How much will a Windows 7 migration really cost?

How much will a Windows 7 migration really cost?

Summary: Last week, the Gartner Group made some headlines with a provocative press release that tried to pin a price tag on the cost of migrating to Windows 7. After reading the full report, I've come up with a slightly different set of conclusions. The short version? The biggest losers are those who bought into the "Save XP" movement, who'll be paying a hefty "XP diehard tax." I've got the details.

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Last week, the Gartner Group made some headlines (including this one from my ZDNet colleague Mary Jo Foley) with a provocative press release that tried to pin a price tag on the cost of migrating to Windows 7. The press release throws out four separate price tags, ranging from $1,205 to $2,069 per PC, with some confusing percentages to quantify overall IT budget increases. But in their zeal to come up with hard numbers, the press release adds more confusion than clarification to the topic. In some cases, the numbers just don't add up.

Gartner was kind enough to provide me with a copy of the full report. After reading it over, I've come up with a slightly different set of conclusions. The executive summary? If you run a Windows shop and you've been paying attention to the Windows landscape for the past two or three years, you've got few surprises in store, and Gartner's alarming numbers don't apply to you. But if you pinned all your hopes on the "Save XP" movement, you've got some serious catching up to do, and your migration bill is likely to be much higher than it would have been otherwise.

Here are the places where I agree and disagree with the Gartner study.

Yes, it's an important issue.

According to analyst Charles Smulders, Gartner estimates that large and midsize organizations will migrate approximately 250 million PCs from Windows XP to Windows 7 in the next two or three years. That sounds about right to me, and is certainly in line with some of the projections I've seen lately. And staying on XP is not an option—at least not for any workstation that is actually connected to the Internet.

Your migration away from XP should be in the final stages by early 2013.

I agree with Gartner completely on this point. Support for Windows XP ends formally in April 2014, but third-party software companies will probably be phasing out their support during 2013. In addition, it is prudent to allow some slack in the schedule for things to go wrong, as they always do. In the timeline that accompanies the Gartner report, 2013 and 2014 are colored bright red and labeled the "XP Danger Zone."

To hit that 2013 deadline, your migration had better be under way now.

Absolutely right. If your IT operation rolls like a well-oiled machine, you've already begun deploying Windows 7 on a three- or four-year cycle that will have XP completely off your network in plenty of time for the April 2014 deadline. Gartner assumes PC hardware replacement cycles of 3.25 years for a notebook and a little less than five years for a desktop. If you're buying new PCs today expecting them to last four years, they'd better be starting with Windows 7 and not with XP.

What might not have been clear in those Gartner numbers that were so widely reported is that they include the capital costs of new PCs and Windows licenses. According to my calculations, Gartner is pegging the cost of a new PC with a Windows 7 Professional license at somewhere between $723 and $1,199. PCs are depreciable assets, so those costs aren't optional, although their timing is.

So, what happens if you haven't already started a migration?

If you're just beginning to realize that you're behind in your migration planning, then Gartner's warnings definitely apply to you. Let's call it the "XP diehard tax," which Gartner says you'll pay in one of two ways:

  • Accelerated PC replacement. Gartner's calculations assume the average enterprise with 10,000 PCs will need to replace roughly 25% of its machines early. In that case, you'll be prematurely throwing out perfectly good PCs before their useful life has run out, meaning you'll be paying a "migration tax" equal to 25% of the average cost of a PC, or about $180-$300 per PC.
  • Upgrades for installed PCs. This one hurts for two reasons. First, you have to pay $150-$200 for a Windows 7 upgrade license, and you have to pay for the parts and labor to upgrade memory, hard disk, and/or video adapters on desktop PCs that you choose not to replace. That's a terrible ROI.

That sounds about right. If your natural hardware replacement cycle is disrupted, you pay extra. Where Gartner loses me in the discussion is with the numbers in the full report, which simply don't add up. According to the report, those upgrade costs (including the Windows license) equal more than $1,600 per PC, which is double the cost of a new PC. I suspect it's a typo, and I've sent an e-mail to Gartner asking for clarification. I'll update this post when I hear back.

