Channel Cleaned House for Vista
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PC sales plummeted the two weeks before Windows Vista's Jan. 30 release, as retailers cleared out older Windows XP inventory. The channel clearing--and not Windows Vista--looks to be the major reason for an apparent end-of-month sales spike. |
On Monday, I contacted NPD about retail PC sales, for the time period following Windows Vista's release. The data wasn't ready then--and it's not yet public today--but Stephen Baker, NPD's vice president of Industry Analysis, said he anticipated a sales increase with mitigating circumstances. Based on channel checks, he expected to find that PC sales declined ahead of Vista's launch because there was little or no stock to sell, creating pent-up demand independent of the new operating system.
I circled back with Baker today, following reports yesterday from another analyst firm, Current Analysis, indicating that PC sales jumped 67 percent year over year during Vista's launch week. Baker couldn't yet discuss NPD's sales figures, although Current Analysis' data is typically within range of his firm's figures.
However, after looking over other sales data, Baker could say with confidence that empty store shelves rather than Vista's release largely accounted for any PC sales surge.
"A big chunk of the PC sales was pent-up demand," Baker said. "The retailers were very good at managing their inventory. There wasn't much inventory in the stores the two weeks before the launch."
For the week ending Jan. 20, PC sales dropped 26 percent year over year, while notebooks remain flat, according to NPD. In the week ending Jan. 27, PC sales plummeted a stunning 59 percent, while notebooks dropped 20 percent.
Notebooks were a leading indicator why the "miserable sales" were about inventory rather than consumers holding back purchases, Baker said. "We haven't seen any week where notebooks were down for more than two years," he explained.
Overall computer volumes also declined during the same two weeks, which is another indication that shelves were bare.
"Really, the only explanation for PC sales increases is no inventory," Baker asserted.
I shopped the weekend before the launch and saw that the local Circuit City had converted its entire stock to Windows Vista machines, which were available for preorder but not for sale. My observation, while unscientific, resonates with Baker's informed conclusion.
This afternoon, I took a close look at the Current Analysis' mini-report about early Windows Vista PC sales. Shock of shocks, Current Analysis reached similar conclusions to NPD, even though most news stories and blog posts attributed sales increases to Vista. While the headline of the mini-report reads, "Vista Launch Boosts Retail Sales," the actual content gives appropriate context about channel inventory.
"The preceding five weeks had seen sagging sales for PCs," according to Current Analysis. "This slowing was primarily due to a limited amount of inventory, as retailers and OEMs chose to keep their supply of non-Vista products limited in preparation for the Vista transition."
Current Analysis put PC sales--I presume for desktops and notebooks--down nearly 40 percent in revenue and about 36 percent in units for the week before Windows Vista's launch.
Nowhere in the actual content of the press release does Current Analysis say or even strongly suggest that Vista was the sole or major reason for PC sales increases. The press release does say that "consumers warmly embraced" Vista, which later on is described a "hit."
The misreporting is unfortunate, but typical in these crazed days of quickly posted news stories and blogs.
Bottom line: It's too early to assess Vista's sales pull, particularly when inventory diminished ahead of the software's release. Additionally, credit hasn't been given where it's due. Retailers and OEMs should be commended for their efforts to clear the channel ahead of Vista's launch.
A small footnote I can't resist mentioning: Current Analysis breaks down the percentage of Windows Basic and Windows Vista Home Premium retail PCs sales. By every measure offered--first full week of sales or breakdown by notebooks or desktops--the combined total is 92 percent of PC units. What is the other 8 percent?
I leave the speculation to commenters.
Comments (16)
Really, really cheap PCs still loaded with XP. Every store I was in had at least 1 pitiful laptop still running on XP.
Posted by Roger | February 9, 2007 7:57 PM
more likely is that the informed consumer simply decided to wait a few weeks for a much better computing experience at the same price.
Posted by mj | February 9, 2007 8:01 PM
If "It's too early to assess Vista's sales pull" then when will we know?
Posted by curious | February 9, 2007 8:06 PM
Here's the 8%.
- XP Home, XP Media Center, XP Pro
XP was still being sold worldwide in retail stores.
- Vista Ultimate and Vista Pro
- If Current Analysis includes Apple as a PC (Intel based), then include OSX in the mix.
By the way, "commenters" is not a word.
Posted by oguchi | February 9, 2007 10:16 PM
Looks like Ultimate is not selling very well.
I think there are too many versions of Vista. Expect the number to be pruned back by 50% in 12 months.
Posted by Lawrence D'Oliveiro | February 10, 2007 2:14 AM
Yes and no. Home Basic will definitely disappear in 6-8 months. Its just available for folks who have an inordinate need to upgrade a really old computer. That urge should pass quickly.
Even if you have a PC that doesn't run aero now, get the Home Premium version and punch up the hardeware later when the price of video cards comes down.
Posted by Roger | February 10, 2007 8:29 PM
A post-Vista visit to PC World, Leeds, England and their web-site shows that XP is still very much alive and well. There was no interest at all in the display of Vista upgrades.
