Microsoft extends availability of basic XP on ultra-low-cost PCs

Microsoft, looking to tap a new market and fend off competition from open-source software, is extending availability of a basic version of Windows XP on a new class of low-end hardware.

The company announced today that it will allow computer manufacturers to put Windows XP Home on so-called ultra-low-cost PCs (ULPCs) such as the ASUS Eee PC until at least June 30, 2010.

These machines can cost as little as $300 and typically do not have enough memory and processing power to run even the most basic version of Windows Vista, the latest version of Microsoft's flagship operating system.

Windows XP will no longer be sold at retail after June 30 of this year and most PC manufacturers will have to stop installing it on new machines at that time, too. Smaller, independent system builders have until Jan. 31, 2009.

Those deadlines left manufacturers of ULPCs with few operating system options from Microsoft, opening the door to competitors. That's troubling to Microsoft because many ULPCs are sold in emerging markets, which represent the best opportunities for growth as mature markets in the U.S. and Western Europe are maxed out.

Microsoft previously said an even more stripped-down version of XP, called Starter Edition, will be available in emerging markets until June 30, 2010. But the ULPCs with XP Home can be sold anywhere in the world.

"These are machines that represent net PC growth overall," said Michael Dix, general manager of Windows Client product management. "Primarily, in emerging markets, a lot of first-time PC buyers find these attractive because it's an inexpensive way to get a fully functioning PC."

Ben Gray, an analyst with Forrester Research, sees "self-preservation against open source alternatives like Linux" behind Microsoft's announcement.

"Microsoft wants to get in early on the billions of new users these low-cost laptops will enable worldwide, which will make it more difficult for them to switch from [Microsoft software] later on," Gray said in an e-mail. "Because of these reasons, it's not surprising that Microsoft was forced to extend the availability of Windows XP for low-cost laptops."

Microsoft took pains to emphasize that this extension for XP applies only to the ULPCs.

"We are not announcing a change to the general availability of XP across all categories," Dix said, adding that the company is "very confident" about the dates the company announced last September.

Businesses stuck with Windows XP in 2007, according to a report from Forrester released this week. The study of 50,000 users at more than 2,300 large companies found that Vista is having a hard time gaining traction.

"Adoption of Vista among Windows users increased by a little more than five percentage points during 2007 to end at 6.3 percent. But, much to Microsoft's dismay, even this conservative growth cannot be attributed to upgrades from XP, which remained fixed at 90 percent throughout 2007," the study's authors wrote.

Windows 2000, XP's predecessor, saw its usage decline about 6 percentage points, roughly mirroring Vista's growth, the Forrester analysts noted.

Dix disputed the notion that businesses want to stick with Windows XP.

"Everything we're hearing now from our [PC manufacturer] partners, our retail partners and our research directly with customers is that the dates that we established back in September ... are the right ones," he said. "It strikes the right balance. Our partners want us by and large to keep those dates and customers seem satisfied by that as well. So we think it's the right time for the mass market to make the switch over to Vista."

Microsoft Chairman Bill Gates said in January that 100 million people are using Vista.

Dix said that eventually, customers have to move on to the next operating system.

"At some point you have to migrate over to the next one for the benefit of the overall industry so that all of the energy is focused on providing the best innovation on the latest technology available," he said.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com