eWeek Microsoft Watch
Advertisement
Advertisement
April 11, 2007 12:22 PM

Uh-Oh, Vista! PC Sales Levels Are Normal



Signs continue to indicate that Vista is doing little if anything to lift U.S. retail PC sales, supporting last week's Harris Interactive poll about consumer buying intentions.

This morning, I spoke with Stephen Baker, NPD's vice president of Industry Analysis, about retail PC sales. March data isn't ready for release, but Baker could discuss trends based on weekly sales data.

"Vista hasn't been a catalyst for PC sales," he said. "Looking at the weekly data, there really isn't anything happening with sales that has anything to do with Vista."

All trends are normal. "Sales are pretty typical for what they have been for the past 18 months or so," Baker continued.

If anything, sales could be slowing and quite possibly more than usual for the second quarter, which typically is the slowest sales period of the year.

"I've heard from some places that sales are slowing more than expected," Baker said. Besides collecting and analyzing data, he also speaks with retailers, which is another measure of trends. Baker said that he doesn't have inventory data, but inventory buildup would be one likely factor to watch for.

Last month, Microsoft made big hype about 20 million Vista licenses sold in one month. But license sales going into the channel almost certainly cannot equate to PC sales, because nowhere near 20 million computers were sold in February, the first month of Vista availability.

If sales are slowing, the logical question to ask: Will there be too much Vista PC inventory on stores' shelves? Those Vista licenses had to go somewhere.

US PC Shipment Estimates

A sales slowdown or even normal sales in anticipation of high volumes could squeeze retailers and PC manufacturers as they move into the summer months, when back-to-schoolers kick off the lucrative second-half-of-the-year buying season. Stock stuck on store shelves could affect PC shipments into the channel and the typical launch of new summer models.

However, Baker said it's yet too early to assess channel levels. Two big sales events—Father's Day and graduations—are still ahead.

The sales problem isn't just about retail, which typically caters to consumers and small businesses. In mid-March, Gartner predicted: "Vista is forecast to have virtually no impact on PC shipments to larger businesses in 2007."

In a research note issued yesterday, Goldman Sachs analyst Sarah Friar expressed some concern about the Office 2007 and Vista launches.

"Normally, this would make us look at the stock as a definitive must-own," she wrote. "These launches also potentially mark the end of an era, and changing technology and business models in areas such as Software-as-a-Service, virtualization, and open source seek to diminish Microsoft's stranglehold on the desktop, which in turn significantly depletes the company's cash cow. Vista may be the last big operating system developed by the company."

Friar laid out a compelling argument for why most consumers will buy Vista PCs rather than upgrading existing computers. Using the PC average selling price of $773 and $159 Windows Vista Home Premium Upgrade price, she calculated the operating system to be 21 percent of the computer's cost. Other factors, like Vista's increased hardware requirements, also would be deterrents to off-the-shelf software upgrades.

Friar's conclusion: "Most users will migrate to Windows Vista by purchasing a new machine rather than upgrading old machines."

Looking ahead, Baker expects retail PC sales trends to remain what they have been: huge year-over-year sales increases for notebooks and nominal gains or decreases for desktop.

"There isn't a buying frenzy anymore, like Windows 95, because the stuff is like dishwashers, coffee makers and chocolate pudding," Baker said. "You only get it when you need it. Tech is demystified."

Related Posts:


TrackBack

TrackBack

http://www.microsoft-watch.com/cgi-bin/mte/mt-tb.cgi/10759

Comments (35)

richard :

I can see why. I think I bought a copy too soon. I have warned all not to get it now to wait for at least the first service pack. I cannot believe all the patches so far, as well as the fact about the ANI thing that Microsoft knew about in December but didn't bother to fix it in Vista before its release! So many other issues I have had that I haven't heard of people having with RC1 now having with the release! Microsoft should have waited a little longer. This only hurts them.

