Microsoft CEO dampens Vista sales forecast

Microsoft CEO Steve Ballmer said sales forecasts for its new Vista operating system may be "overly aggressive"

Microsoft chief executive officer Steve Ballmer believes that sales forecasts for its new Vista operating system may be "overly aggressive."

In a conference call Thursday with financial analysts Ballmer said lower selling prices, limited new corporate sales, and software piracy may combine to temper Vista sales forecasts.

"I'm really excited about how enthusiastic everybody is about Vista," he said. "But people have to understand that some of the revenue forecasts I've seen out there for Windows Vista in fiscal year 2008 are overly aggressive."

Microsoft's 2008 fiscal year begins this July 1.

Ballmer did not provide specific sales numbers.

Sales of Microsoft's Windows operating systems are driven by the growth in sales of personal computers (PCs), Ballmer explained. But PC sales growth tends to come more from the consumer market these days than the business market.

Also, while Ballmer expects Vista to see greater sales growth in emerging markets such as in China, India and Brazil, that growth will be on a smaller base than in developed countries. Also, those emerging markets are also high-piracy markets. Even though Microsoft has added features to Vista to thwart piracy, it is still a problem in some countries, he said.

And while Microsoft sold a lot of Vista upgrades to corporate customers, they have already been accounted for in previously signed contracts, so forecasts of additional corporate sales "may be a little more bullish" than is warranted, he said.

Vista is the first totally new desktop operating system from Microsoft since the introduction of Windows XP in 2001. Vista has been much-delayed in coming to market as the company tried to avoid releasing a product with defects and security flaws that plagued previous Windows versions.

Although Ballmer reported a strong early surge in Vista sales, which began for corporate customers in November 2006 and for consumers in late January, the surge may be limited to what's left of fiscal 2007 and "will not recur in fiscal year 2008."

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Robert Mullins

IDG News Service
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