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May 17, 2007 9:42 AM

Vista License Sales in Context



Microsoft's sales figure of nearly 40 million Vista licenses is impressive. But it's no sign of surefire success. Yet. The PC market is much larger today than in 2001, diminishing comparisons to Windows XP license shipments.

On Tuesday, Microsoft Chairman Bill Gates claimed that Vista's adoption rate is about "twice as fast as the adoption of Windows XP." Maybe so, but it's off a much larger base.

As the chart below indicates, IDC preliminary data on first quarter 2007 worldwide PC shipments is 58.9 million units. Q1 would be the first after Vista shipped, if counting the Vista holiday coupon program and business release on Nov. 30, 2006. Microsoft shipped Windows XP in late October 2001—nearly five years to the day the Vista coupon program started—with PC shipments of 34.4 million in the quarter that followed.

Q1 PC shipments following Windows releases

In evaluating Microsoft's 40 million license figure, "Another important point here is the size of the PC market, which is much bigger," said Loren Loverde, program director for IDC's Worldwide PC and Mobile Phone Trackers.

Caveat: The comparisons aren't clean, because Microsoft's 40 million figure is for sales through last week. In late March, Microsoft made the audacious claim of 20 million Vista licenses sold in February. So the real number of Vista licenses sold during the first quarter is somewhere between the two figures. Since Gates said "nearly 40 million," I'll split the difference at 30 million licenses.

If Microsoft sold 30 million licenses during first quarter and manufacturers shipped around 59 million PCs, doesn't that work out to about half of the computers going out with Vista?

I wouldn't call that a flop, by any means, as some Microsoft Watch commenters might presume is the point. OEMs can still license Windows XP and fastest PC growth is in markets where Vista antipiracy mechanisms and shipments of lower-horsepower computers could affect shipments of the newer Windows.

Yesterday, HP announced robust earnings, in part because of strong PC sales. During a fiscal second quarter conference call yesterday HP CEO Mark Hurd cautiously praised Vista's contribution to earnings.

"I think any story out there that people want to tell about Vista, they can tell," he said, "Right now, I can tell you it has been good for us."

But HP reported year-over-year PC sales growth of about 24 percent, or about twice worldwide PC sales growth. Whatever HP is doing right, it's more than just Vista. I don't doubt Vista contributed something, but HP's success in context of Dell's troubles suggest other factors at work.

I still think that second 20 million of Vista sales—from March 1 through early May—is sign of increasing momentum. If Microsoft wasn't so hung up on XP comparisons as the benchmark, it could really demonstrate that Vista sales are increasing.

The first 20 million figure really represented four months of sales, and that could have been positive data because Microsoft protected its customers' holiday investments. For free! Instead of making that point, Microsoft got carried away with making comparisons back to XP.

I say, let Vista sales stand on their own. Past comparisons don't work, because mitigating factors—size of the PC market, for starters—have changed.

Colleague Scott Ferguson contributed the HP comments to this report. Thanks, Scott

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Comments (17)

DD :

Joe,

Why are you wasting your time and ours ??? Whatever the figures are eventually 94% of the PCs will run Vista. Fullstop.

Richard :

Absolutely correct! The uptake of Vista is not as rosy as Microsoft would have you believe, but it's not bad, either. I wish Microsoft would just be honest with the public, rather than trying to mislead them for the sake of boosting sales...

Parvenu74 :

The 40M number is inaccurate. In March I bought a Dell laptop and at the time I had no option but to order it with Vista. The VERY FIRST THING I did when I got the machine was to wipe the hard drive and install Windows XP. I had no desire to use Vista on my machine and I'm sure there are tens of thousands, if not millions of machines that count toward the 40M figure that, while sold with Vista on board, were replaced with another O/S once delivery was taken.

Paul :

"If Microsoft wasn't so hung up on XP comparisons as the benchmark, it could really demonstrate that Vista sales are increasing."

Part of the reason MSFT has to make XP comparisons is that reporters have been endlessly parsing the compares or otherwise disparaging Vista. As one of the biggest abusers in that regard, it's kinda comical to see you make this statement. You have done this whole Vista/XP number thing to death. Unless you can show that Vista is actually eroding the number of PCs shipping with an MS OS, then Vista will grow nicely with PC sales and can't help but be a "success". So what exactly are you trying to get across? That it should have been more of a success? Possible - perhaps even likely. And since you think they shouldn't do XP compares, why are you still obsessing about the now larger base and PC run-rate? That's bad for MSFT and folks who ship on that platform how exactly?

