Windows XP forever? The OS that just won't die

Microsoft has a problem on its hands. Or more precisely one problem with three seemingly contradictory components:

1. Windows XP is too good for its own good.
2. It needs to die for the company's sake.
3. It won't die because nothing else -- not even Windows 7 -- currently approaches it.

We're closing in on eight years since XP first hit the market and began the long process of making us finally forget we ever used Windows 95, 98, and Windows Me. By anyone's standards, it's been one of Microsoft's most visibly successful products. It still runs on some 60% of all PCs years after it was supposed to have been retired as a front-line offering. It's sold around 800 million copies since its initial release. And if piracy is the sincerest form of flattery, hundreds of millions more illegal copies are in use across the globe. In an age where icons are in desperately short supply, this is as iconic a product as it gets.

Dragging on the future

The problem with XP is this: The longer it sticks around and continues to tug at the heartstrings of end-users and corporate IT decision-makers alike, the bigger a drag it becomes on Microsoft's bottom line. For a company accustomed to earning triple-digit revenue from every OS it sells, Microsoft can't be pleased with the paltry $30 or so it makes from each retail sale of XP. Although Microsoft obviously recognizes that $300 netbooks and $400-to-$500 mainstream laptops mean the good old days of high margin OS sales are over, it still wants us to add Windows 7 to our wish list to continue to drive its Windows revenue stream, albeit at a reduced rate.

Unfortunately for Microsoft, buyers don't seem to have latched on to the need to upgrade. If it ain't broke, the saying goes, don't fix it. And XP ain't broke by a longshot, so cost-sensitive consumer and enterprise buyers don't have much incentive to make the jump just yet. Like Vista before it, they'll get a new OS when they buy new hardware or refresh their client environments. But as long as they're either filing for unemployment benefits or laying off workers, new hardware won't be their top priority. Even if they're still gainfully employed, upgrading will take a back seat to keeping their heads above water.

Increasingly, a marginally more capable new technology platform is seen as a want and not a need. As good as Windows 7 seems to be, Microsoft needs to convince the rest of the world that it offers more than a marginally better value proposition for recession-weary buyers.

Good enough is good enough

Microsoft's value proposition for Vista -- more features, more capability -- was hatched when market conditions were significantly more positive than they are now. The message has fallen largely flat in an era when consumers are increasingly questioning whether bigger really is better. The positioning of Windows 7 as a leaner and meaner alternative that plays just as nicely with low-end netbooks as it does full-on workstations is designed to make us forget about the company's missteps in positioning Vista as the heir apparent. But in doing so, Microsoft has prompted a growing realization that it already has such a lean-and-mean, all-things-to-all-people product, and it's called Windows XP.

XP is a good enough operating system that despite early deservedly rave reviews of Windows 7 (and positive comments from Betanews), many friends and colleagues with whom I associate are quietly ignoring Windows 7, and hoping to stick with XP for as long as their current hardware holds out. If the Windows franchise has had a backbone through the somewhat stomach churning Vista era, XP has been it. It's not a product that will go quietly into the night.

Despite XP's position at the center of Microsoft's OS universe, though, it isn't immune to long-term reality. At some point, every OS fades from the landscape. Just last week, the ancient Compaq Contura 486-based laptop with the glorious trackball that I had been using as an occasional note-taking machine finally bit the dust, and the era of DOS 6 and Windows 3.1 came to an end for me. As ancient as this OS platform was, it just worked, and it fit the relatively simple needs that surrounded its continued, if dusty, existence.

Is XP Microsoft's saviour?

Windows XP isn't nearly so dusty, so it's infinitely more capable than my admittedly Pre-Cambrian Windows 3.1-based machine of existing on its own in a home or office setting in the absence of anything newer. It connects to the Internet, corporate network resources, and a large enough cross-section of PCs and peripherals. With a bit of administrative oversight to ensure all the latest patches, fixes, and updates are applied, it's relatively secure, too. And unlike most versions of Vista, XP runs nicely on all that older hardware still hanging around because recession-challenged end-users and IT shops believe they're too budget-challenged to replace it.

It's also given Microsoft critical momentum in the hardware industry's sole bright spot: netbooks. Microsoft may not enjoy sitting in the cheap seats, but XP's stopgap save in this market kept the Windows brand visible -- and relevant -- until Microsoft could come up with a longer term solution. If anything, someone owes XP a thank you.

We're barely a couple of months away from general availability for Windows 7. Even then, it'll take months before we know how successful it is. Microsoft's betting the company on this new OS because it has no choice. If it can't keep folks buying new versions of Windows, it'll need to find a new business to replace it, and fast. But the overwhelming success of its legacy XP brand, coupled with the market's newfound focus on frugality and sensibility, could derail this plan before it even gets off the ground.

The value proposition for Windows 7 needs to be compelling enough to get the legions of Windows XP users convinced that good enough is no longer good enough. That's easier said than done, and given XP's cockroach-like survival skills, it's anybody's guess as to whether Microsoft will be able to pull it off.

Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.