Update September 9: It took a while, but Gartner's Charles Smulders finally got back to me. As I suspected, that number is not accurate. The correct figure they used to calculate the cost of an upgrade is $835, which is only a few hundred dollars less than the cost of a maxed-out new PC with a Windows 7 Professional license.

If you've put together a comprehensive migration strategy, Gartner's numbers don't apply to you.

A few big qualifications are buried in the fine print of that Gartner report, and a couple aren't mentioned at all.

  • If you bought smart, you don't need to upgrade hardware. Specs for Windows 7 are equal to or less than those for Windows Vista. So if you bought a Vista-ready machine in 2007 through 2009, it shouldn't need any hardware upgrades to handle an OS upgrade. The losers here are IT buyers who bought cheap PCs and now need to crack them open. That was a false economy. If you bought PCs with an eye to the future, you've already got the hardware you need.
  • If you have a Software Assurance contract, you've already paid for Windows 7 licenses. Gartner notes this detail in passing, but that detail shaves $150-200 off their cost estimates.
  • Investments in deployment technology can have huge payoff. Many of the Gartner numbers seem to be predicated on the idea that an IT worker has to touch each PC and do a manual upgrade. But as the report's authors note, smart enterprises have already eliminated the need for those manual interventions, and the savings are staggering: "[M]igration costs can be reduced significantly by investment in zero-touch PC deployment processes and tools. Gartner estimates that in the best case, an in-place upgrade can be done for $100 per PC or less…"
  • PCs running Windows Vista don't need accelerated upgrades. For some reason, Gartner completely ignored enterprises that have already completed app compatibility testing and have begun a migration from XP to Windows Vista. Those PCs don't face the same 2014 upgrade deadline as their XP counterparts. An IT administrator who has moved 25% or more of the enterprise desktops to Vista can comfortably switch to Windows 7, avoid the XP Danger Zone, and avoid all those early upgrades and replacement.
  • This is a tremendous opportunity for desktop virtualization. Gartner notes the potential for server-based computing and hosted virtual desktops but doesn't calculate the potential savings. I suspect a lot of organizations will accelerate their plans for replacing PCs with cheaper, more centralized options, especially for task workers.

So, what's the overall impact on IT budgets?

In her headline, Mary Jo Foley called out the most alarming number from the Gartner report: IT shops moving to Windows 7 need a 20 to 60 percent PC budget increase. But as the report makes clear, the PC budget typically represents only 15% of a typical IT budget, which means that a 20-60% increase in the PC budget actually represents an overall increase of only 3% (best case, according to Gartner) or 9% (worst case). And given the numbers I calculated, companies that began planning for migration three years ago and invested in advanced deployment tools could actually see their PC costs drop, percentage-wise, during the course of this migration. Imagine that.

Topics: PCs, Hardware, Operating Systems, Software, Windows

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  • RE: How much will a Windows 7 migration really cost?

    I can't see some of the local businesses and my local library near me upgrading very quickly as they're using XP (some even using Win2000) and all their web apps are made for IE6 and since Win 7 won't run IE6 they'll have some headaches doing that.
    explodingwalrus
    • RE: How much will a Windows 7 migration really cost?

      @explodingwalrus that's what happens when you build to a non-standard standard. There shouldn't BE sites that rely on IE at all, much less ones that still require IE6.
      thatroom
      • RE: How much will a Windows 7 migration really cost?

        @thatroom Seems that IE6 problem happed centuries ago.<br><a href="http://www.ofertareonline.ro/ferestre-termopan.html">Termopan</a>
        termopane
    • RE: How much will a Windows 7 migration really cost?

      @explodingwalrus, well if they don't by the 2014, they'll be in for a influx or new apps at your local library and businesses, alas they'll all be distributed from the new botnets they just joined :D
      Xanderxavier
      • RE: How much will a Windows 7 migration really cost?

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    • RE: How much will a Windows 7 migration really cost?

