updated 06:00 am EDT, Sun October 26, 2008
Vista outlook unimpressive
Microsoft's recent quarterly revenue report indicated troubling numbers for the Vista operating system that could continue into next year, according to Computerworld. Although the company has shown strength in its business division, the client division, which is primarily driven by Vista, showed only two percent sales growth year over year. In contrast, the overall shipments of PCs increased by 10 to 12 percent. Microsoft claimed the soft sales of its core product was the result of unimpressive shipments of PCs to developing countries and the booming production of netbooks.
A research firm analyst from Directions on Microsoft, Matt Rosoff, pointed out that the slow growth "fell pretty far short of Microsoft's expectations." He also noted that the company must be worried, as the client division represents the "core of the company's business." Setting aside quantity licensing to businesses and consumer retail purchases, Vista sales to PC manufacturers actually slipped by one percent.
The computers being shipped to developing countries generally include less expensive operating systems, including XP or the least expensive version of Vista. Netbooks are also aimed at customers looking for low cost devices that likely will ship with XP or Linux installed. A report earlier this year indicated that 35 percent of business purchases have chosen an XP downgrade instead of Vista, although this could have been related more to backwards compatibility or performance issues than the cost of implementation.
Despite the lackluster numbers for the quarter that ended September 30th, the company believes that the operating system will show a seven to 10 percent growth in the holiday quarter. The expectations show an unusual optimism while many of the company's peers have been significantly cutting forecasts, anticipating negative impact from slowed consumer spending.
Microsoft presented a humble outlook through the rest of its fiscal year, however, with expectations of a two percent overall increase for Vista, even taking into account the eight to 12 percent increase in PC shipments. The business division, driven by Office, is expected to grow seven to eight percent in the next quarter, and 12 to 13 percent for the year. The stark contrast between sales of Vista and Office further indicates the problems that Microsoft is facing with its operating system.