Can Microsoft Survive the XPocalypse?

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Microsoft (NASDAQ: MSFT  ) ended its support of Windows XP earlier this week, leaving thousands of businesses prone to virtual attacks in the coming months unless they upgrade to a newer operating system. Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) hopes its Chrome OS instead of a newer version of Windows.

It's not just Google that Microsoft has to worry about, however. Samsung (NASDAQOTH: SSNLF  ) is going after the enterprise market with its Pro line of tablets in an attempt to tap a niche of the market Apple (NASDAQ: AAPL  ) still dominates and take share from PCs.

With the expected enterprise system migration, Google is pushing Chromebooks aggressively and tablet options are looking more attractive. Will Microsoft's reward outweigh the risk its taking?

What's at stake?
Windows XP is tremendously popular for a 12-year-old piece of technology. As of January, the OS was installed on 29.5% of PCs, according to Net Applications. Only Windows 7 is a more popular OS.

Businesses, in particular, stuck with Windows XP because it's simply good enough. It runs everything they need, and doesn't take up too many resources. There's no reason to spend money upgrading systems when it's unnecessary.

With the end of Microsoft's support for the OS, however, businesses will need to open their wallets. Some institutions are reportedly paying Microsoft to provide additional support for XP. Others are upgrading to Windows 7. This is exactly what Microsoft wants.

Others, still, may find solace in a new platform. This is exactly what Microsoft doesn't want.

New software or new computers?
As mentioned, many businesses now facing a necessary expense. Since businesses typically like minimizing expenses and maximizing value, they're going to find an option that will balance both.

The first option is to pay Microsoft in some form. Whether that's upgrading to a newer version of Windows or paying Microsoft to support XP, Microsoft will gladly take their money.

Google is hoping it can attract businesses with special offers on Chromebooks for business. The company is offering $100 off its already low-priced computers for businesses. Moreover, it's teamed up with VMWare and Citrix to provide cloud computing services that will make the transition from XP to Chrome OS nearly seamless. Google is also offering a discount when bundling those services with a Chromebook.

Even with the discounts, however, a complete overhaul of an enterprise hardware likely carries a higher up-front cost than upgrading software. The benefits will come long term as the company adds additional hardware. Still, many businesses will hesitate at a large up-front cost and necessary workarounds to continue using legacy software. It's not an easy solution to sell.

What about tablets?
A growing trend is the deployment of tablet computers in the workforce. Apple won 8% of global business and government spending on computers and tablets in 2012, up from 1% in 2009. The iPad is the biggest driver behind Apple's share gain, and Forrester Research expects Apple's share to climb to 11% next year.

Samsung, which also makes Chromebooks, is gunning for the market with its Pro line of Galaxy tablets. The Korean electronics maker unveiled the new tablets earlier this year, prominently featuring their 12-inch displays. Apple is rumored to release a larger iPad this year as well.

Samsung will have to overcome the same hurdles as Google's Chromebooks, however. More than 90% of business apps are written for iOS, just as enterprise PC software is written for Windows. The added expense of migrating to Android may curb Samsung's success in professional-level tablets.

Others may gain, but so will Microsoft
As businesses weigh their options, Microsoft will surely see some additional revenue in the form of Windows upgrades or commissioned support. That revenue could be curbed by other companies, particularly Google, aggressively going after the enterprise market given this opportunity.

Google hopes that proliferating Chromebooks within enterprises will increase the use of its services. This may be the case, but Microsoft, too, offers cloud computing solutions that can work with Chromebooks. Notably, Office 365 includes web apps that run on Chromebooks. Additionally, Microsoft just released Office for iPad, which means Microsoft can capitalize on the increase in tablets in the workforce without selling its own tablet. Overall, Microsoft should see the benefits outweigh the risks of ending XP support.

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Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On April 09, 2014, at 6:59 PM, techy46 wrote:

    Wow MF's, Adam Levy, is really demonstrating a total lack of understanding of how Windows XP is used in many businesses.

    First, many business applications that run on Windows XP are client server and file server applications that will only run on Windows and some only Windows XP without upgrading to a new version or even a browser based version. That eliminates any possibility of using any Apple or Chrome devices as clients.

    Second, many of these businesses never connect their applications client and servers devices to the internet and could isolate internet connections so as to not expose their WXP devices to attack from the internet. Any Windows device, even a W95 device, can be made perfectly safe by just not connecting it to the internet.

    Lastly, many Windows devices are protected by anti-virus and malware from third parties which will not be ending when Microsoft stops support.

    Upgrading those Windows devices that require internet connectivity to W7 or W8 is the best and least expensive path for businesses that depend on application that run on Windows.

  • Report this Comment On April 09, 2014, at 8:19 PM, noobinvest wrote:

    Many medical electronic records services are telling doctors that they must upgrade from XP. Some gov regulations thing, I don't know precisely what reg #. All I know is, my in-laws are having to buy all new computers for their office. Multiply that times all the other doctors offices and looks like the regulation just forced a new demand for Win7/8 - which won't run on their old computers. Plus, these offices can't use another OS because the records service only works on IE - safari, chrome won't work. These tech companies only seem to develop for 1 browser, whatever that may be - in this case IE. Talk about pushing demand.

  • Report this Comment On April 10, 2014, at 12:56 PM, badgerzilla wrote:

    Why doesn't Microsoft pick an OS and just stick with it like Apple does with OS X and they way they do with Linux. Microsoft insists on changing so every few years they make a new OS and retire the older ones. They should make one Windows and stick with it forever. This is done by IBM with AIX and Linux, OS X, Unix, Solaris, Red Hat. This should be done by Microsoft as well. All the ATMs and cash registers will have to be replaced every few years.

  • Report this Comment On April 11, 2014, at 9:44 AM, moharait wrote:

    MSFT will survive it just fine - they are not the ones with the issue. The endusers who (inevitably and always) drag their feet are the ones who should and will suffer.

    No sympathy for all the banks and endusers who cannot LISTEN to their vendors. Especially those who were told YEARS AGO that XP was going bye-bye.

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Adam Levy

Adam has been writing for The Motley Fool since 2012 covering consumer goods and technology companies. He spends about as much time thinking about Facebook and Twitter's businesses as he does using their products. For some lighthearted stock commentary and occasional St. Louis Cardinal mania

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