Hopes high as Windows 7 debuts

As Microsoft Corp. prepares for the upcoming release of its Windows 7, Japanese manufacturers of personal computers are hoping the latest operating system will be the long-awaited silver bullet for a market hammered by eroding prices and flagging demand.

Hasta la Vista: Windows 7 packages, reserved for advance orders, pack the shelves of a Bic Camera electronics outlet in Tokyo's Yurakucho district last week. KYODO PHOTO

For the U.S. software giant, the success of Windows 7 will be critical to repairing a reputation bruised by its disfavored predecessor, Vista, especially at a time when Microsoft faces growing threats from rivals Google Inc. and Apple Inc.

The new operating system, now on sale only to large businesses, will be available to the wider public starting Thursday with expectations already hyped on the back of strong preorders.

"This is an OS that has significantly improved speed, stability, compatibility and operability in a balanced manner," said Yasuyuki Higuchi, president of Microsoft's Japanese unit. "Many of our employees say this is the best OS so far."

An official at the Bic Camera major home electronics discount chain said its stores have received a larger number of inquiries from customers on Windows 7 compared with the prelaunch interest for Vista in 2007.

Demand for Microsoft's new OS was strong to begin with following the cold response for Vista, which has been riddled with problems linked to frequent crashes, slow speed and complicated security functions.

According to a report by ITR Corp., an information technology research and consulting firm, nearly 80 percent of firms in Japan as of last October were still using Windows XP, which came out in 2001, while less than 10 percent had switched to Vista.

"With Vista, we put more priority on security rather than user feedback," Higuchi said as a reason for the overall heaviness of the Vista system.

Because so many companies and consumers are still using XP, a major sales point for Windows 7 is the new XP compatibility mode, which supposedly ensures that existing applications will run smoothly on the new OS.

A string of Japanese PC makers, including Sony Corp. and Fujitsu Ltd., will be rolling out new products based on Windows 7 ahead of the yearend shopping season, hoping to attract customers with the addition of multitouch functions.

"As Microsoft is already promoting, we are experiencing firsthand that this is actually very much lighter than Vista," Ryosuke Akahane, Sony's deputy president in charge of the Vaio business, told reporters.

"We hope the market will heat up with the launch of Windows 7," Akahane said during the unveiling of the new lineup of Vaio PCs, which will hit store shelves in Japan the same day as Microsoft's OS.

A successful debut for Windows 7 is pivotal at a time when the domestic PC market has seen a jump in demand for smaller, low-priced netbooks with narrow profit margins versus sluggish sales of bigger laptop and desktop PCs amid the economic downturn.

"The introduction of the Eco-point program in March helped significantly in revitalizing the consumer electronics industry, but it appears to be working unfavorably for PCs," Akihiro Matsubara, corporate vice president at Sony Marketing (Japan) Inc. said, referring to a government program to reward purchases of energy-saving consumer appliances.

"Market conditions from after the summer are especially severe," he added.

According to the Japan Electronics and Information Technology Industries Association, PC shipments in Japan fell nearly 10 percent from a year earlier during the April to August period. The value of PC shipments also dropped nearly 25 percent during the first five months of the current business year.

Even though Microsoft still has a dominant share in the OS market, the company hopes to quickly move past the sour Vista experience and brace for growing competition with other players, such as Google, which is set to release its first operating system — Google Chrome — during the second half of next year.

Although Google's Chrome OS will initially be targeting only netbooks, many view its planned OS as a direct threat to Microsoft because it will likely be extremely fast, lightweight, and offered for free. Microsoft's Windows 7 is expected to be priced at ¥24,800 to ¥38,800 for full versions or ¥15,800 to ¥26,800 for upgrade versions.

"It's not that easy to make an OS," Higuchi said, citing years of Microsoft's experience and investment in OS development.

"We do feel a big threat in the sense that (Google's) business baseline is different," he said, emphasizing companies need to get paid for their products to secure sufficient funds for development.

But despite promises of a revamped operating system, uncertainty still remains strong on whether skeptical and fickle consumers will quickly switch to the new Windows 7 as counted on by both Microsoft and computer makers.

According to a survey conducted last month by Kakaku.com Inc., which operates an online price comparison Web site, 39 percent of 10,715 registered users responded that they plan to buy Windows 7 at an undetermined date, while nearly 40 percent said they do not know or do not plan to buy the OS, indicating many are taking a wait-and-see attitude.

"Users now make replacements when they feel like buying," a Fujitsu official said. "We are unlikely to see a 1.5-fold growth in (PC) sales just because a new OS is out."