Microsoft And The Vista Shakeup

UPDATED: Microsoft is refusing to comment on reports it plans to shake up the Windows group following yesterday’s bombshell that the consumer version of Windows Vista won’t be available until after the crucial Christmas shopping period.

Meanwhile experts are assessing the fallout for consumers and companies faced with another delay in the world’s most popular computer operating system.

Tuesday, Microsoft announced the consumer version of Windows Vista won’t be sold until January. A day later, reports indicate Jim Allchin, co-president of Microsoft’s platforms and services division, will be replaced.

A Microsoft spokesperson refused to confirm or deny a Wall Street Journal Report that Steve Sinofsky of the software company’s Office division will replace Allchin.

“We have no information to share at this time,” Microsoft spokesperson Jessica Crozier told

While Microsoft is reluctant to talk, analysts aren’t surprised word is leaking out about a possible shakeup. Change is expected whenever you miss such an important milestone, according to David Smith, a Gartner analyst. Smith called news of the delay disappointing.

“This is clearly an endemic problem,” said Rob Enderle of the Enderle Group. Microsoft missed the 2005 deadline when Vista was Longhorn. The misstep requires house cleaning, according to Enderle.

“As much as 30 percent of new PC sales could be nerfed by this,” Enderle explains. The PC industry was looking at Vista for all of its sales.

“Microsoft is going to feel the pain: over 80 percent of desktop Windows are through sales of new PCs,” said Rob Helm of Directions on Microsoft. Helm said that PC sales are slowing because people were waiting for Vista to be released.

That pain could amount to $845 million, the amount financial analyst firm S.G. Cowen & Co. estimates the delay might cost Microsoft next year.

“At the top of the list of losers would be PC retailers,” said Charles King, analyst with Pund-It. He said retailers depend heavily on Christmas sales, and Vista was at the top of their wish list.

While budget-conscious consumers that shop after Christmas for bargains will pick up some of the slack, “the killer could be the power user” who often buy the new, leading edge hardware. For instance, Vista is needed to power many of the dual-core PCs, according to King.

Although Microsoft made a point of announcing the corporate version of Vista remains on track, analysts saw it as window dressing, since most enterprises won’t update until 18 months from now.

Dell, the leading consumer-oriented PC maker, said it will ship Vista “as soon as Microsoft makes it available.” King said Dell and other PC makers have little choice but to wait.

A spokeswoman for HP said the company is supporting Microsoft in determining the most appropriate schedule for the Windows Vista launch.

“Holiday is usually our strongest season, and we still expect it to be so, but it’s a bit too early for us to share any detail on specific offerings or upgrade plans for those products,” noted Tiffany Smith of HP. “But, with more than 90 percent of our consumer PC portfolio qualifying as ‘Vista Capable,’ customers concerned with future compatibility with the new operating system will be able to purchase with confidence that their HP system will continue to serve them well as they look to move to Vista and other system upgrades of their choice.”

How will Microsoft ensure customers wait until January?

Get ready for plenty of ads and coupons, said Enderle. We will see a series of promotions, including free copies of Windows Vista if you buy a PC, bundling offers and contests, according to the analyst.

For PC buyers, companies will likely offer computers during the holidays with an option to upgrade to Vista when it is available, according to King.

Security companies, such as Symantec or McAffee, may benefit some from Microsoft delaying Vista to polish security.

Apple may even use the delay to gain some market share for its OS X operating system, according to King.

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