Believe it or not, I have been to the launch of every version of Microsoft Windows. Some have been spectacular, like the Windows 95 launch in Seattle that featured Jay Leno, and the launch of the first Windows in New York City, which offered something of gala-like atmosphere. The New York launch of Windows XP, on the other hand, occurred just after the September 11th attacks, and was, not surprisingly, comparatively subdued.
I wasn't sure what to expect when I flew to New York City two weeks ago to attend the Windows 7 launch. The event, it turns out, fell somewhere in the middle. It wasn't as flashy as the Leno event, but it was a lot more upbeat than the Windows XP launch. My colleagues at PCMag covered the event extensively, but I wanted to weigh on something that the media missed in the shuffle.
As you're likely aware, two major surprise factors have impacted the PC industry in the past two years. The first was introduction of the netbook in the fall of 2007. This new space has been a boon for the industry in terms of sales figures, but the devices' pricing has had a devastating effect on PC vendors. While netbooks aren't designed to meet all of the needs of a standard laptop, they're great for a number of users, and as such, have sold extremely well.
As a result, however, netbooks are changing consumer expectations about what a standard laptop should cost. The industry has responded by dropping the price of notebooks down by as much as 40 percent over the last 18 months. That means that vendors have to increase PC sales by 25-35 percent just to maintain their revenue levels from two years ago. Margins have also been reduced, and bottom lines and overall profitability have suffered as a result.
The second major factor that has impacted the industry is the recession. In October 2008, consumer began buying less, and the purchase of a new PC became a luxury. The worldwide demand for PCs shrunk by as much as 13 percent. Business users and consumers hunkered down and tried to squeeze as much as they could out of their current systems. Twenty-five million fewer PCs were sold in 2008 than in 2007.
With these factors in place, Windows 7 couldn't have arrived at a better time. Windows launches have always been important to both Microsoft and PC vendors, but this latest version of the OS offers the potential to increase the wavering demand for new systems and revitalize the declining PC market. As one executive from a major PC manufacturer put it, this time "Windows really matters."
At present, most market researchers foresee a 12 percent growth in the PC market, thanks to Windows 7. And while consumers will no doubt be the first to adopt the new operating system, Gartner Research predicts that 15 percent of enterprise users will be running Windows 7 next year. Considering that enterprise demand for PCs has declined 17 percent since Oct of 2008, this jump seems to indicate that business are loosening their purse strings.
So, Windows 7 does, in fact, matter. But for how long? At the moment, we live in a client/server world, so the operating system will likely matter on the enterprise level for some time. On the consumer level, the availability of thousands of Windows apps for PCs may well help this dominant OS live on as well. But as always, the world of technology is changing, and as such, it's possible that this may be the last major version of Windows to come out.
There are two things occurring in the space that will eventually force Microsoft to transform Windows. If you follow Apple at all, you're aware that it rarely completely reboots its operating system. Instead, the company largely relies on version upgrades. So, while Leopard was a big release, Snow Leopard, the latest version of OS X was more of a features upgrade. But really, even Leopard was considered something of an extension of its predecessor, Tiger. Apple found that this method is ultimately less disruptive to Mac owners. To some degree, Microsoft also issues smaller OS updates in the form of service packs. But it wouldn't surprise me to see the company head even more in that direction, focusing on more "gentle" releases, adding extra features instead of constantly pushing major upgrades.
Google's Chrome browser and OS may also shape future iterations of Windows. We have been playing with the browser version Chrome for some time now and are beginning to understand how it will evolve into a full-blown operating system, delivering direct calls to the CPU and system BIOS, controlling PCs in much the same manner that traditional OSes do today.
The Chrome OS will be tied to other Google apps in a manner similar to approach that Apple takes with OS X and its iLife suite. When you buy a Mac, it comes loaded with OS X and a number of Apple products, including iTunes, iPhoto, and iMovie. Web-based operating systems will approach personal computing in a similar manner, controlling the user interface and system commands, while still tying everything to the cloud. The company's online apps will be integrated into this environment.
Microsoft understands this approach, and is already moving in that direction. The company has started offering free versions of its software. Given Google's push toward a cloud-based OS, I'm convinced that Microsoft will eventually do something similar with Windows.
With these factors in play, Win 7 may end up being the last major Windows release. Next time out, the OS may be much more focused on the cloud. Like Google's Chrome, such a release would likely be free. Over the next few yeasr, Microsoft will have to figure out how to make money from cloud-based services, rather than from selling the operating system outright. In order to do this, the company will have to reinvent itself—something that will have to happen if Microsoft is going to survive and thrive in the future.