Roland :

obviously microsoft watch has been bashing vista for the last couple of weeks, one could get the impression, that this has been going on since mary jo left for her zdnet blog. to start talking about how the sales didn't explode immediately is just not smart. look at the mainboard shipments for march. they're going UP. wonder why that is... guess what's gonna happen next... riiiight, intels santa rosa is coming out, the h-hdd and ssds are slowly entering the market, aaaand you won't believe it... only a couple of days to go till the new mainstream dx10 graphics cards are available... now i really wonder why the market's not exploding... maybe it's just because people are waiting for the "vista-hardware" to be available? may be. just a thought. stop pretending everything is bad, you know better. stop trying to catch the eye of headline readers with stupid bashing. ppl read msw because you guys were well informed, not because you were ranting. get back to that. soon.

Steve :

This article also doesn't mention how many new systems are sold with XP. I've noticed that most stores have shifted from most new computers running Vista to most running XP. Since most consumers faced with a choice choose XP and Vista only stores were losing sales to stores selling XP. I think PC sales will pick up towards the end of the year as this will be the last chance to buy XP and I think there will be a big rush followed by a recession.

TomT :

To the contrary, a April 4, 2007 Best Buy press release states "Contributing to the results was the launch of Microsoft's Vista operating system, which accompanied double-digit comparable store sales increases for notebook computers and computer services."

TomT Again :

Another news tidbit: "April 4 (Bloomberg) -- Microsoft Corp., the world's largest software company, had its third-quarter profit and revenue estimates raised by Citigroup Inc. on the outlook for the Windows Vista operating system."

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=MSFT:US&sid=aC7Lu1oJyF9w

Gerardo Tasistro :

Roland, I hate to rain on your parade. But even Mary Jo is running news prints with bad news for Microsoft.

Some article titles from her:
Vista: Whatever happened to fast boot?
Not a good day for Microsoft
Ouch: Goodbye Microsoft; Hello, Google

Maybe things are really that bad.

Neil :

Gerado
You missed Roland's point, sure there is some "bad news" for MS, but what Roland is saying is what I have been saying since Mary Jo left.
That is that "Microsoft Watch" is "Bashing" MS not "Watching" at all !!
The good news bits Joe has begrudgingly done are "non issues" and he knew it !
Returning back to Roland's point ... which would you rather buy if your a gamer... a current Nvidia 8800 card (DX 10) that is expensive or one of the new "8600 or 8500" cards coming out this month that are reasonably priced.
When all these "new" things come then watch the sales of Vista.
Me... I am waiting too ! And then I will upgrade.

Neil :

Just one more thing.... Joe states "Signs continue to indicate that Vista is doing little if anything to lift U.S. retail PC sales, supporting last week's Harris Interactive poll about consumer buying intentions."
Notice anything about this statement.... the world wide sales are not quoted JUST THE USA !
What about all the other countries in the world Joe, I myself live in Australia.
What about England, what about Europe, etc., etc.
Lastly if it's not the "Yankee Group" it's NPD.
All the figures about USA and they mean NOTHING with regards to WORLDWIDE sales !!!
As the old saying goes "Figures don't lie ...but liars can figure" right Joe !!

Gerardo Tasistro :

I didn't miss Roland's points. I'm quite aware of Microsoft-Watch's turn about in regards to its position to Microsoft. And I like it very much. I don't always agree with Joe, but he doesn't seem to run the news to please someone. It is clear that after so many years of veiled news what comes up now might sting.

You closing comment on the card is clear support to Joe's position. You're one of the many who have found a reason NOT to upgrade to Vista. In your case it is video hardware related. I see others with different reasons: RAM, CPU, trouble of backing up, software, etc.

The fact that you haven't upgraded comes to prove there is little to be gained from an XP to Vista upgrade. Unless you have software or hardware that can take advantage of new Vista features. Hardware which in your case isn't even out yet. You seem to make Joe's point better than Joe himself. Yet you complain about him. Funny isn't it.

