Microsoft's looming Windows 7 licensing 'disaster' for XP users

Windows 7, due to ship on Oct. 22, has gotten good reviews as the OS that Vista should have been. And the large percentage of businesses that have held onto XP rather than go to Vista— about half, according to Gartner—are no doubt planning to migrate to Windows 7. But Microsoft may be making it harder and costlier for them to do so, notes Gartner analyst Michael Silver. "It's a disaster waiting to happen," he says.

 

 Under Microsoft's planned enterprise licensing rules, businesses that buy PCs before April 23, 2010, with Windows 7 preinstalled can downgrade them to Windows XP, then later upgrade them to Windows 7 when they're ready to migrate their users. But PCs bought on or after April 23 can only be downgraded to Vista—which is of no help for XP-based organizations, Silver notes— and could cause major headaches and add more costs to the Windows 7 migration effort.

 

Microsoft's PR firm told us, "It looks like Microsoft hasn’t made any announcements around timing for downgrade rights from Windows 7 to Windows XP yet." But Microsoft has discussed the six-month limit with Silver multiple times and characterized it to him as a "public" policy. The policy is also clearly visible in a Microsoft PowerPoint slide.

 

Both Forrester Research and Gartner advise clients to wait 12 to 18 months after Windows 7 ships before adopting the new OS, so they can test compatibility of their hardware and software, as well as ensure their vendors' Windows 7 support meets their needs. But Microsoft's six-month downgrade restriction for XP means that the businesses that chose not to install Vista have to rush the migration process. Or they can spend extra money and enroll in Microsoft's Software Assurance program, which then lets them install any OS version at the price of the extra yearly fee (about $90) per PC. "Microsoft will probably get more money out of [this policy]," Silver says.

 

For businesses not willing to pay extra for the Software Assurance program, Silver sees real headaches coming, which ironically could slow the adoption of Windows 7 by XP-based businesses. Organizations could buy more PCs than needed by April 22 to essentially stock up on XP-downgradable Windows licenses, but that distorts their purchasing costs. Or they could buy PCs as needed after April 23 and either live with Vista or Windows 7 on them—perhaps allocating those systems as test units instead of regular production systems—or buy XP licenses from retailers that still have them in stock. Tracking which PCs have which downgrade rights in IT asset management systems, though, "will be difficult," Silver notes. "Microsoft has made a real mess."

 

"Users need to say this policy doesn't make sense," Silver advises, and try to convince Microsoft to change it. Consumer pressure has worked to sway Microsoft licensing policies before; notably, businesses' strong resistance to Vista caused Microsoft to extend the availability of Windows XP several times in various forms.