XP Uptake

With the launch of Windows XP in October last year, Microsoft promised users the best PC experience ever. Analysts were not so sure however, with concerns voiced over hardware requirements and software compatibility. But has Microsoft’s latest offering been selling? ITP.net’s XP user survey tried to find out.

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By  Mark Sutton Published  June 9, 2002

Windows 98 - a tough act to follow?|~||~||~|When Microsoft launched its latest Windows operating system last year, it was released into a market that did not seem likely to be rushing to embrace the new OS any time soon. The software vendor was facing hostility over potentially costly changes to its licensing programme, corporate budgets were reeling from the poor economic climate, and few analysts could see much benefit in what was seen as exclusively a consumer upgrade. Adding to this resistance was the fact that XP requires a fairly high-end PC system to run properly, meaning hardware upgrades for many, and the future did not look too bright for XP.

But the success of XP is vital to Microsoft. Not only does the company need good licensing sales of XP, to offset declining revenues from other areas and massive expenditure on XBox, but as one of the first components of .Net, XP is an essential launch pad for the company’s wider software vision. All the stops were pulled out to launch the OS, and the response so far from the region looks positive, both according to end users and the channel.

The ITP.net survey of end users received responses from 266 companies. Respondents were from a number of industry sectors, as well as government and education sectors, and covered a range of scale from SMBs to 500-employee plus enterprises. In terms of operating systems deployed, by far the most common system in use in the region is Windows 98, with 41% of organisations reporting that they are still using it. The enduring popularity of Windows 98 is due to a number of factors. Gartner research director Michael Silver said that the number of Windows 98 users in the Middle East is quite high compared to the rest of the world, where Windows 95 is still found in many workplaces, a factor he attributed to the superior Arabic support found in Windows 98.

The success of Windows 98 can also be attributed to a lack of compelling reasons to buy later versions of the operating system according to Frances Furtado, software business unit manager of Tech Data. “There wasn’t much interest in ME or 2000, they did not get picked up much,” she said. “98 sort of stuck because it was the most stable of all Windows.”

Distributors report that Windows 98 has continued to sell, either to organisations that require additional licenses for an existing deployment, or to developers, although they are seeing demand begin to tail off. Demand from developers, who require a stable and established environment could be important to the uptake of Windows XP, according to Trevor D’Mello, Microsoft product manager for Logicom. He said that many developers currently regard XP as uncharted territory, but he would expect them to adopt it if a second edition is released, as happened with Windows 98.

||**||Factors effecting uptake|~||~||~|There are a number of other factors that could prove to be a catalyst to the uptake of XP, not least the discontinuation of Windows 98 at the end of June. Even without the demise of Microsoft’s most popular OS, adoption of XP is going well in the region. Around 10% of respondents had already made the switch, comparable to the percentage of respondents using Windows 2000 and NT. Microsoft and its distributors say that sales targets have been exceeded by 13% for the Gulf region, with the uptake exceeding that of Windows 98. 32% of respondents said that they planned to deploy XP within twelve months.
One of the reasons for the success of XP seems to be ease of use. “The feedback from the channel is that it is much more user friendly,” said Furtado.

The need for hardware upgrades has not caused the problems that were expected, Furtado continued, saying that many channel partners had been able to make additional sales to provide customers with the upgrades necessary to run XP at optimal performance levels. “It is a harder sell, but at the end of the day it is more business for the channel,” she said.

D’Mello said that although cross selling is tailing off, memory is still providing strong opportunities for add on sales. “Initially when it [XP] was launched, a lot of resellers started bundling memory with XP, they also bundled things like Intel cameras, VGA cards, to demonstrate the capabilities of XP,” he said. “It is still going, but it is slowing down, people are still buying memory to get the best performance.”

The fact that companies are buying hardware to get performance would certainly seem to be backed up by survey respondents, with 32% saying that rolling out Windows XP was expensive. Hardware requirements have caused problems in some markets however, particularly for retail sales. Emad Jaddo, merchandise manager for the CompuME chain of retail stores, said that while consumers in the UAE and Saudi Arabia either had up to date hardware or could afford to upgrade, customers in Egypt were reluctant to use XP if it meant hardware expenditure. “In Cairo we faced a few small issues with XP. In Dubai it has moved very well, the computers that people are installing XP on are up to date, but in Cairo it is different, what people are willing to spend on is different to here. They preferred to return Windows XP and wait for new drivers [for incompatible hardware], but even with these problems, it is still going well,” Jaddo explained.

||**||So far, so good?|~||~||~|The image of Windows XP as a consumer upgrade has also had some affect on sales. Jaddo believes this has mostly been positive, as for the consumer market, Windows 2000 had been regarded as a professional product and the uptake of ME had not been good, so home users were waiting for a consumer version to come along. After some initial education, home users bought into XP. “We had some enquiries about activation, on how many times you can activate the product and so on, but once we had made it clear to the customers, they bought Windows XP,” he said.

One trend picked up by the retailers is that more English versions of Windows are selling than Arabic. Despite the fact that both versions were available simultaneously, Jaddo said that he felt that Arabic-speaking users had gained familiarity with the English version since Windows 98, and that more non-Arabic users were buying products earlier.

In terms of satisfaction with XP, both end users and the channel report very few problems. Of the survey respondents, 63% said they were satisfied or very satisfied, with only 7% saying they were unhappy.

Distributors said that there had been very little negative feedback on the situation. “There haven’t been that many instances where we have needed to help people out,” said Furtado. “XP is relatively user friendly, in the sense that it tells you what to do, I do not believe it requires that much training, and there are lots of sales tools, installation guides, that have come out from Microsoft, and I think that has helped the channel a lot. We really haven’t had that many complaints.”

It is hard to get a clear picture of what sort of customers are buying which version of Windows XP, as Microsoft has allowed all users to buy the OEM product, which is the cheapest option on offer. Jamal Ali, sales unit manager for Mindware said: “Our first users were OEM and FPP customers. During the last quarter, sales have also seen a major increase for Open License customers. All of our corporate customers are buying XP Professional, and a large majority of the OEM and FPP customers are buying the Home edition.”

According to D’Mello, a large amount of Logicom’s XP sales have been to OEMs, who are designing their new machines specifically with enough capacity for XP. Corporate uptake was taking a little longer. “[XP] started with a consumer launch, later it filtered down to the SMBs, and then later on to licences for up to 200 users,” he said. “Over 250 users is considered enterprise, we have not yet quite achieved that, although there are some big government installations.”

Microsoft expects to see more enterprise customers take up XP soon enough. Mazen Shehadeh, Windows XP product marketing manager at Microsoft said that many enterprises are waiting for applications to be ported to XP. “It doesn’t mean they don’t want to migrate, but they have applications that they have spent thousands of dollars on, that they need to migrate,” he explained. “I see a lot of companies that have some departments on 98 and others already on XP. The move is relatively slow, but we are working on it, a lot of the big [ISV] companies are working on it, and soon we will have compatability.”||**||

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