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Windows 7 launch could give economy boost

If new software succeeds, other businesses will too

By Hiawatha Bray
Globe Staff / November 3, 2009

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Microsoft Corp. says it won’t be the only one to benefit from sales of its new Windows 7 software. The local economy could see a lift, too.

Windows 7, released Oct. 22, is the much-ballyhooed update to the software that runs most personal computers. Microsoft hired research firm IDC Corp. of Framingham to conduct a study of the ripple effect of the Windows 7 launch. It found that American companies could hire an estimated 25,000 additional workers to cope with the Windows 7 launch, including about 2,500 new jobs in Greater Boston, through the end of 2010.

“There is a bounce effect based on the introduction of Windows 7,’’ said Amie White, vice president for global research at IDC.

That a software launch could have such an effect reflects the sheer dominance of Windows and the vast “ecosystem’’ of tech companies that depend on the software giant’s fortunes. Some make Windows computer hardware; others produce software that runs alongside Windows; others sell Windows-related products, or install and maintain them. Those companies are affected when a new version of the Microsoft operating system, its core product, is a hit or a miss.

The IDC study estimated that technology companies nationwide will sell an extra $110 billion in Windows 7-related products and services through the end of next year. Those companies will also boost the economy by investing $41 billion to develop, sell, and support new products for Windows 7 users.

In the Boston area alone, IDC said, Windows 7 could generate about $2.3 billion in additional revenue for tech companies, and those firms could invest $826 million they would not have spent otherwise.

But that all depends on whether Windows 7 becomes a bestseller. Its unpopular predecessor, Microsoft’s Windows Vista, was plagued by poor performance and incompatibility with other hardware and software products.

Nearly three years after its release, only about a quarter of the world’s personal computer users run Vista. By contrast, between 60 and 70 percent are still running Microsoft’s eight-year-old Windows XP software, which many find more compatible and easier to use.

Vista “just disappointed everybody,’’ said IDC’s chief research officer, Frank Gantz. “There were a lot that were turned off.’’

In a study commissioned by Microsoft for the January 2007, release of Windows Vista, IDC predicted that the product’s launch would prompt the creation of 3,500 jobs in Massachusetts. Gantz now says that number was too high, although he’s not sure of the actual figure.

However, Gantz believes IDC’s estimates for Windows 7 are on firmer ground, because early reviews of the new software have been overwhelmingly favorable. “That gives us faith that we haven’t been sabotaged by a product that didn’t live up to expectations,’’ Gantz said.

IDC expects worldwide personal computer shipments to decline by 1 percent this year, but rise by 9 percent in 2010, and many of those new machines will run Windows 7.

Tech Networks of Boston, a South Boston computer retailer that mainly sells to small businesses, expects a Windows 7 sales surge in the coming year. “The opportunity to move people to a new operating system is fairly substantial for us,’’ said Tech Networks president Susan Labandibar.

She said many customers have held on for years to underpowered machines running Windows XP, but “you cannot stay on XP forever. It’s time to get off.’’

Labandibar doesn’t know whether she’ll need to hire more workers to keep up with demand for Windows 7 work.

PlumChoice Inc. of Billerica, which provides nationwide computer technical support services, isn’t expecting much of a bump. “We’re just seeing small effects,’’ said founder Ted Werth. “It is not causing us to go out and hire more people or take any drastic action.’’

Werth said that the Vista experience will lead many businesses and consumers to hold off buying Windows 7 until they’re confident that the new operating system is reliable.

Michael Cherry, a Windows analyst with Directions on Microsoft, a research firm in Kirkland, Wash., said any uptick from the Windows 7 release will be muted by the economic downturn.

He said Windows XP will continue to predominate for a long time, because cash-strapped companies are in no hurry to buy new machines. “We’re going to see the buildout of Windows 7 take anywhere from three to five years,’’ Cherry said.

Hiawatha Bray can be reached at bray@globe.com.