Windows 7 beta debuts in January '09

Microsoft executive Bill Veghte answered a few questions yesterday about Microsoft's business strategies for the Windows product line at the Credit Suisse Annual Technology Conference.

Veghte, who is Microsoft's senior vice president for Windows business, notably described when Windows 7, Microsoft's latest operating system under development, will be released.

"Our public comments have been to have general to release-to-manufacturing of Windows 7 product by next January, and we're on track for that," Veghte said at the Scottsdale, Ariz.-based event.

Windows 7 will be available first as a beta, followed by the release candidate version and then release to manufacturing. Veghte didn't exactly specify when the beta would be released, but a Web page advertising Microsoft's MSDN Developer Conference gave an indication. It explains that attendees at the January 2009 MSDN event will be handed the "Windows 7 Beta 1 DVD."

Developers reacted to the pre-beta of Windows 7, which was publicly released at the Professional Developers Conference in October, saying it was "the highest quality" Windows release they've seen, Veghte said. The APIs were complete with that release, he noted.

Microsoft expects that the Windows 7 beta will be compatible with existing systems running Vista. Microsoft made fundamental changes in security and graphics when it first released Windows Vista, which tripped up some of the vendors writing drivers for the OS. However, with the release of Windows 7, "we don't have to change graphics drivers," Veghte explained.

Microsoft has spent "more than 250 structured hours of conversation" with its OEM partners on Windows 7, Veghte said. It has gathered feedback from both hardware and software providers for the beta release.

Phil Winslow, Credit Suisse analyst, asked Veghte about Microsoft's up-selling strategy and how it will structure its premium offerings with Windows 7. Veghte didn't provide the details except to say that Microsoft would base pricing on its past Windows release experiences.

In that context, the elephant in the room that went unmentioned during the talk was the "Vista Capable" lawsuit in which plaintiffs have accused Microsoft of false advertising. Microsoft offered a Vista Basic edition of the operating system that couldn't run prominent features, such as its Aero graphics experience. It apparently caused customer confusion at the low-end of the price scale when customers expected Aero to be part of the Vista Basic experience.

Winslow asked about the market prospects of netbooks, which are low-cost, low-tech laptops that typically can run Windows XP, but not Vista. Veghte said that the netbooks market is meaningful in terms of the number of units that can be sold, although he said it was "too early to tell" what the market share might be. "It's significant enough that we are going to participate," he said.

Veghte said that netbooks would "cannibalize" Microsoft's existing OS market share to some degree. Microsoft is also concerned that customers will choose Windows for netbooks rather than a Linux OS alternative. Veghte said that "more than 70 percent" of netbook vendors are onboard with offering Windows-based machines.

Veghte was asked about how virtualization would affect Microsoft's hold over its component products. He didn't really give an answer except to say that virtualization on the server side will help consolidate unused capacity for customers, while on the client side, Microsoft has an opportunity to help drive down deployment costs for organizations.

Winslow asked about how Microsoft expects to continue pushing out margins in a recessionary environment. Veghte didn't really answer, but he pointed to Microsoft's R&D accomplishments in rolling out the forthcoming Windows 7 and Internet Explorer 8 products. Microsoft is also extending the Windows experience to the Web via its Live offerings, he added.

Veghte talked a lot about Microsoft's marketing campaigns as a way of having a conversation with the customer. Windows has "almost 80 percent positive reception'and yet we need to have a conversation about what Windows uniquely offers," he said. People remember the ads from Microsoft's latest ad launches, he said.

An audience participant asked if Windows 7 will be harmed or helped by the contention that it is just the "Service Pack 2 release of Vista." Veghte didn't really answer, except to emphasize Windows 7's compatibility with Vista.

Veghte did point to two notable features in Windows 7. One feature, called "direct access," is a more convenient way to connect with the office than current VPN (virtual private network)-type connections. Another is the ability to differentiate device use between work and home by specifying groups in Windows 7.

An audio recording of Veghte's talk can be accessed at the Microsoft Investor Relations Web page here.