Microsoft Bails Out The PC Market

Forbes.com ^ | 01.07.03, 7:00 AM ET | Lisa DiCarlo

[Redcloak]

Software
Microsoft Bails Out The PC Market
Lisa DiCarlo, 01.07.03, 7:00 AM ET

NEW YORK - This summer, millions of businesspeople will be upgraded against their will. And no, we don't mean their flight plans.

Microsoft (nasdaq: MSFT - news - people ) will officially end technical support for Windows 98 and Windows NT 4 on June 30. The financial implications for Microsoft and others could be significant, even in the short term.

		More on Microsoft
		Tear Sheet   400 Best Big Cos

Pacific Crest Equities estimates there are 300 million PCs worldwide running these older operating systems--195 million in corporations and 105 million in homes.

Pacific analyst Brendan Barnicle believes that 25% of these enterprise customers and 17% of home PC buyers will replace their systems in the first half of this year, leading him to raise his earnings-per-share estimate for Microsoft's fiscal third quarter, which ends March 30, by 2 cents, to 49 cents. Consensus estimate for the quarter is 47 cents per share.

Barnicle also estimates that 150 million users are running older versions of Microsoft Office, which will not work well with newer versions of Windows. A massive upgrade of Office would be a boon to Microsoft, since at times it has been the most profitable product the company sells. The phaseout is within Microsoft's usual support framework.

Barnicle is optimistic about a relatively swift corporate upgrade cycle, since "an organization's livelihood might depend" on running the latest software, he says.

Microsoft will announce its fiscal second-quarter numbers on Jan. 16. In October, the company said to expect sales of $8.5 billion to $8.6 billion, up from $7.7 billion in the year-ago quarter.

Corporate and home users will not be forced to upgrade to new PCs--they can run old software on old PCs as long as they want--but the lack of technical support, including patches and upgrades, should spark the replacement cycle.

PC companies, such as Dell Computer (nasdaq: DELL - news - people ), Hewlett-Packard (nyse: HPQ - news - people ) and ailing Gateway (nyse: GTW - news - people ), would benefit from a new cycle, as would Intel (nasdaq: INTC - news - people ).

The industry has not had a significant upgrade cycle since 1999, when businesses replaced older systems with year 2000-compliant models. Since then, companies have tried everything under the sun to promote sales, including two-for-one offers, free vacations, and PCs packed to the gills with bells and whistles.

Looks like the answer will be a lot simpler than that.

---

[Redcloak]

"Vee have vays of making you upgrade"?

[pabianice]

A new PC every three years used to be rule of thumb. Now it will be a mandate. What scum Microsoft is.

[Grut]

Anybody out there want to recommend a Linux distribution that has good-looking fonts?

[steve50]

btt

[Bush2000]

A new PC every three years used to be rule of thumb. Now it will be a mandate. What scum Microsoft is.

Dude, reality check: Win98 was released five years ago. And NT4 seven years ago. How long is a vendor supposed to support old software? Indefinitely? Get real.

[fogarty]

Barnicle is optimistic about a relatively swift corporate upgrade cycle, since "an organization's livelihood might depend" on running the latest software, he says.

This guy is smoking crack. Look at Windows 95. There are still millions of Windows 95 users out there, who have no intention of upgrading anything, even though Microsoft gave up supporting it years ago. I still use MS-Office 97, which is no longer supported and I'll stop using 98 when my computer itself dies (perhaps sometime in the year 2010).

[shadowman99]

There are... alternatives.

[shadowman99]

There are... alternatives.

[shadowman99]

Gack! Sorry for the double post!

[Petronski]

I still use MS-Office 97, which is no longer supported and I'll stop using 98 when my computer itself dies (perhaps sometime in the year 2010).

Bingo. There's only about a terabyte of support out there for win98. The first thing I did when I got my Dell last year was to rip out by the roots that resource pig called WinXP.

[winner45]

Mandrake is very user friendly.

[E. Pluribus Unum]

Got Linux?

[YOMO]

A new PC every three years used to be rule of thumb. Now it will be a mandate. What scum Microsoft is. .......

Kind of like General Motors saying they will no longer repair or supply parts for your 5 year old car so go out and buy another. BESIDES it's good for you to have a more reliable car and more profits to us.

[sigSEGV]

XFree 4 includes TrueType support built in. Also includes anti-aliasing and sub-pixel rendering for LCD screens (Cleartype in MS land).

[Salgak]

Microsoft is the single best argument for Linux I can think of. As soon as the WINE group gets WINE to the point where you can run any Windoze game on it. . .

[RedWing9]

There are still millions of Windows 95 users out there.

Shoot, I still support Win 3.11!!!!!!!!!!!!! And MS still has Win 3.11 available if you know the URL...

[PatriotGames]

I have customers, both individuals and businesses, who are still using Win3.11 and what's even more astounding is that some still run DOS 6.22! The next time you are in a large restaurant or even hospital, look at a computer screen and the chances are good that you will see a DOS screen.

[Cicero]

Actually I've always upgraded immediately, if not sooner, by preference. But you don't HAVE to upgrade. I still have a desktop upstairs that runs Windows for Workgroups 3.11 with Win32S, because it didn't have enough room to install Win95 and wasn't worth putting a new motherboard and hard drive in.

It's still working fine, and it has a ton of old games and WordPerfect on it, so my kids can use it to write papers. You can even get on the internet with it using an ancient version of Netscape, though it's pretty flaky in that regard.