Vista fights for relevancy against poor sales, XP, Windows 7

Microsoft has expressed disappointment in Vista's lethargic sales growth.

Recent sales numbers for Windows Vista paint a somewhat dreary picture for the OS as consumers and enterprises try to save dollars in an economic downturn.

While Microsoft cited strong overall year-over-year growth in revenue in its fiscal Q1 2009 earnings report last week, the numbers for Windows Vista fell short of expectations, with year-over-year growth of just 2 percent.

The software giant expressed disappointment in Vista's lethargic sales growth, pointing to growth in inexpensive netbooks that use Windows XP or Linux and flat PC sales in developing countries as the two main culprits.

Vista moved only slightly in a quarter that saw 10 to 12 percent growth in overall PC shipments. Meanwhile, Microsoft has been hyping Windows 7 while barely mentioning Vista at its annual PDC (Professional Developers Conference) in Los Angeles. Is Vista being unduly neglected, and is too late for a significant turnaround?

The answer is probably yes to both questions, says Roger Kay, president of research and consulting firm Endpoint Technologies.

Kay says that although Vista is "getting a bad rap," it never generated enough momentum when it launched. "It didn't make the big splash it should have in early 2007. And that window has pretty much closed," he says.

Microsoft's claims that skyrocketing sales of cheap netbooks and flat foreign sales are Vista killers left one Computerworld reader unconvinced.

"Microsoft blames the low uptake of Vista on 'netbooks and foreign sales of less expensive versions of Vista'....That is pure 100 percent unadulterated BS .... There are IT enterprise customers who wouldn't deploy Vista if their life depended on it. The real reason that MS is sucking air on Vista sales is that the consumer market is drying up due to the economy and the enterprise customers (even those with upgrade rights) are staying at Windows XP."

Kay asserts that Microsoft is not hiding anything and that netbooks and flat foreign sales are absolutely hurting Vista. But, he added, "Vista adoption has been at historically low rates. The learning curve is too great and the transition costs are too high for the perceived benefits," he says.

"Meanwhile, Microsoft is greatly affected by the PC lifecycle. If customers delay purchases for financial reasons, as they're doing now, then fewer units go out, affecting license shipments. Add to that a higher proportion of discounted developing world licenses and XP Home and embedded licenses and you have a recipe for slowing revenue growth."

Microsoft, for its part, remains confident that Vista is building momentum, and it stresses that those who have deployed Vista are satisfied.

"We are pleased with Windows Client momentum," says Ben Rudolph of Microsoft's Windows Business Group. "But success isn't measured just by sales-it's also important that our customers are deploying and using the product, and that they're satisfied with the experience. Based on our latest internal research, nearly 90 percent of Vista users are very satisfied or satisfied with the product. Across all of these metrics, we're pleased with the progress we're seeing."

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Shane O'Neill

CIO (US)
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