Ripple effects of a Windows Vista rollout
Computer users know the drill.
First comes the hype from Microsoft about the latest Windows software. Next come the reviews from techies, and then the decision about when or whether to upgrade the core software on their machines.
But even if this week's release of the latest Windows software, called Vista, has become a somewhat familiar event, the rollout is nonetheless significant – for Microsoft, for worker productivity, and, as a consequence, for the whole economy for years to come.
For better or worse, Microsoft's code will help determine how quickly the digital revolution advances.
"It won't ... feel as dramatic" as Windows rollouts in the 1990s, says Michael Gartenberg, a senior analyst at JupiterResearch in New York. But desktop software, of which Windows is king, is "still a base and a foundational technology."
Vista arrives amid renewed competition in a transitioning high-tech industry. Microsoft dominated the software arena in an era when the goal was to put computing power on individual desktops.
In this decade, more emphasis is on the creative potential of the Internet – a platform where Microsoft has no monopoly. Neither does the Redmond, Wash., firm rule in the market to bring video, Web surfing, and other capabilities to the cellphone.
Still, its Windows software underpins most computers in American homes and workplaces – meaning each new version of Windows causes ripple effects from living rooms to corner offices. Worldwide, some 850 million personal computers run on some version Windows, Microsoft says.
Though Vista may well bring productivity gains, they aren't likely to be apparent right away. Nor is a surge in economic output. As in the past, the launch will kick off an "upgrade cycle," involving billions of dollars in hardware sales, software development, and help-desk calls.
It's a a slow but inexorable process, moving more like the tortoise than a high-tech hare. Microsoft wins, but computer sales also rise, and new products emerge from hundreds of other firms.
"We're not only going to see a lot of software, but we're going to see a lot of innovative and interesting hardware as well," predicts Mr. Gartenberg.
For the US economy, the gains should come – over time – in higher productivity.
When workers can do more each hour on the job, it's a recipe for wealth creation. Companies prosper, and both wages and profits can rise faster than inflation. For any nation, productivity holds the key to a rising standard of living. Vista won't cause an overnight revolution in cubicles, but Microsoft has outlined productivity gains among its benefits.
In the 1990s, America's productivity growth exceeded expectations, often surpassing 3 percent a year. But the progress tends to come in cycles, and productivity growth ebbed last year to a pace nearer 1.5 percent for the US and Europe.
Economists haven't settled their debates over what causes productivity to spurt, but many posit that computers and their effective use played important roles.
And experts say the digital revolution is young, leaving plenty of room for computer technology to enhance worker output.
"That capability is still there. I don't see that going away," says Jeffrey Bowker, who directs the Center for Science, Technology and Society at Santa Clara University in California's Silicon Valley.
In the past, he notes, economists have observed a "productivity paradox." Companies invest in new hardware or software, and worker output initially drops.
One moral of this story is that productivity depends on a lot of things other than computers – including skills and management. But the longer-run record of computers, many experts say, is positive.
The Internet is now where much of the action is. Companies like Salesforce.com provide business software that resides online. Google is doing the same for a host of functions beyond its roots as an information search tool.
But even if the Web increasingly takes the lead in computing, Windows still has years to go as the dominant platform.
In the case of Vista, "It's not a matter of if, it's a matter of when" companies will migrate to the new system, says Benjamin Gray, an analyst at Forrester Research in Cambridge, Mass.
Here a glimpse of how Vista might enhance productivity at work and at home:
•An on-screen Windows Sidebar will provide quick access to "gadgets" of your choice, from a calendar to a calculator or weather reports.
•Several features aim to better manage a computer's horsepower, so that key programs boot up quickly and run smoothly.
•New defenses will guard against crashes and security breaches.
•Speech-recognition software is included.
•For home users, there's a "Windows Media Center" that uses the computer to manage a household's music, videos, and TV watching.
Most people who buy a new computer will find that it now comes with Vista. But home and business users alike may not rush to buy.
For one, the predecessor program, Windows XP, is widely seen as adequate.
Then, too, many users like to wait to buy until Microsoft spends more time working bugs out of the new program. Vista also hogs more computing power, so using it may hinge on investing in new computers. Businesses have have grown more cautious about tech spending, and many will want to make sure the productivity gains are really there.
"The consumer [home] market will probably see a bit more interest in Vista up front," says John Witt, a hardware analyst at Fitch Ratings in New York. "Late into this year and early 2008, that's probably when you'll see more companies upgrade."
About 25 percent of large firms in Europe and North America will switch to Vista by year's end, Forrester predicts. Another one-quarter will do so in 2008.