Is Windows 7 Just a Vista Service Pack?

The folks at Pacific Crest Securities are at it again, talking about the implications of Microsoft’s (MSFT) forthcoming Windows 7 operating system. Monday, the firm’s analysts produced a massive report noting improvements of the software and implications for the Netbook market and for chip and computer makers.

Survey says…
Tuesday, Microsoft analyst Brendan Barnicle has written up the results of a panel call that Pacific Crest conducted Monday regarding impressions of Windows 7. Barnicle talked with 3 analysts who follow Mr. Softie’s products: Joe Wilcox from Microsoft Watch; Ed Bott from ZDNet; Paul THurrott from Paul Thurrott’s SuperSite for Windows.

Barnicle says all three “viewed Windows 7 as an improvement over Vista because of functionality, interface and lack of demanding new hardware requirements.”

Sinofsky’s running the show…
Barnicle has some interesting ancilliary findings. The accelerated pace of release of Windows 7 is because of the “new management team running Windows,” he declares, including Steven Sinofsky, who Jim Allchin leading the engineering team, and who was the star engineer of the Office product group for a while. Sinofsky “has done a very good job of running a disciplined engineering operation and he is largely choosing to exclude Windows 7 features that would knock Windows 7 off its timeline.” Wow, they really want to get this thing out the door.

A service pack?
But what is Windows 7, exactly? A service pack for Vista? Well, yes and no, says Barnicle in a phone call I had with him Tuesday afternoon. “This is an evolution of Vista rather than a revolution,” says Barnicle. In his opinion, many of the things they chucked from Vista are showing up in Windows 7. Hmm. Sounds like a service pack.

Will it sell, and for how much?
Call it what you will, what matters is how many copies Microsoft will sell and for how much. Barnicle thinks the price when sold on Netbook computers will be more expensive than the current Windows XP Home Edition cost of $25, on average, but still less than the blended five-year average price of all Windows licenses, which is $50. So, he’s guessing Microsoft will sell it for as much as $35. A higher ASP means Netbooks are going upmarket, basically cannibalizing the existing laptop market. And that’s good, if demand turns out to be price-elastic and people buy more computers. Barnicle estimates that if the industry sells 28 million Netbooks running a $35 copy of Windows, it could add 2 cents per share to Microsoft earnings in fiscal 2010.

Copying the Apple business model
Why is Sinofsky and his team apparently in such a heat to get this thing out the door? “I wonder if this becomes more of a practice for Microsoft, of releasing a new OS once every year to 1.5 years,” muses Barnicle. “Apple (AAPL) has been doing this for a long time,” he notes. “80% of Apple’s installed base upgrades to a new version [of the OS X operating system] every year and a half.

“If Microsoft could get that model in their installed base, the payoff would be enormous,” concludes Barnicle.

Indeed.

Microsoft shares Tuesday were up 26 cents, or 1.46%, at $18.09.

Comments

[numberoneoppa:]

These guys are idiots. Windows 7 is going to be running off of the new NT 7.0 kernal, whereas Vista was on the NT 6.0 kernal. People who think it's a service pack have no idea what a service pack is. Windows seven will have a similar, but refined GUI, and will be less resource intensive. Expect sales (and pre-sales) for Windows 7 to be very high once reviews start coming in for it during later beta stages. Myself and others who have tested build 7000 (current public beta) all agree that thus far Microsoft has definitely taken some steps in the right direction with 7.

Feb 03 03:53 PM

[bigmoney:]

supposedly Windows 7 can run on low power netbooks whereas Vista was too heavy. Right now, people tend to run Windows XP or Linux on their netbook.

Feb 03 05:50 PM

[driftwood2:]

"Is Windows 7 Just a Vista Service Pack?" No because service packs from MS have been so unimpressive for years. I do agree with you that it's a very modest upgrade. Think of it as Vista 1.1

Feb 03 06:25 PM

[1 of 4:]

I've heard reviews on the radio for Windows 7 and they were saying it is the best Windows since NT2000. It's what Vista should have been. Based on that, I'm holding off a laptop purchase until it's available.

Feb 03 10:58 PM

[Mac'em X:]

On Feb 03 03:53 PM numberoneoppa wrote:

> Myself and others who have tested build 7000 (current public
> beta) all agree that thus far Microsoft has definitely taken some
> steps in the right direction with 7.

Myself am looking forward to it!

Feb 04 09:28 AM

[Dave Williams:]

Windows 7 is so different from Vista in every way. It's a totally different foundation. Idiot analysts. Consult a geek. Read my blog! Heck, try it before you open your trap and speak nonsense.

Feb 04 09:45 AM

[Maxi:]

I have used Windows 7 and I can tell you its by far the best Operating System from Microsoft. Its quick, easy, stable and secure. Microsoft has almost shut their critics.

Feb 05 05:54 AM

[doctorwho92:]

No, The NT 7 kernel, which was being written from the ground up, was dropped. W7 uses a kernel almost identical to Vista, and in fact what IS coming out as Windows 7 was referred to inside Microsoft as v6.1, because it has basically the same the kernel, and the same API's, so yes, it is a Service Pack. Not that that is a bad thing. Apple's been charging for Service Pack's for years.


On Feb 03 03:53 PM numberoneoppa wrote:

> These guys are idiots. Windows 7 is going to be running off of the
> new NT 7.0 kernal, whereas Vista was on the NT 6.0 kernal. People
> who think it's a service pack have no idea what a service pack is.
> Windows seven will have a similar, but refined GUI, and will be less
> resource intensive. Expect sales (and pre-sales) for Windows 7 to
> be very high once reviews start coming in for it during later beta
> stages. Myself and others who have tested build 7000 (current public
> beta) all agree that thus far Microsoft has definitely taken some
> steps in the right direction with 7.

Apr 30 11:46 AM