Gerardo Tasistro :

Neil, regarding the Microsoft bashing. I just finished filling out a questionnaire at

www dot microsoft dot ipsos dot com

Do keep in mind that I have more years using Microsoft products than shaving. So I've seen the good days and not so good days.

I could have been really nice and said wonderful things about their products while secretly using php, Java and Linux among other open source tools. Or I could have said the truth behind the move away from a Microsoft centric development.

The truth might be less liked than the lie, but it will be a whole lot more useful to them. It's up to you if you want to help Microsoft or Microsoft's PR department.

Richard Eng :

Roland, Neil, you're suggesting that people are waiting for affordable DX10 video cards before upgrading to Vista. Well, hardcore videogamers may certainly be doing that, but most Windows users are not hardcore gamers. Most Windows users aren't gamers at all! Or they're casual gamers. Either way, they couldn't care less about DX10 hardware.

The availability of affordable DX10 cards will NOT drive Vista sales.

And, Roland, your point about mainboards and Santa Rosa and so on is nonsense. New hardware innovations are constantly coming to market. PC sales continue to grow because more and more people are able to afford them. All of this has little to do with Vista. If MS had never released Vista, the PC market would still grow (using XP).

Neil :

Gerardo
Joe reminds me of a Vulture !
Why because he sits there waiting to pick MS's bones clean when it suits him.
And I am glad to see that you have seen the "change" that has happened here since the departure of MJF.
Because you are a truthful and unbiased person(in my book) and if you can see the "change" here, then it has !!!
Because if you have seen it and as you have said you are not worried one way or the other. Then it really is bad here now !
I still believe that Joe after asking us "Are we MS employees or not?" should state (for the record) why he does not like MS !!!

Gerardo Tasistro :

I believe what Joe asked was if we had investments in Microsoft. From what I've seen as of late, MS employees are beating all other MS bashers hands down.

Neil :

Richard
Of course hardware matters !
I am not a "gamer" and yet I would rather have an "up to date" card before I upgrade to Vista.
People pick what they feel is the right time to upgrade not just because only one new thing comes out.
But a whole new era of hardware is going to be released and I for one, would rather update after it comes out, not to mention it would be cheaper as well.
And isn't what people are mostly concerned with regarding Vista, so it goes that the same is the case with the hardware.
Also you did not mention the main area of my comment and that is WORLDWIDE not just the USA, there is a hell of a lot more people out there than just the USA my friend, hey Gerardo !

Gerardo Tasistro :

Well I can add to that. Here in Mexico, Office Max and Office Depot sell Vista Ultimate Full at around 570 US dollars, Business Full at 430 US dollars and Home Premium Full at 350 US dollars.

It was no surprise when the tech guy said they had sold mostly "los verdes" meaning the green Home Premium packs, one Ultimate and one Business.

I don't think it is selling much.

Roland :

hi again,

i wasn't trying to say, that there's supposed to be only good news... we all know, there's many things going on right now with vista/ms that aren't good at all. i was just wondering why there hasn't been any article showing me, that msw is well informed, but only analyst-talk about how bad everything seems to be.

gerardo: i totally get your point, but what i wanted to get across was, that vista is selling not so bad in most parts of the world... sure, the "full" packages are bloody expensive, but thing is, most people aren't buying those, because there are cheaper alternatives. here in germany you can get a stand alone full oem-package/system builder version of vista ultimate for about 200 usd, because they can be sold without combining them with hardware. the upgrades are even cheaper. those sb/oem packages are selling like hot cakes, but they're not in any statistics, because only "real" retail packages are counted... the oem/sb packs have been top sellers on amazon and many price comparison sites for weeks now. i wonder why that is. next thing is, almost all new computers sold around here are already running vista. so although the overall sales numbers aren't exploding, vista is being sold on like 80% of the systems. i wasn't trying to say, that vista is selling like hell, because the "official" numbers from people like npd show that's not the case. i was trying the say however, that the reason for the not-exploding sales numbers could be, that the "right" hardware's not yet available. and believe me, there's some cool stuff coming...

i just don't like the negative attitude msw has taken since mj left.