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      lincc263
    • RE: How much will a Windows 7 migration really cost?

      @explodingwalrus They're not alone. There's one large insurance company that announced that it was starting final testing of it's Move-to-Vista effort two days before Windows 7 hit the streets.
      LeMike
  • Replacement Cycles

    The whole assumption of this analysis is pretty much invalid for most legitimate IT shops with a decent PC replacement cycle. We'll replace our systems regardless of the OS factor.

    In any case, in my business, I'm already upgrading systems to Windows 7 because of the lowered support costs. In my environment, I've had better performance with Windows 7 and fewer end-user support requests, which easily pays for the slight increase in licensing costs.
    GoodThings2Life
    • You would think so, wouldn't you

      @GoodThings2Life
      The thing is that much of Corporate America don't really have "legitimate IT shops" as you aptly put it. There are major international corporations who are getting caught on the short sided end right now. Some of those companies have hundreds, or even thousands, of workstations that have to be migrated to Windows 7 at this point. For them the analysis is very relevant.
      use_what_works_4_U
    • Bring out your dead...

      @GoodThings2Life

      We are upgrading machines to Windows 7 as they fail. So far, I haven't had any problems and the users like the speed and the search on the Windows menu...

      That said, they are being upgraded from 1.2Ghz Athlon machines with 256MB RAM to Core i3 with 4GB, so they really do see a performance improvement over Windows XP :-D

      That said, we still have Windows 95 machines in daily use as well, and when they die, we will have big problems, because the software they use won't run on an NT base!

      A lot of my users also still use Windows 9x at home, very few have gotten around to installing XP, most will probably skip straight to whatever is pre-installed on their next machine, when their current one dies...
      wright_is
      • RE: How much will a Windows 7 migration really cost?

        @wright_is "we still have Windows 95 machines in daily use as well, and when they die, we will have big problems, because the software they use won't run on an NT base!"<br><br>Your solution is to run Win 95 on a virtual machine on the Windows machine and use that for any programs that are vital, while moving all users to the current version of Windows for all other programs. Once that's done, make the effort to replace the vital programs with current software.
        LeMike
  • Custom (and not so custom) apps

    My organization (20,000+ desktops) wants to move to Win7 yesterday, but is being held hostage by some of the applications we have to run.

    Third-party vendors are in no hurry to confirm that existing systems will work with Win7. It makes business sense for them to want us to upgrade to their new product rather than take the time to certify that something will keep chugging away under the new OS. They won't say that it *won't* work, but they also won't certify that it *will*. If we're talking a small utility used by a few geeks in networking, no harm giving it a try and upgrading if neccessary. When it's the multi-million dollar ERP, then the calculation is different.

    We're left in limbo, hoping the app vendors will actually produce a certified version of the product in time for us to test and then make a part of the overall upgrade. Some apps won't get certified ever because of customizations that have been made and we'll pay for those updates through the nose.

    That's the holdup for us.
    wafsd
    • Just curious...

      @wafsd

      ...but have you tried in house testing of those critical apps? We were in the same position, but through our own testing found out that, with a few tweaks, the old apps ran very well under Vista/7. We were told recently by another office that the apps "won't work with 7", yet we had already completed upgrading that department's users in our office to 7 with no issues.

      We have found a few apps that will only work with 32 bit 7, though. A shame, really, to be installing modern PCs with a 32 bit OS.
      itpro_z
      • RE: How much will a Windows 7 migration really cost?

        @itpro_z <br>We had the experience to run an application on Windows Vista and W7 even though the vendor hadn't certified it yet. The problem was asking for support. As soon as they knew we had Vista/W7, they closed the case until we downgraded to Windows XP "on a real PC", because virtualization was not an option. I agree with you in testing in a local environment, but for something as critical as an ERP, support is very important and you have to adapt to the vendor requirements. And it's sad when the software vendor put you upgrade on hold because they don't adapt changes fast enough.
        dvm
      • Time to find a new vendor?

