NEW YORK -- On the eve of Microsofts festive Windows XP launch party, which will include an outdoor concert by rock artist Sting in midtown Manhattan on Thursday, industry watchers are predicting that languishing PC makers will not get any immediate relief from the new operating system.
Major PC vendors, including Compaq Computer, Dell Computer, Gateway and Hewlett-Packard have historically banked on major releases of Microsofts operating systems to spur sales. The Windows XP launch comes at an especially important time for PC makers, who this year have been walloped by the biggest and most prolonged sales slide in the industrys history.
The PC industry, including Microsoft and Intel, is throwing an estimated $1 billion into XP-related marketing. But there is not likely to be a hard return on that spending anytime soon, analysts said.
For the PC makers, "XP makes no difference in the short term, but sets the stage for a longer term replacement of the consumer installed base as word-of-mouth spreads," said Martin Reynolds, an analyst at Gartner Dataquest.
The consensus among market researchers is that PC sales in the fourth quarter will be better than the third quarter, but not by much. At best, Roger Kay, IDCs director of client computing research, says PC sales will see a "slight uptick" in the fourth quarter of 2001 over the same period in 2000.
In fact, IDC doesnt expect the U.S. PC market to start growing again until 2003. The research firm projects 42.1 million units to ship in 2001, slipping to 40.4 million in 2002 and finally rebounding in 2003 with 45.5 million units.
One of the main problems for PC makers is that business IT spending has dropped significantly during the course of the year, and the economic outlook grew even dimmer after the Sept. 11 attacks. At the same time, the window of obsolescence for PCs has been growing wider. Whereas businesses and home users typically replaced a PC every three years, the refresh cycle is extending to four years or more, said Brooks Gray, senior analyst at Technology Business Research.
"The transition [to Windows XP] will occur, but Im of the opinion that XP will not necessarily be a sales driver for most PC companies at this stage of the game," Brooks said. "The spending isnt there, and there doesnt seem to be a reason to upgrade PCs less than 2 years old to XP."