Microsoft's Vista OS delayed until January 2007

March 22, 2006

Late yesterday, Microsoft announced that it would delay to at least January 2007 its long-awaited Windows Vista operating system. The decision will mean that personal computers with the new Vista OS won't be available until January of next year.

In a prepared statement, Microsoft said it will speed up development of the operating system in 2006 and make it available to a few volume-licensing customers around mid-Q4.

Nevertheless, Microsoft stated that a delay of a few weeks in Vista's schedule meant that some PC makers would be able to launch this year and others would not.

As a result of this latest move, Windows chief Jim Allchin said Microsoft is delaying its massive launch of Vista until the beginning of next year.

"We needed just a few more weeks, and that put us in a bubble...where some partners would be impacted more than others," Allchin said during a Tuesday afternoon conference call with reporters and analysts.

The delay is the latest setback for Vista. Microsoft scaled back several key features of the operating system last year in order to try to ensure a 2006 release. The operating system, which has been in development for years, was delayed by, among other things, the fact that Microsoft had to put so much time and testing effort into Windows XP Service Pack 2, a largely security-oriented upgrade to the current version of Windows.

Tuesday's delay in the release of Vista wasn't supposed to happen. In 2004 Microsoft specifically removed a key ingredient, called WinFS, from the new operating system so that it could assure PC makers of delivery of the OS for the crucial holiday selling season.

Allchin said that although PC makers were not universal in wanting the delay, there were concerns from some companies that they could not ensure a holiday quarter launch if Microsoft pushed back its development schedule even slightly.

Analysts have been warning that Microsoft's schedule left little room for error if it was to make a fourth-quarter launch.

As recently as January, Allchin expressed confidence that Microsoft would make its deadline, although he reiterated his caveat that quality issues could lead to a postponement.

The delay would likely hurt retail PC vendors the most, said Stephen Baker, vice president of industry analysis at NPD Techworld.

Dell, which sells most of its PCs directly, could probably handle a delay of a few weeks without too much trouble. Hewlett-Packard and Gateway, on the other hand, have to have their PCs ready for retail partners weeks ahead of when they will actually go on sale, and can't change gears as quickly, he said.

"It scares you," Baker said, when asked about the impact of the delay on fourth-quarter PC sales. The PC industry's largest quarter of the year always comes around the holiday shopping season, and expectations were high for that period this year, given the expected introduction of the new operating system.

Microsoft does not expect the move to affect this year's overall PC sales, Allchin said.

"There's no (change) to the PC forecast from our perspective," he said. "You can ask the partners what they think."

Allchin also said the product will still launch in the same earnings period for Microsoft, whose fiscal year runs from July to June. That means Microsoft's overall business for next year shouldn't be affected, he said.

Allchin said some of the additional time would be used to ensure security levels, and the company is also working on ironing out usability issues.

"We're trying to crank up the security level higher than ever," Allchin said. "This came down to a few weeks. We're trying to do the responsible thing here."

Microsoft released its most recent test version of Vista in February. Late that month, the company also announced plans for six distinct editions of the operating system.

Allchin said Tuesday that Microsoft still plans next quarter to launch a broader test version of Vista, with the new version to be tested by about 2 million people.

Microsoft had hoped to have a massive marketing push around Vista and Office 2007, which is slated for the second half of this year. It is not immediately clear how the delay will affect those plans.

Allchin, whose official title is co-president of Microsoft's platform, products and services division, is slated to retire later this year.

Source: C-Net News

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