        @dvm

        I would try to find a new vendor. If they are that lazy not to be upgrading their products, then let them fall by the wayside. Don't let them drag you down with.

        My school is the same way, if it was up to them they would be running XP for another few years yet in the CIS dept., which in my mind is a HUGE dis-service to the students. It is only because of the number of students upgrading off of XP, that they are finally teaching Windows 7 and Office 2010 in an attempt to keep up.
        The one and only, Cylon Centurion
      • RE: How much will a Windows 7 migration really cost?

        @NStalnecker... It is sad that schools do not teach computing principles. Instead, they have become Microsoft and Cisco trade schools. Even at the high school level, my nephew could take "Networking" which was solely Cisco products.

        It is unfortunate that we have, through inept management, given commercial organizations a way to manipulate students by giving them "free" products. They are "branding" students just as much as the YO Ranch brands cattle.
        pwatson
      • RE: How much will a Windows 7 migration really cost?

        @dvm

        dvm, your company should have gotten ANGRY with that vendor and told them "No, we are not downgrading, tell us what to do to fix this that DOESN'T include that or look at a lawsuit!"

        Seriously, these vendors need to have the HAMMER (100000000000 ton hammer at that!) put down on their heads to get it through to them that they HAVE TO SUPPORT NEW OPERATING SYSTEMS!

        There is no 'No!' allowed there.
        Lerianis10
      • We have a Cisco class as well

        @itpro_z

        However, in our networking dept., we have a healthy supply of Netgear, Sisco, and various other brand networking devices in our labs. Same with the various different operating systems, we have a Linux course, however we only really teach Windows to the students, the Linux course being an optional class.

        But, I agree and disagree with your PoV, Cisco and Microsoft are two big players in the IT world, and as such, certification by either of them can carry some weight in the job market. However, there is nothing wrong with diversifying (As some very vocal people on here claim otherwise).
        The one and only, Cylon Centurion
      • RE: How much will a Windows 7 migration really cost?

        @itpro_z

        Yes, we do copious amounts of internal testing. We have a strong internal development shop. We are very certain which apps will run on Win7. For the most part, our servers are all 64-bit VM (except for the legacy ones slated for retirement), though our desktops are 32-bit XP Pro. Our servers are moving to 2008 R2 faster than our desktops are upgrading.

        I think people are missing my point. The vendors aren't declaring that program X won't run on Win7. They won't guarantee that they *will* run on Win7 and we are on our own where support is concerned - unless we want to upgrade to the latest and greatest. In the case of the customized ERP, we have no choice but to do massive internal testing and our own fixes on anything in the customized modules. We're OK doing that, but we still risk voiding service and support agreements that are very expensive.

        Because it is an ERP, the auditors are foaming at the mouth at the hint of technical malfunction. This doesn't just manage money; it handles inventories, it is a repository of legal records, it tracks employee time and benefits, it is more thoroughly intertwined in the daily operations of our business than any MS product. If every piece of MS software on my system immolates itself in a toxic pyre - no biggie. Grab a new box and get my data from the FAS. If the ERP hiccups, that could mean business for the week has just vanished into the ether and we have outside investigators on the doorstep wanting to know about the "accident".

        We will upgrade. That's a given. In the context of Ed's article, however, we don't see big expenses in the OS itself (our hardware is relatively new, of better than average quality and well maintained, we have excellent desktop management software and experience, we're big into virtualization, we have great training programs for staff, etc.), but we do see large expenses and delays in moving the non-MS enterprise systems to the new OS.
        wafsd
      • Support Contract Without an Upgrade Plan?

        @wafsd
        You have a "very expensive" support contract with your ERP vendor that doesn't include upgrades to the ERP software in the price of the support contract? That's not good. It seems that you are better off either buying the software and paying for support on a per incident basis or else getting a support contract that includes upgrades (depending on the software, either can be reasonable). With an important ERP program, I would think the latter course would be the more prudent. To me there is no sense in paying a lot for support without getting upgrades thrown in.
        CFWhitman