How PC Makers Plan
to Cope"> "This allows us to prepare for the holidays in a more orderly fashion, and regardless of the actual timing, our PCs will be fully Vista-ready well in advance of Microsofts introduction," a Gateway spokesperson said in an e-mail to eWEEK. However, the manufacturers declined to elaborate on what specific efforts they might make to ensure this compatibility."Microsoft said its going to have to go a long way to help its partners to get through this," Kay said. "That implies all sorts of financial help, including [upgrade] certificates and things like that." However, certificates arent likely to snare all would-be PC buyers in the fourth quarter. "That only helps people who are thinking about people buying to continue buying," Kay said. "Some consumers dont want to load operating systems on their PCs, no matter how easy you tell them its going to be. They just want to buy it as a package." The delay could also impact a range of chip makers, including Advanced Micro Devices and Intel, as well as graphics chip makers ATI Technologies and Nvidia, and even memory makers such as Micron Technologies, according to Joe Osha, an analyst with Merrill Lynch, in New York. "The disappearance of Vista from the holiday 2006 selling season is likely to have a bigger impact on semiconductor companies than a simple few-week delay might imply," he wrote in a report. AMD and Intel are both working to bring new PC processors and supporting chips out during the third quarter. But now PC makers are less likely to push hard to roll out high-end systems that include those chips in time for the holiday selling season, Osha contended in the report. The result could leave AMD and Intel fighting to win deals on less cutting-edge chips largely on pricing, he wrote. The same effect could hit memory makers, as Vista is expected to require more memoryabout 1GB, compared with the 512MB standard nowas well as graphic chip companies, as some of the advanced user interface features require beefy graphics. Meanwhile, opinions vary on just how much graphics processing power Vista will need. But PC companies are likely to use Vista machines to sell machines with premium graphics, Osha wrote. "Without the consumer Vista push for the 2006 holidays selling season, we think that discrete [graphics processor unit] sales could suffer slightly," he said. An Intel spokesperson declined to comment on the Vista delay. Given the financial damage pushing back Vistas arrival could cause, Baker criticized Microsofts decision to release the operating system in January. The new timing is close enough to the holidays to stall demand, where a March or April debut might not, he argued. As a result, Baker said he may cut his forecast for PC sales this holiday season. Its still early, but, "I suspect that I will probably tamp that down a bit based on that," he said. "I think itll hurt units. I think itll hurt [revenue] dollars. Itll hurt everything." Not everyone took as dour a view, however. "At this time, we estimate that almost all of the lost demand in units for the PC food chain for 2H06 will be recaptured in 1H07. Additionally, PC OEMs will take steps to shore up demand in 4Q06," Gurinder Kalra, an analyst at New York-based Bear Stearns, wrote in a report. However, the company lowered its expectations for both AMD and Intel in the third and fourth quarters of 2006, and raised its first and second quarter 2007 estimates for both companies. It made similar adjustments regarding memory maker Micron and graphics chip makers ATI and Nvidia. Editors Note: This story was updated to include more information and comments from analysts. Check out eWEEK.coms for the latest news in desktop and notebook computing.
Analysts such as Kay suggested that PC makers would offer Microsoft-sponsored upgrade coupons.