Is Microsoft set up for failure with Windows 7 and Office 2010?

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Opinion – Ok, let’s be realistic. It can’t get much worse for Microsoft than Windows Vista, which exposed the vulnerability of Microsoft’s most important product. And it is easy to understand Microsoft’s enthusiasm for the new Windows 7. But Microsoft almost seems to be too cocky about its outlook and it may be way too confident about its companion, Office 2010. Will Microsoft screw this one up as well?

Oh boy, I can already imagine the fan mail I will get over this article. But before you flame me, hear me out and, if you like, share your opinion below.

Let’s talk about Windows 7 first. Earlier today, we were told that Microsoft expects to sell 177 million copies and licenses of Windows 7 by the end of the year, which is a pretty substantial number, given the fact that we are still in a pretty calm PC market that only sees shipments of netbooks growing. Windows 7 has about six months of sales this year (including the current pre-sales; the software will be officially available on October 22.) and getting about 30 million copies out the door every month is a stunning figure, even if we know that Windows 7 is dominating the current software sales charts.

I recall that Windows Vista was not nearly as successful. About one year ago, and more than 21 months after Windows Vista had gone on sale, Microsoft said that 180 million Vista licenses were sold.

Today we know that Microsoft was not exactly happy about the Vista sales performance and actual sales numbers are rare. In late October of 2007, or just after the 1-year sales anniversary of Vista, Microsoft said that it had sold 88 million copies plus an additional 40+ million licenses, which adds up to about 128 million units total. Nine months later, Microsoft apparently has sold an additional 52 million units total, indicating a pace of just 5.8 million copies and licenses per month between October 2007 and July 2008. Microsoft says that there are currently 246 million Vista PCs in the market, which means that the company has sold about 86 million Vista copies and licenses within the past 12 months. So, can Microsoft get us excited enough to buy 177 million Windows 7 copies and licenses in 6 months. It may, but I am not so sure: In effect, Microsoft believes that Windows 7 will sell four times as well as Windows Vista.

Today we heard from ScriptLogic , a desktop and server management company, that 60% of companies do not share Microsoft’s enthusiasm for Windows 7 and choose not to upgrade to the new operating system. That, of course, is somewhat reminiscent of what Microsoft called a schizophrenic research report from Forrester, which claimed about one year ago that less than 9% of corporations were actually using Windows Vista. According to the ScriptLogic study, 60% of companies in a survey said that they will not be moving to Windows 7 in the near future. 34% said they may use Windows 7 by the end of 2010.

What about Office 2010? The big news here is that Microsoft is going after Google with free, lightweight browser versions of its core Office. It is necessary for Microsoft to follow Google into the cloud, but I wonder if that will be enough. Sure, Microsoft may not have said much about Office 2010 yet, but looking at Microsoft’s product announcement history, the information provided today was very thin – and first reports indicate that Office 2010 may be a solid upgrade, but it won’t be the revolutionary product the company may need.

So, we have a huge sales forecast that may be tough to keep on the one side and an underwhelming Office 2010 on the other. Is Microsoft setting itself up for failure again? Quite possibly.  

Wolfgang Gruener is the founder of TG Daily. The opinions expressed in this commentary are solely those of the author.