The cost benefit analysis for Windows 7

When I tested Windows 7 earlier this year I thought it was a winner. I am holding to my opinion.

And, from a recently released forecast by IDC it looks like the rest of the world thinks the same.

According to the Worldwide Economic Impact of Microsoft’s Windows 7 study conducted by IDC research analysts John Gantz, Al Gillen, and Amie White, by the end of 2010, more than seven million people worldwide in the IT industry and at IT using organizations will be working with Windows 7, or 19 per cent of the global IT workforce.

IDC is suggesting that the channel will reap $18.52 in U.S. dollars for every dollar of Windows 7 sold. That’s not a bad ratio, but is it enough to sustain a business? Microsoft’s channel ecosystem consists of OEMs, solution providers, consultants, independent software vendors, retailers, system builders and developers.

Well, from the day Windows 7 is launched to the end of 2010; roughly 14 months Microsoft’s channel network of 640,000 partners will sell more than $320 billion in products and services revolving around Windows 7, IDC forecasts.

Now, the 640,000 number is impressive, but I have been told that it is really 400,000. So working with that number it comes down to $800,000 per solution provider. Some of those will be large account resellers, or global integrators who will make a lot more than $800,000 in 14 months. But you have to think that is a pretty healthy slice of business for everyone in the channel to eat from.

Stuart Crawford, vice-president of business development for Bulletproof Infotech, would love to see $18.52 in bottom line profits from Windows 7. The long-time Microsoft advocate believes the number will be enough to sustain a service-based business for solution providers.

However, the challenge he sees for many solution providers is how to convince customers that Windows 7 is ready for prime time.

“My vision tells me, many small businesses will need to be influenced by VARs and resellers on the benefits of Windows 7. All things in, software licensing, training and new products…I would love to see $18.52 in bottom line profit from Win7,” Crawford said.

But that profit comes with a cost. IDC pegs it at $115 billion in those same 14 months. If you do the math again it’s an investment of $287,500 per channel partner to get ready for Windows 7 business. Again, the larger partners will have to invest more, but these are the ball park figures everyone is dealing with.

Nothing like skin in the game?Crawford said that at this particular time it will be hard to determine where the costs will be.

For certain training, marketing, education, sales training, and events will be cost factors. Bulletproof is looking at $10,000 per employee, hopefully less depending on how deep the company is willing to go with Windows 7.

I don’t think Microsoft or IDC or anyone else has told the channel community Windows 7 was going to be easy. As Crawford pointed out you still need to sell this stuff to customers. And Vista, not to mention the poor economy, has left a sour taste in the mouth of customers with amble IT budgets.

IDC expects budgets will increase modestly in the next year. But that is no failsafe. At the end of the day IDC predicts solution providers will net $4.23 for every Windows 7 dollar. Add in services and it almost doubles. Not bad; but not great.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Editor of Computer Dealer News, covering Canada's IT channel community.

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