PC vendors fear an Osborne Effect from Windows 9

The Osborne Effect is one of those rules of business even non-B school graduates know all about. Announce a hot new product and watch the sales of the existing version shrivel up and die as consumers hold off for the new commodity.

The name dates back to a computer company that effectively killed itself by announcing a new PC so good it killed sales of the existing products on the market, and then they couldn’t get the new product out in time. So the PC industry knows this well.

And the industry fears it will happen again. Microsoft is believed (but not confirmed) to release a public beta of Windows 9 on September 30, with a full release coming in Q2 of 2015. And we know Windows 7 sales will cease on October 31, leaving the slandered and maligned Windows 8 as the only OS on the market.

Our favorite Russian leaker WZor is saying PC vendors are upset that Microsoft will launch Windows 9 after the Christmas holiday season and during the slowest time of year for PC sales. WZor adds that many Asian hardware vendors are so unhappy that they are considering cutting production of Windows PCs and tablets during the waiting period.

On the one hand, I don’t blame them. They will absolutely be Osborned, if that’s a verb, in the fourth quarter, the Christmas buying season. This is especially true if the preview of Windows 9 is anything like the preview of Windows 7. I remember the hugely positive response to it, with many people replacing XP on their systems and using the beta right up to the official launch. I was one of them. If Windows 9 goes over as well as Windows 7, you won’t be able to give away a Windows 8 PC.

Back then, Microsoft wouldn’t give the release date because it was trying to protect OEMs from having their sales crater, but once the beta was out and went over so well, that was all but impossible. Dell’s then-CFO Brian Gladden said on a conference call that he expected PC sales to be weak until Windows 7 launched because people would hold off buying.

Microsoft tried to protect its OEMs by offering free Windows 7 to customers who bought an XP or Vista machine, but the effort fell flat. Reinstalling an OS is a pain in the rear end. I know; I go through it annually for one reason or another.

WZor said Microsoft is in talks with hardware manufacturers to find a solution, and the free upgrade to Windows 9 is one idea being floated. Then again, there are also rumors that Windows 9 will be a free or just $20 upgrade for existing customers.

Microsoft is in a bad spot. I absolutely would not want them to rush out Windows 9 to make Christmas. The company can’t afford another hairball OS, and Windows 8 wasn’t even bad technically, just in usability. Launching Windows 9 in April/May would actually be good. It will give corporate customers time to shake it out and test it and Microsoft time to fix it up before the 2015 back-to-school and Christmas buying periods. But the next eight months are going to be a gut check time for OEMs/ODMs.