Friday May 9, 05:44 AM

AnalystWatch: PC Makers Extend XP Life as Vista Looms

Rhonda Ascierto, Datamonitor analyst

In April, the world's top three PC makers announced they would exploit a loophole in their contracts with Microsoft and extend the availability of Windows XP operating system for as long as one year past Microsoft's deadline to discontinue the software.

Businesses will not be forced to include Windows Vista in their desktop management strategies this year, despite Microsoft's plan to officially retire its predecessor Windows XP on June 30.

In April, the world's top three PC makers, Dell, Hewlett-Packard, and Lenovo said they would enable customers to continue to buy custom-built PCs pre-installed with XP Professional long after Microsoft's deadline passes.

Dell and HP will sell new XP notebooks, desktops and workstations until at least July 30, 2009, while Lenovo will extend XP on its ThinkPad notebook line through the end of January.

Dell "has the ability to exercise "Windows Vista downgrade rights" on your behalf in the factory if...you'd prefer to have Windows XP Professional preinstalled on your PCs," said the PC maker. Customers must choose to "downgrade" in order to get XP, in accordance with complicated terms set forth by Microsoft that PC makers must comply with.

Enterprises must choose a "Vista Business Bonus" when they order their PCs and then request XP be installed. There is no risk for businesses that may want to upgrade to Vista at some future point; they will still receive a copy of Vista on a backup DVD.

And for businesses that are part of Microsoft's Software Assurance program, it doesn't matter what type of operating systems they run. HP said it would also sell XP through field downgrades to customers that have already bought pre-installed Vista machines.

Downgrade rights, which extend to volume licensing customers, have long been a standard option for PC buyers. Downgrade rights are typically mundane, but have recently risen to prominence because of customers' widespread dissatisfaction with and reluctance to deploy Vista. Since the release of Vista Business in November 2006, enterprises and mid-sized businesses have mostly piloted the operating system in limited trials.

Part of the problem was that Vista was such a major overhaul from XP that customers needed to extensively test application compatibility and other factors before large-scale mainstream deployment. Businesses and consumers that have upgraded their desktops to Vista have complained of glitches and compatibility problems, as well as a lack of Vista drivers in new machines, which means they could not take advantage of some Vista features.

Moreover, Vista lacked any vastly improved features or functionality over XP, which meant many businesses were not compelled to move from the relatively stable XP platform to Vista.

While XP downgrade rights will give some respite to businesses unwilling to install Vista, it seems unrealistic they will be able to wait until Windows 7 is released and bypass Vista altogether. For one thing, new PCs are likely to ship with more Vista drivers and fewer XP drivers, which means businesses may not be able to exploit XP features to their fullest.

Also, no details about Windows 7 have been made available and no one knows when it may be released. Vista was, after all, released five years after XP debuted, the longest pause yet between Microsoft operating systems. There also is no guarantee Windows 7 will be significantly more stable or have considerable improvements over Vista.

Microsoft has announced that it will stop distributing XP to manufacturers and retailers after June 30. However, Microsoft chief executive Steve Ballmer has hinted that XP's life may be extended if there was a groundswell of demand.

"If customer feedback varies, we can always wake up smarter, but right now, we have a plan for end-of-life for new XP shipments," Ballmer reportedly said at a press conference in Belgium late last month.

But whether a sufficient number of customers are vocal enough to keep XP alive remains to be seen. Microsoft claims it has so far sold about 140 million licenses of Vista, in line with its forecasts. However, when customers choose to "downgrade" to XP, the PC is still counted by Microsoft as a Vista sale; it figures the option to upgrade to Vista is merely unused.