Posted by Alan(UK) | February 11, 2007 8:48 AM
I hate to say this and I should have known better, but I just had to upgrade to windows Vista. I was so excited to intall it in my computer, I spend a week trying to update my system tso it would install wothout problems. But I now regret it My printer won't work, my speakers and mic won't work. I'm Disabled and low income, and I saved my money to get this program thinking it would help me with my computer, instead I have nothing but headaches. I use my computer to comunicate and do work. I don't think it's right that Bill Gates can put out a new OS if it's not going to operate with the programs and hardware that you already have. It is a shame that Bill Gates can't wait until he new the OS was abble to work with at least all hardware and most software. I wish it was aasy to go back to XP until Vista is fixed!!
Posted by Kim Copeland | February 11, 2007 11:20 PM
I have to say that as I use Vista more and more for everyday use I find it increasingly frustrating. It's full of obvious bugs and an over-complicated and inconsistent UI make even simple tasks more difficult than the equivalent on XP.
Posted by Chad | February 12, 2007 12:01 PM
The problems that many people are having are not Microsoft issues. The hardware vendors had PLENTY of time to prepare for the Vista rollout considering it was supposed to happen more than a year ago. If you're having problems getting your hardware to work then complain to the hardware manfucaturer...they're the ones responsible for making a Vista compliant driver. Now notice that I said 'problems that many people are having' because any new OS is going to have it's bugs..it's inevitable...and a lot of the blame for those fall on Microsoft's shoulders. Now...anyone who chooses to upgrade immediately upon release and doesn't expect to run into issues has issues of their own.
Posted by Derek | February 12, 2007 2:31 PM
I'm not sure exactly the message you were trying to convey but I can tell you that in my shop we are desperately trying to find a way to keep from buying any new PC's with Vista. Dell has been non committal on letting us keep our XP image on new computers. Our initial tests have confirmed my worst fears that it will break a great deal more than any advantage it might offer.
Its amazing to me that with W2000 they finally came up with a workable OS, then XP made things a little worse and now Vista keeps that downward trend. Now XP looks like a good thing. I think that Vista will end up driving more people to OSX or Linux which is exactly what we are contemplating. To be honest Vista isn't the only reason, we are fed up with MS outrageous pricing on Office plus the problems posed by Vista. I say AstalaVista baby.
Posted by Al | February 12, 2007 2:44 PM
Exactly. Anyone who wants to upgrade to Vista right now should at least first check the driver availability for all the hardwards he/she can't live without. This was one of the best practices back to our XP installion, wasn't it?
Posted by Ray | February 12, 2007 3:07 PM
"The channel clearing--and not Windows Vista--looks to be the major reason for an apparent end-of-month sales spike." Duh
Supremely logical: Windows Vista wasn't available to consumers before the end of the month.
Posted by J Ger | February 13, 2007 4:59 PM
"A small footnote I can't resist mentioning: Current Analysis breaks down the percentage of Windows Basic and Windows Vista Home Premium retail PCs sales. By every measure offered--first full week of sales or breakdown by notebooks or desktops--the combined total is 92 percent of PC units. What is the other 8 percent?"
Hmmmm.....that 8% must be Apple/Linux/etc. Truly an astounding improvement in sales.
Posted by J Ger | February 13, 2007 5:02 PM
Heres one for all you guys who love the stats coming out of "NPD Group".
From a Cnet article "More buyers home in on Office 2007".
near the bottom is this statement "Correction: Due to incorrect information provided by NPD Group, the original version of this story misidentified the sales period focused on by researchers and mischaracterized first-week sales results for Office 2007 and Office 2003."
Why is this relevant to "this" article ... the source is same ... NPD Group.
So I would ask again "Is this story true" and the answer is "Who Knows" !
I still stick to my original statement ... it is too early to a sales analysis on Windows Vista.
Do it in 6 months time, and in the meantime Joe please do some NEWS articles instead of this stuff, as you may "stuff up" again... who knows !
Posted by Neil | February 13, 2007 6:23 PM
I'm just waiting to read about the Microsoft layoffs, that will be the real true indicator of how bad sales are lagging. So far the I've only seen 2 computers, laptops that came with Vista, and one had been rolled back to XP. I work in the IT department and no one has asked me if they need to upgrade to Vista, so even the uninformed have not been dazzled with Microsoft Marketing.
This is truly a bad bit of software at a bad time, will historians look back on Vista as being one of the contributions to the 2008 depression? Housing takes banking to the edge and Microsoft's lackluster and buggy software pushes things into the abyss? Glad I don't have to support this bit of rubbish, hope to be retired before this bit of digital stench burns the nostrils.
I don't own any Microsoft stock, but I've noticed Bill Gates has been selling 1 to 2 million shares a day. The arc is descending, there is no market left for this bloated crap except fools and idiots and media reviewers.
Posted by Helen Drury | March 18, 2007 4:15 PM