Well, at least China is seeing a 20% increase.

Since last year they sold 20 million units then the 20% increase may translate to ~24 million in Vista unit sales.

If I assume revenue to Microsoft is $50 per unit then the 24 million brings in $1.2 billion in revenue.

Estimated OS Revenue from China:
2007 - 24 million units : $1.2 billion
2006 - 20 million units : $1 billion

For Microsoft, the $200 million delta from China is chump change but its good to see growth.

Lawrence D'Oliveiro :

I predicted a couple of months ago that Microsoft would have to cut the number of versions of Vista in half within 12 months. I'm thinking this is looking more likely than ever.

Joe, the answer to this enigma is explained in this new article, which you may find informative.

http://www.informationarbitrage.com/2007/04/microsoft_phili.html

"This is a relic of old-line consumer products companies like Philip
Morris, or fraudsters like Miniscribe who literally shipped bricks in
lieu of disk drives to hit sales targets.

[...]

Channel stuffing is the business practice where a company or a sales
force within a company inflates its sales figures by forcing more
products through a distribution channel than the channel is capable
of selling to the world at large.

. . .

We have a game we play around the office here with Microsoft press
releases. The game is, "Find the words that make the headline true."
It's not always easy.

. . .

Sony, like Microsoft, announces units shipped, not actually sold.
This allows both companies to advertise sales numbers based on how
many units they can force retailers to accept, not on how many units
customers actually buy; both have considerable market power to push
excess unsold inventory into the channel."

Just-a-drone :

The column is titled: "Microsoft Watch"
Not: "I love Microsoft"

TomT :

From yesterday's Washington Post:

"Laptop shipments surge in March: Contract notebook manufacturers report record sales for March and ongoing increase in sales of mobile PCs."

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/11/AR2007041100984.html

Steve Knabt :

The "normal" pace of Vista sales speaks well of the relative comfort level with Windows XP. Some would say this flies in the face of conventional wisdom if you read the preponderance of articles critical of Microsoft in the IT industry media.

Businesses will resist changing over to Vista for the simple reason it takes a lot of resources to support a new operating system. There's also risks involved in being an early adopter. After a year or two we'll reach a tipping point where they'll be shoving old XP boxes out the door into retirement.

Home users are price sensitive. Many aren't that PC literate. Upgrading an OS isn't big on their to-do list.

Plus, obviously, there's a lot of truth to the old adage don't buy version 1 of any software, especially an OS.

But one critical issue missing in much of the Microsoft-bashing within the industry, is there's a huge open source 'religion' brewing. The many industry advocates of Linux on a desktop, looked at its principal advantage, server-quality security, and beat up unmercifully on Microsoft's Windows client. Microsoft responded by making security a principal focus of Vista.

People like me yawn. Neither my work nor my home PCs have been victimized by a security threat in years. To put it in perspective, the last time it happened I was running Windows 98.

I probably won't see Vista on a computer for another 3 years. But I suspect the tipping point for many home users and most businesses will happen sooner and probably no later than 2009. When that happens you'll see the herd of upgraders heading off to buy a new Vista-loaded PC.

bruno :

Vista? Come one...Microsoft is not cool anymore....

People will get Vista yes....but time to time...Nothing exciting about it...Just wait until they need another computer....Vista will come in the box....

I was younger, i was thiner, i was a Windows user...

Now i am older and smarter and ...Mac user

Time to learn people...


regards

evan :

Neil,
I think you stole my line....I was the first to name it "Microsoft Bash" :)

stenman :

The window of opportunity with Vista was before the holidays when clueless consumers would have bought computers with Vista installed. Corporations are testing Vista for problems with their internal suite of applications and few will complete this until late 2007. Most corporate IT departments are wisely planning very limited deployments until more is know about the OS and to minimize having to buy everyone a new computer which is a part of the cost of conversion. Most will cycle in Vista over the next 3 years as computers are replaced and in particular as service packs and new drivers are released.

