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Study: Vista to Spur Revenue, Jobs Growth

As Microsoft goes, so goes the country?

If a new report from IDC is to be believed, Microsoft  will ship more than 90 million units of Vista throughout the world next year, 35 million of which will go in the United States.

The fact that Microsoft stands to earn $4 billion in revenues from Windows Vista next year is small potatoes compared to the impact it will have on the U.S. IT sector as a whole, according to the authors of the report.

While $4 billion represents just 1 percent of total IT spending in the U.S. in 2007, Vista is expected to create 157,000 new jobs and pump an additional $70 billion into the U.S. IT industry, IDC said.

This is because every dollar of Microsoft revenue from Windows Vista in 2007 in the U.S. will create $18 in revenues for IT service and product vendors.

Vista would thus drive "revenues and growth for many of the one million IT companies worldwide that sell hardware, write software, provide IT services or serve as IT distribution channels."

According to IDC, as many as 200,000 IT companies that produce, sell or distribute products or services running on Vista will employ over 660,000 people, and another 1.5 million will be employed at firms using IT.

The report goes on to say that Vista will be directly responsible for 60 percent of Windows-related employment growth.

The report was sponsored by Microsoft, and is similar to a report published by IDC in September on the impact of Vista on the European IT sector.

Analysts at other firms supported the 90 million Vista shipment figure on which the data in this IDC report is based.

Laura DiDio at the Yankee Group noted that only three in 10 enterprises expected to upgrade their software and operating systems in 2006, meaning that there is a lot of pent-up demand.

"That tells me they were waiting for Vista and Longhorn," she told internetnews.com.

Greg DeMichillie of Directions on Microsoft also felt that the basic assumptions are correct. However, he cast doubt on the cascading effect of those shipments on the overall IT economy.

When businesses buy PCs, they frequently remove the operating systems delivered with them and reinstall the operating systems that they've been running, at least until they have a chance to evaluate the new software.

"It is incorrect to count every copy of Vista sold as a copy of Vista in use," he said, adding that along with every Microsoft license is the right to downgrade to an older version.

So while Microsoft will get paid for Vista regardless, the ISVs, consultants and trainers get cut out of the loop -- at least in the short term. DeMichillie said it would be at least the end of the year before most companies got around to making decisions on Vista.