Microsoft Looks to Holidays to Lift Vistas Prospects

 
 
By Peter Galli  |  Posted 2007-10-24
 
 
 

Microsoft and some of its partners are hoping that Vista will be the gift that fills their holiday stocking this year.

This is the first year that notebooks and desktop computers loaded with Vista software were available for the recent lucrative back-to-school season, as well as for the upcoming holiday season.

As Windows Vista was only widely released at the end of January 2007, Microsoft and its partners essentially missed both of these peak retail periods in 2006, although retailers did offer customers who bought machines upgrade coupons to Vista once it was available.

"I expect sales of notebooks and desktops loaded with Windows Vista to eclipse the sales we did last holiday season of machines with Windows XP," Wendy Fritz, a vice president at Best Buy, in Richfield, Minn., told eWEEK at a Microsoft-sponsored dinner Oct. 23 to discuss the first holiday season with Windows Vista broadly available.

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"Consumer demand for Vista has been really strong, which was evidenced by back-to-school sales, and we, as a company, have invested more in Vista than for any other operating system," she said.

The company sees Vista as a market catalyst that is driving consumers to upgrade or replace their machines and have a totally new computing experience, she said, noting that demand for Vista machines continues to exceed their expectations.

Bruce Greenwood, a vice president at Hewlett-Packard in Cupertino, Calif., is also upbeat about the prospects for strong retail sales over the holidays, saying consumer interest and demand for Vista remains strong.

"We expect PC sales this holiday season to be very strong, and all of the holiday products we are selling through retail stores, across both our notebook and desktop lines, will only be loaded with Vista," he told eWEEK.

But, despite all of this bullishness, Microsoft last month allowed its OEM and retail partners to continue offering Windows XP for an additional five months—until June 30, 2008—after receiving complaints that customers are not ready to cut off and switch to Vista.

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The holiday sales optimism is also shared by Bob ODonnell, an analyst with IDC in San Mateo, Calif., who also expects strong holiday sales, particularly for Vista notebooks. Vista has also, for the first time, enabled hardware ODMs (original design manufacturers) and OEMs (original equipment manufacturers) to offer feature differentiation, he said.

"Vista features like ReadyBoost, ReadyDrive and Sidebar now let these partners differentiate their offerings by which of these features they do, or do not, offer," he said, although he noted that ReadyBoost and ReadyDrive have not worked as well as had been hoped and have not been well-received in the market.

While both Best Buys Fritz and HPs Greenwood acknowledged that the move to Vista has not been seamless for all customers, they said only a very small number struggled with the change and none asked to downgrade back to Windows XP.

"Having Geek Squad agents in our stores has been an enormous differentiator for us, as they can help customers see, find and customize the many features in Vista, which addresses many of their concerns before they even buy their machine. They also offer remote support and will come to a customers home or office if necessary," Fritz said.

For his part, Mike Nash, corporate vice president for Windows product management, told eWEEK that many of the market perceptions about Vista are lagging the actual reality on the ground and a lot of progress has been made around compatibility since the product launched.

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"The early issues with driver incompatibilities are mostly now behind us. Also, for the consumer market, the experiences that Vista brings on the digital media front are compelling," he said.

There is a huge opportunity this holiday season to change consumer perceptions by showing them the new scenarios and experiences enabled by the combination of Windows Vista, Windows Live and new hardware, he said.

Industry analysts will be watching closely to see whether holiday season PC and Vista sales enable Microsoft to overcome Vistas bumpy start in 2007.

Check out eWEEK.coms for Microsoft and Windows news, views and analysis.

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