No experienced IT manager is going to rush to buy new computers to install an unproven operating system from a company with Microsoft's history.

A recent poll of CIO's showed 46% planning to never deploy Vista. I expect most of these companies will be going to Linux on the desktop and this is the perfect time to do it. The technical issues are known with the Linux distributions, the effort to deploy it will be no greater than with Vista, and there is no need to upgrade existing computers. In fact it may double the expected life of most computers.

russ :

Vista? Give a good real reason … none.
Vista doesn't do anything you can't already do with XP and couple other applications.

TomT :

And from today's news wires:

"April 12 (Bloomberg) -- Microsoft Corp. shares rallied after Soleil Securities Corp. started coverage of the stock with a ``buy'' rating and said the company will benefit from customers seeking to upgrade with Windows Vista and Office 2007.

``The strong upgrade cycle is likely in the near term,'' analyst Dawn Simon Talbot wrote in a note to clients. ``Vista, combined with an office suite upgrade, should prove a powerful combination to drive growth.''

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=MSFT:US&sid=aEAFysWRQ5p8

Neil :

Evan you can claim "naming rights" that's alright.
What both of us agree on is that this site is "Microsoft Bash" !!
Even after figures showing slow uptake on XP Joe Wilcox keeps on and on and on about how Vista is doomed to failure !
He of course is totally wrong and all of this will be forgotten later, as if no harse words were ever spoken, just like XP which I doubt Joe has (currently anyway) any harsh words for ... or has he !!
Windows and in general microsoft can't win with people like him, and as can be seen there are plenty of those "analysts" chaffing at the bit to say something bad about Vista.
And yet in the real world there comments like TomT's that show despite all the doom and gloom posted by Joe Wilcox and his cronies, business is as usual despite them !!

Neil :

NEWS FLASH NEWS FLASH NEWS FLASH

For all the Apple users who said "typical" of MS to delay a release of an OS.
The table has completely turned around to you now !
http://www.betanews.com/article/Apple_Cant_Face_The_Truth/1176414722
Lets see how you can crawl out of this one ??
After all the snide remarks made by Apple people, now its our turn !!
Apple should practice what they preach !

netjet2020 :

I enjoy windows and the IBM based architecture; mainly because it is so flexible and the marketplace has embraced it so vigorously. That said, I am sure if Mac was cheaper and as flexible we would be talking about Apple watch right now; instead of having two sound buds stuck in our ears listening to our Ipods. We can debate the pro's and con's of operating systems and hardware until the tucows come home; but what pushes today's machine is gaming and porn dollars. So I will go back to my Dual-Core SLI nVidia Gaming system (don't like porn) and put my ear buds in and listen to some good 60's anti-establishment rants. BTW Mac is better (<8

Kyle :

I have no Idea where this analyst is getting his information. Although he did admit that he did not know the actually stock on the shelves. The fact of the matter is that the only reason vista isn't selling the way that previous operating systems did in the past is because of people like him. Analyst keep coming out and saying that it doesn't work, or that it is a bad operating system. But in all reality, this change is what was needed. Windows XP was at its limit. We could not push the operating system any farther than what we had without a major overhaul. And there are just to many security risks and holes built into the system.
What we need is the people on the front lines telling the consumers what they need. Because in all reality the technicians are the ones that understand how to use vista to its fullest potential. And you get buisness and data analyst saying that it dosen't work when they have no damn clue what they are talking about. I am a certified technician, and I have been a technician for over 15 years. Vista is what we needed. The problem with it, is that Microsoft waited 7 years to release a new OS. The public is stupid, they listen to these analyst because they assume that they know everything, and they don't. Granted there are some drawbacks to the new system. The same thing was said about XP. But people just didn't listen because the people that new what they were talking about actually spoke up and told people what they did need to know about the new OS.
Those of you that are techs need to get off your butts and explain to people about the benifits to vista and not its downsides, like the legacy program issue. Get over it. The reason those programs don't work is because they utilize protocalls that were made more difficult to access by the new security. If the damn software companies would do there job and release updates then we wouldn't have this problem.
Oh and sales of computers are actually at a quarter high compared to past sales for both of the major computer dealers in the country.

