Vista, which Allchin said have not changed, are Windows Vista Starter, Windows Vista Home Basic, Windows Vista Home Premium and Windows Vista Ultimate. The business editions are Windows Vista Business and Windows Vista Enterprise, and they will be available through volume licensing in November.

Allchin said during today's teleconference that Vista development has slipped by "a few weeks" because of quality issues, primarily involving security. "If I had to pick out one aspect here, we're trying to crank up the security level higher than ever," he said, adding that Microsoft is "continuing to try to hone" some of Vista's security features.

Microsoft had originally targeted late November -- the start of the holiday shopping season -- for the broad shipment of Vista-based PCs. Some PC makers and retailers told Microsoft officials that they still could gear up to start selling machines with the new operating system during the holidays, Allchin said. But, he added, others told the software vendor that the development delay would prevent them from doing so.

"We needed just a few more weeks [on development], and that put us in what I would call a bubble where some partners would be affected more than others," Allchin said. "The fact is, we want everybody in the industry to be ready for this."

Microsoft said it isn't concerned about rival Apple Computer Inc. capitalizing on Vista's delay because the company thinks customers will still buy Vista simply because of the rich features it will provide.

But at least one analyst suggested Microsoft should be worried, since the delay will have a major effect on the company's entire partner ecosystem.

"They will miss out on the lucrative holiday season, and this move will definitely slow down growth in the PC industry," Sam Bhavnani, a principal analyst at Current Analysis, said via e-mail. "The impact is far reaching and will have a significant impact on computer manufacturers, resellers and ingredient players."

Wall Street reacted negatively to the news, as both Microsoft and hardware partners Dell Inc. and Hewlett-Packard Co. shares slipped in after-hours trading Tuesday. Microsoft shares were down 64 cents from $27.74 at market close to $27.10. Dell's stock slipped 42 cents from $30.27 per share to $29.85, and HP's stock slipped 54 cents from $33.54 to $33.00.

Financial analysts noted that the news will force hardware partners that were expecting a holiday surge from Vista PC sales to revise their financial expectations.

Microsoft is on target to release another Community Technology Preview of Vista by the end of June, a completion of the Beta 2 process of the operating system, Allchin said. At this point, Vista is already feature-complete, and any tweaks made to the operating system before its final release will be for quality, he said.

"It’s not new work that we’re adding," Allchin said. "It's simply ... [work in] continuing to make this the most safe and secure system that’s ever been."

For most companies, this slip will not be an issue because it will take them 18 months for testing and planning before they can start deploying Windows Vista anyway," said Michael Silver, an analyst at Gartner inc. "Companies should have been planning for 2008 deployment anyway.

"Microsoft could slip the business editions into 2007 without a big impact on what most companies would do, and that’s certainly possible," Silver said. "The Home editions were really the more important ones to get out this year. Once they miss Christmas, slipping again has fewer ramifications."

Microsoft said Vista's delay doesn't affect the release of Internet Explorer 7 for Windows XP in the second half of the year. IE 7 will ship as a feature of Vista, and Microsoft had said the version of IE 7 for XP was to be released at the same time as the operating system.

Computerworld's Craig Stedman and carol Sliwa contributed to this report.

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