RealTime IT News

Will 2008 Be Vista's Golden Year?

Despite months of rumors and innuendo suggesting that sales of Windows Vista were lackluster, Microsoft last week turned in its best first quarter in eight years.

And among the products credited with driving that revenue jump was Vista. However, Microsoft officials are being even cagier than usual when it comes to talking about the specifics behind those numbers.

Chief Financial Officer Chris Liddell told financial analysts during the company's quarterly earnings call Thursday that sales of Vista so far stand at 88 million units. He said that compares to 45 million units for Windows XP in a similar time period after XP first shipped.

That number, according to a Microsoft spokesperson, includes sales of Vista installed in new PCs and as retail packages. In July, Liddell told analysts that Vista units sold via PC makers and at retail locations totaled 60 million to that point. (Vista began shipping to corporate customers last November and to consumers in late January 2007.)

But that doesn't even begin to tell the whole story when it comes to license sales.

In late August, David Zipkin, senior product manager for the Windows client, told InternetNews.com, that besides the OEM and retail numbers, Microsoft had also sold some 42 million units through volume license agreements with large customers.

However, as Liddell pointed out, volume license numbers are not directly comparable to installed units. They are rather an indication of the "intent" to install Vista. In that regard, he said volume licenses were up significantly during the quarter that ended September 30.

"The volume licensing portion of our business was up 27 percent in the client area so that's a very good leading indicator from our point of view," Liddell added.

Compare that to a statement made by CEO Steve Ballmer at the company's annual financial analyst meeting in July when he said that by the end of the current fiscal year—which concludes at the end of June 2008—there will be more than 1 billion PCs running Windows worldwide.

Indeed, sales of new PCs remain strong. In late September researcher Gartner predicted worldwide PC sales in 2007 will increase 12.3 percent compared to 2006, and will grow by another 11 percent in 2008. For 2007, that translates into 260 million PCs sold worldwide.

Microsoft's own predictions, while not directly comparable, see the industry selling between 14 percent and 16 percent more new PCs in fiscal 2008. Perhaps even more aggressive is the firm's "guidance" for analysts regarding sales of Windows "clients," which includes XP as well as Vista.

Liddell told analysts the company expects sales for its second fiscal quarter of 2008—the so-called "Christmas" quarter—to be up 62 percent to 64 percent over the same period last year. While he didn't provide guidance for the third fiscal quarter, the one in which the first Vista service pack is slated to ship, he did say the company expects client sales for the entire fiscal year to increase between 12 percent and 13 percent compared to fiscal 2007.

In fact, a strong Christmas quarter followed by the shipment of Vista Service Pack 1 (SP1) in the January quarter might just make for a very jolly fiscal year for Vista sales. Traditionally, large IT shops tend to wait for the first service pack before adopting a new version of Windows. And that means the period between January and the end of June 2008 may be a very good time indeed for Vista uptake.

"It seems like the next major event that might impact uptake will be the release of Windows Vista SP1 to see if it satisfies those customers who want to wait until there is a service pack before deploying," wrote Michael Cherry, lead analyst for operating systems and mobile technologies at researcher Directions on Microsoft, in an e-mail to InternetNews.com.