Kyle :

And those of you that read my post an think I dont know what Im talking about. HAA. I read all of the posts before mine. You all have a ligitimate point, but you don't see the big picture. Every computer sold since June of 2005 is capable of handleing vista out of the box!!!
As far as the hardware requirements go, so what. Why don't you go look a little closer at the hardware requirments. Vista requires 64Mb of ram to run 1024x768 resolution with Areo enabled. And 128 Mb to go 1280x1024 or higher. 512 MB of ram in order to run the system, just doubled from XP's 256Mb minumum.
And....AND almost every computer manufactured now and in almost all of 2006 that was an OEM build has a dual core processor and is 64 bit. Vista is the only operating system capabale of giving you significant performance boosts over XP. Vista is FULLY 64bit compatible versus XP64 was limited. And vista actually fully utilizes the second processor where XP was limited to the applications support for it.
So go out there buy the upgrade or a new system, learn it (or even dual boot) and buy the hardware you want for it later when the price drops. Oh and if you have that big of a problem not using all of your old applications, DEAL WITH IT. Have multiple systems. And remeber most of the average users dont need the newer hardware, they just need someone to show them the differances between XP and Vista. So tech them, and make sure they buy a warantee. It is significantly less expensive in the long run, because granted you might be able to do the work, once you open that case the warentee from the manufacture is void, extended warentees through Circuit City and Best Buy are not void.

Forgetting Mac sales?

Apple's outselling Dell, HP, Gateway, and others quarter after quarter, with the Mini and iMac leading the way. Don't believe me? Proof is in the pudding.

Most users don't care about games.

Most users want to surf the web, pirate software/music, play simple games, watch a movie, make an audio CD/use audio device, and look at/download porn.

Linux is a joke. Joe Blow can't use it. Vi$ta is a joke. Joe Blow can't tell the difference between Winblow$ 95 and Vi$ta. You don't even know how many people I see buy a new game for that 486 still trucking along with 95 and 16 MB RAM.

Again, they simply don't care.

Mike Marzolf :

go to your neighborhood Best Buy -- look at the shelves for Vista and Office -- MSFT has put empty cardboard boxes (colored the same color as the respective SKU) on the shelves to "face" the shelf -- making them looked stocked -- the questions are: why? are they ahead of plan, but want to modulate the sell-in (this is how they recognize revenue now)(and still have the shelf look appealingly full) or is there some other motive for the make-shift dummy cardboard boxes on the shelves? any thoughts?

TomT :

From an IDC press release:

"FRAMINGHAM, Mass., April 18, 2007 � Worldwide PC shipments grew by 10.9% in the first quarter of 2007 (1Q07), according to IDC's Worldwide Quarterly PC Tracker. Year-on-year growth improved from the fourth quarter in all regions with Europe and Asia/Pacific (excluding Japan) showing the biggest improvements versus forecasts. Japan recovered from a double-digit decline in the fourth quarter, but was the only region with declining volume as the United States moved back into growth mode."

"The strong first quarter is a good indicator of the health of the industry," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker."

http://www.idc.com/getdoc.jsp;jsessionid=MEHEVTKFHHGP2CQJAFDCFFAKBEAVAIWD?containerId=prUS20652107

Post a Comment

 
 
RSS Syndication

Advertisement
Advertisement
Microsoft Watch     Contact Us | Advertise | Site Map
Ziff Davis Enterprise