Joe :

Paul wrote: "Part of the reason MSFT has to make XP comparisons is that reporters have been endlessly parsing the compares or otherwise disparaging Vista."

Paul, Microsoft releases the numbers on XP comparisons. That's where reporters get them from.

The comparisons are effective PR bang, but they don't reveal the real numbers that Microsoft partners, like software developers and solution providers, would want to have. They must make business decisions based on Vista's progress. Similarly, many enterprises would want to know, too, as for some IT managers there is safety in numbers.

Vista will eventually succeed. But how it does early on affects the business decisions of many companies. That's why this blog spends time sifting through the Vista numbers.

Thanks,

Joe

Richard :

Is it "disparaging Vista" to dispel Microsoft's exaggerated claims of Vista sales? Is it disparaging Vista to point out that, as a majorly overhauled operating system, Vista is bound to have bugs, driver problems, and application compatibility issues? Is it disparaging Vista to recommend that people wait for Service Pack 1 before making the leap to this product?

Is it disparaging Vista to suggest that there *are* perfectly legitimate alternatives to having Vista on your desktop? Windows, OS X, and Linux share the same IT market space.

Joe Wilcox's industry analysis *should* include these kinds of exposés.

David :

A lot of discussion over the 40M and whether Vista will succeed etc...

But has anyone come up with an answer (or is it a question?) about what constitutes a Vista failure. Monopolistic business practices from Microsoft ensure they will sell millions, so can we formulate the right question that could shed some light on this launch.

Whatever the outcome (and I think we all know what it is) I think we can say that Microsoft's development methodology and marketing of Vista has been the ultimate demonstration of how NOT to do it.

Gerardo Tasistro :

David, in my opinion the failure of Vista is Web 2.0's success. As well as platform independent solutions. The next great thing need not be the greatest thing at all. Just look at PS3. Big, loud, impressive, expensive and from the reviews I've seen a flop.

This whole issue of Windows is due to user dependence on software. I have no doubt there will be Vista ports or Vista compatible apps down the road, be them work or game related (we already have Office 2007) But we must also consider all the installed software and code! How much will it take to port that to another system.

We've already heard issues from Joe regarding his VPN. How many more are out there? As more and more developers see the pain this uphill climb is they will start to consider web based applications. Because they're so much easier to maintain.

We already see a growing stream of web based solutions to our everyday needs. If this trend gets even more speed due to Vista's slow adoption, then it is very possible people won't care what OS they run. This is Microsoft's greatest fear. They need to be desktop centric or they loose their monopoly.

I'd like to see a review (hint Joe) about Vista's impact in the business sector. Particularly in the inhouse developments and how people are looking at this. I know a few companies that would be hit by Vista and Visual Studio 2005 migration paths. I'd like to know if there are numbers or data regarding this.

These are important things to write about because essentially Microsoft is misleading the public when they claim forty million sales for Vista. As has been pointed out, business are making decisions based on information such as how many Vista machines are out there. It can mean the difference between supporting Vista with a new software product, or not... its not all about businesses deciding to buy new machines. We deserve the correct information and not PR half truths. Long may this blog continue.

Skeptic :

Parvenu74: That's why Gates said "licenses". It does not matter what you decide to do with the Vista license you have bought--that is, unless you seek a refund. Of course, Microsoft realizes perfectly well that refunds are too inconvenient for consumers to matter to Microsoft.

Skeptic :

Vista is, among other bad things, an attempt to force DRM upon people. Gates wants to wear down any resistance consumers might have to DRM so that, at "worst", they are merely resigned about inconvenience.

Rumors of DRM's impending death are premature. Gates has already acknowledged that it does not work well _now_ but was careful to note that they are working hard on "improving" it. Thus, with future updates to Windows that make DRM more convenient, Microsoft will be the darlings of the MPAA, RIAA, etc. Also the greater convenience will be welcomed by consumers, just as convenience always is.

The only hope is for greater resistence and education about how bad DRM and Vista really are. It's not hopeless. Consider that even Steve Jobs spoke out against DRM and lately Apple and Amazon have been working against DRM. Some ideas:

1. Check out defectivebydesign.org , an anti-DRM site.
2. Check out badvista.org , on the many ways Vista is such a losing proposition.
3. Just searching for "vista refund" will give plenty of hits describing successes at retrieving people's hard-earned money from Microsoft crooks.

