It's a Case of Out with the New, In with the Old at Microsoft

An article in Computerworld (though it comes via PC World) says that Microsoft will see increased Windows XP sales in 2008 than in 2007, even though Vista is available:

During a conference call with analysts following the earnings results release Thursday afternoon, Chief Financial Officer Chris Liddell said the company has changed its fiscal year 2008 forecast from an 85/15 split in sales between Vista and XP to a 78/22 split. Windows XP sales will, in other words, be nearly 50 percent higher in the next 12 months than Microsoft had estimated earlier.

Alright, so it's not that Vista is going away, or even that it's selling less than XP. But this really is an astounding situation for the company. It's continuing to set aside revenue into the "unearned income" category for the year because of "undelivered elements." That translates into having to ship unannounced upgrades and enhancements to Vista. Another way of saying that, I think, is that Vista has too many problems and gaps, which shouldn't surprise if you've followed stories about the product, or even know someone who has shifted to it.

Microsoft is planning to stop selling XP to resellers and retailers after the end of next January. What does this all say about Vista specifically, and the software business in general? The industry is on a painful tredmill. They sell products, which probably don't really need to be replaced for years, and then keep adding new features that few people ask for and create new file formats to make older versions obsolete. This is why Microsoft and other companies are trying to push software as a service - not because it's good for customers, but because they're trying to get themselves out of the pricing jam they've been in for a good 20 years and get people locked into a leasing model. There you know customers will be regularly paying money.