Windows 7 Product Strategy Unveiled

Microsoft on Tuesday described its product lineup plans for its forthcoming Windows 7 operating system launch, expected in early 2010 or possibly earlier. The so-called stock keeping unit (SKU) strategy held little surprises. It reflects a similar plan executed with Windows Vista, Microsoft's current flagship operating system.

The SKU strategy for Windows 7 likely will provide upselling opportunities for Microsoft, which will offer at least six versions of the OS. Microsoft didn't release any pricing information with its announcement.

Microsoft did tell veteran Microsoft observer Mary-Jo Foley that Windows XP users will be able to upgrade to Windows 7 without paying the full price. However, XP users will have to perform a clean install of Windows 7.

In general, Microsoft envisions two choices. For consumers, the company will offer "Windows 7 Home Premium." For businesses, the OS choice will be "Windows 7 Professional." In the latter case, the upgrade path will be from Windows Vista Business, according to a Microsoft-published Q&A.

Microsoft plans to offer a "Windows 7 Enterprise" edition to its Software Assurance customers only. The enterprise edition will support "advanced data protection, lower cost compliance and IT tools to streamline PC management," according to Mike Ybarra, Windows general manager at Microsoft. The enterprise version won't be available from OEMs or retail outlets, he said.

Microsoft also plans to release a "Windows 7 Ultimate" edition for enthusiasts who want a full-featured OS, including BitLocker, Microsoft's encryption feature for hard drives.

For its channel partners around the globe, Microsoft plans to let its OEM partners preinstall copies of a Windows 7 "Starter" edition on new PCs that have the right hardware. Microsoft also plans to serve the low-cost end of the market with a "Windows 7 Home Basic" edition, but Home Basic is just intended for distribution in emerging markets.

The Home Basic brand carries some negative connotations for Redmond. Microsoft is currently being sued over its "Vista Capable" program involving the "Home Basic" edition of Windows Vista. While Vista Home Basic worked on new PCs at the time, it couldn't run Microsoft's Aero graphical user interface promoted in Vista marketing. Legal discovery in the case has brought forth internal Microsoft memos suggesting that Intel failed to get its graphics engine ready in time to run all of the features in Vista.

Finally, Microsoft is heavily suggesting that Windows 7 will be capable of running on netbooks, which are smaller notebooks that typically use lower cost hardware components. Currently, netbook vendors sell them running a version of the Linux operating system or Windows XP.

Since netbooks typically lack state-of-the-art hardware, running Windows Vista on them hasn't been an option. However, that picture could change with Windows 7, according to Brad Brooks, Microsoft's corporate vice president for Windows consumer product marketing.

"With Windows 7 we are on track to have a smaller OS footprint…faster boot-up and shut-down times…[and] improved power management," Brooks said in a Microsoft-issued interview.

Brooks suggested that Microsoft is snatching away the netbook market from Linux vendors, based on new sales. He said that "since February 2008, Windows OS share [of the netbook market] has gone from 10 percent to over 80 percent on these machines."

Microsoft blamed some of its poor fiscal second-quarter earnings results on netbook sales. In December, Bill Veghte, Microsoft's senior vice president for Windows business, had said that netbooks were partly "cannibalizing" Microsoft OS market share. However, Microsoft expects to see a high demand for netbooks continuing this year.

Brooks cited stats from research firm IDC suggesting that the netbook market will grow from 11 million units in 2008 to 42 million units by 2012.

Microsoft's Windows 7 netbook discussions seem a bit premature. According to Ybarra, Microsoft has still not specified guidance on the hardware requirements for netbooks to run Windows 7. Brooks suggested that Moore's Law will prove favorable to consumers on the hardware side of things. Netbooks are currently being produced with "enhanced capabilities…at the same price points," he claimed.