Microsoft Sees Strong Sales of Windows XP Starter

Microsoft has sold 100,000 copies of its Windows XP Starter Edition software, designed to meet the needs of first-time users in emerging markets, the company announced at its annual financial analyst meeting.

REDMOND, Wash.—Microsoft Corp. has sold 100,000 copies of its Windows XP Starter Edition software, designed to meet the needs of first-time users in emerging markets.

Will Poole, the senior vice president of the Windows client group, told attendees here at Microsofts annual financial analyst meeting that the company is growing its portfolio of products and that the XP Starter Edition had so far been introduced into 22 countries and in six languages.

/zimages/1/28571.gifClick here to read more about the Windows Starter Edition.

Poole opened his presentation by noting that he was making an unusual announcement for Microsoft, which was that it was ahead of its schedule for Windows Vista, and that "my goal is to keep us ahead of schedule. The client team has had a very good year so far," he said.

/zimages/1/28571.gifDavid Coursey takes readers on a tour of Windows Vista. Click here to view the slideshow.

"We [the Windows client business] grew by 6 percent in the last fiscal year to $12.2 billion, with strong growth reported in China and Latin America. As the client side of our business is very OEM-driven, with some 80 percent of our client business coming from there, we were pleased to see that grow by 10 percent last year," Poole said.

Microsoft is also considering trials with some of the telecommunications companies that offer broadband to give first-time users rapid connectivity and a PC starting at a low cost—about $15 a month—Poole said.

On the downside, there has been a 9 percent decline in the Windows client units annuity licensing revenue, which was largely based on uncertainty about timing of new operating system releases, he said.

"Clarity around Windows Vista and its availability timeframe will accrue to our benefit as customers continue to sign multiyear licenses. We do not expect to see this decline the way it did in 2005," he said.

The team will also continue to drive segmentation in the marketplace and have specific products for specific segment groups that would drive revenue and growth, he said.

Microsoft is also looking at ways to recapture revenue, including reducing piracy rates. Its Windows Genuine Advantage program, announced earlier this week, is one key element of that strategy.

Microsoft will continue to emphasize the security in Windows Vista, he said, adding that the adoption of Windows XP SP2 by users has been strong.

But the Windows client business has faced its share of challenges, Poole said. By far the biggest of these is its past success. "The Its good enough syndrome is one that we are aggressively going after as these users are running code from five and 10 years ago that is still working fine for them We have to show them why upgrading is even better for them," Poole said.

/zimages/1/28571.gifClick here to read what Ballmer says are the biggest challenges facing Microsoft.

While open-source software is a competitor and is seen by many as a significant threat, it was not more cost-effective in most cases during the past fiscal year. "We are seeing the 24-hour Linux syndrome, where a customer installs a free copy of Linux and within a day downloads a pirated copy of Windows onto their system," he said.

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