March 25, 2008 10:01 AM PDT

Windows XP may get another reprieve

Posted by Ina Fried | 136 comments

With deference to my colleague (and boss), not ALL roads lead to Vista.

Although Microsoft is pushing hard to move everyone to the latest version of Windows, there are some market realities that are going to keep Windows XP around for some time--likely well beyond the current June deadline for large computer makers to stop selling the older operating system.

Microsoft has already extended the deadline once (XP was originally supposed to stop showing up on big-name PCs in January) and I would expect another extension to be announced soon.

The biggest area where XP is likely to stick around is in the nascent but growing market of low-cost, flash memory-based notebook computers, such as the Asus Eee PC. These devices are fertile ground for Linux, benefiting from its low cost and low memory requirements. Microsoft had to do some work just to get Windows XP onto the Eee PC and Vista would seem to be a non-starter.

Speaking of starters, another area where XP is likely to persist is in emerging markets. Microsoft conceded as much when it first extended the XP deadline last year. In addition to offering a few months reprieve for XP broadly, the software maker said it would offer the entry level Windows XP Starter Edition through 2010 for use on ultra low-cost PCs.

"We're seeing great interest from our OEM partners in having Windows on these machines, such as pre-installing them with Starter edition in over 100 emerging market countries worldwide," Microsoft VP Mike Nash said in a statement in September. "That continues to be a trend we're keeping our eye on, as even though we expect hardware costs to continue to drop, it reaffirms for us that not all customers want the same thing from their computers."

But it's not just Starter edition that people want. To compete against Linux, Microsoft needs full Windows XP on these devices. There are more and more devices like the Eee PC cropping up and they are finding interested buyers, not just in emerging markets, but in mature markets where people are willing to trade a few features for getting a low-cost, light machine that allows full Web browsing on the go.

Publicly the company is still sticking to the revised June deadline, but Microsoft has shown a willingness to make changes in the past. My big question is whether it will extend the deadline only for certain types of computers. There are plenty of mainstream models today where XP remains an option, particularly on build-to-order machines from the likes of Lenovo, Hewlett-Packard, and Dell.