#3 will seem like a hassle, but consider that not only will you get your money back, but also you can set a great example for others around you. Heck, it would be a great thing to blog about. Filling the blogosphere with such stories would be a great demonstration of grass-roots opposition to DRM, among other things.

As an IT Services in the Northern Black Hills, I recently ordered ten new systems for my clients and they all demanded XP Professional. So in a day, delete partitions, format, and install. A shame that the consumer is put through the extortion of attempting to get a refund. I use Vista Ultimate on both of my workstations ONLY and I don't have a problem at all. Unfortunately, my clients and my fellow IT people will remain on XP for some (long) time.

nix :

Of course Vista's sales are increasing. Consumers don't have a choice when buying PC's without an OS.

chips b malroy :

But perhaps we are all using the wrong data or rather the wrong criteria to measure the "success" of Vista.

1. We already should know that MS will make a lot of money off Vista and Office 2007. This should be a given, right out of the starting gate. Windows ME also made a lot of money, that dosn't mean it was good or made users happy with M$.

2. MS will sell a lot of Vista licenses, how can they fail to? They are a monopoly, its forced on most users when they buy a new computer. So while the current 40 miilion figure may not be completely true, (they were probably counting XP sold as well with upgrade coupons) its probably close. Yes some of these are still "in the channel." Some were really XP licenses as well.

3. Vista is not going be enough for MS to "go away," or lose its dominate position on the home Desktop computer.

4. Vista has a lot of problems right now, like ME. But like ME it may actually work ok of some hardware. I had two computers out of five I tried Windows ME on the worked very well. So I think not everyone is displeased with Vista.

So, what data should we be looking at?

1. Is Vista depressing hardware sales? Chip manufacturers?

2. Is Vista depressing Computer sales?

3. Will Dell's Ubuntu sales work? (I doubt it unless they put it on low end laptops)

4. Will other OEM's try Linux on their computer sales?

5. What percentage of the folks that get a computer with Vista on it wipe it off the hard drive and install XP, an older version of windows, or Linux? (this is a big one) This will show customer dissatisfaction of Vista, and perhaps a growing revolt among the MS users in general. Some of these will eventually move to Linux, as the upgrade path is too much down the road.

6. If Vista sold 40 million licenses and there are 400 million computers in the world (not sure on this figure) that would mean that 10% of the market should now be using and surfing with Vista. Be interesting to see the market stats on the online breakdown when it comes out at the end of the month. Not that I trust this sight, but it may be one of the few we have to go on;
http://marketshare.hitslink.com/report.aspx?qprid=2
Now if at the end of the month, we can figure that Vista should be at 11 or 12% sold, and this site reports less, we might get an vague idea of how many people are wiping out Vista and replacing it with something else.

7. Ok, heres the really big stick to measure how good MS is doing with Vista. How much of the desktop market percentage are they losing to alternate OS's? Again, its hard to get reliable figures, but using that same link, I think it fair to say that MS has lost between 2.5% and 3% already. Tiny Linux has Tripled in use, with Apple making big gains. Will this trend hold up?

David :

Gerado, good points and I agree with most except the PS3 analogy...

Sony have BOTCHED the marketing of the PS3, no doubt, but it is an impressive piece of work and I think will be around longer than Vista.

The PS3 and Apple demonstrate what people actually want from their computing devices these days and backs up your observations...Appliances. I dont care what OS the PS3 or my Macbook is running, they just work.

Microsoft are still so focused on the plumbing and most people dont care anymore. The OEM channel and endless bits of hardware that Microsoft helped create is their greatest weakness.

chips b malroy :

Speaking of chip manufacturers, here is an interesting post;

http://www.threadwatch.org/node/13904

comments as well worth reading as well.

Neil :

Chips
You sure can find bad reviews when you want to !
Note the main thing in the article that you have linked to, is that they are 90% questions, and not statements, and questions don't mean zip mate !
As one person (commenting on that site) put it there is a general lack of new computer sales at the moment.
But Chips have ever thought that people might have seen that Vista needs more modern computer components and are therefore saving up (like me) to do an upgrade when they can !
So for the moment sales are sluggish the long term is what matters.

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