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January 12, 2007

Pent up demand for Vista on Wall Street

Posted by David Hunter at 11:09 AM ET.

Yesterday’s news revealed pent up demand for Windows Vista on Wall Street. No, it wasn’t demand for actual installation of Microsoft’s new PC operating system. It was traders jumping on any report of increased sales to validate their hopes that somehow Vista will put a little unaccustomed life into Microsoft’s cash cow:

December sales of Microsoft Corp.’s Vista were stronger than expected, helping the company’s shares become the biggest Thursday gainer on the Dow Jones industrial average.

The index was up 72.82, to a record close of 12514.98.

Sales data on the new Windows Vista operating system drove investors to boost Microsoft stock by $1.04, or 3.5 percent, to close at $30.70, after shares earlier reached a new 52-week high of $30.75 on the Nasdaq.

Of course, Microsoft’s share price wasn’t hurt by the general market surge, but this report bears further examination:

Sales of Windows Vista to businesses were stronger than expected during the operating system’s debut month, according to a report from NPD Group.

The sales outpaced the first month’s tally for Windows 2000 and only slightly trailed that for Windows XP, the market researcher said Thursday. Commercial revenue from Vista in December was 62.5 percent above that racked up by Windows 2000 in March 2000, its first month after launch. But Vista’s total is 3.7 percent below what Microsoft got in the commercial channel for Windows XP in November 2001, its first month on the market.

In addition, the average price of Vista was about 4 percent higher than of Windows 2000 and roughly similar to that of Windows XP, NPD said.

The NPD folks only measure Vista sold through the reseller channel (not directly from Microsoft) and opined that these results were “strong” and “impressive.” It’s a little hard to see why and a moment’s thought and knowledge of the history of Windows 2000 and XP can provide less rosy interpretations. Moreover, the meager 4% per copy price differential seems to put paid to Microsoft’s hopes of upselling pricier Vista versions, although consumers may be a better target for that. However, the key point is that even a glimmer of Vista hope seems to shake up Microsoft shares so stand by for an earthquake on January 25 when quarterly results are announced.

Update: Joe Wilcox gets with NPD and thoroughly spelunks the numbers. Excerpt:

I don’t doubt NPD’s data, just what some news stories make it out to be. Swenson released comparisons at a reporter’s request; no report was published. While the information NPD releases to its clients is no doubt complete, what’s available to the news media is not. NPD did not make available unit shipments, SKUs sold, ratios of upgrades versus full licenses or breakdown across volume licensing plans. In addition to the questionable comparisons, what’s missing would make a huge difference in evaluating the quality of Vista early licensing sales compared Windows 2000 or XP.

I doubt any of that will inhibit the punters.

Filed under Financial, General Business, Investor Relations, Microsoft, OS - Client, Windows Vista

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2 Responses to “Pent up demand for Vista on Wall Street”

  1. Bob Says:

    Michael Dell was also quoted as saying they expected “massive” pent up demand for Vista. Obvisouly, they have a vested interest in saying that, but the use of “massive” struck me as more than required if it was just the usual hype – so maybe there’s some truth there.

  2. Vista Odds and Ends, January 12, 2007 -- Microsoft News Tracker Says:

    [...] For a week seemingly dominated by consumer electronics of the non-PC variety, there was still an abundance of Windows Vista news. I’ve already mentioned the December sales estimates, but here’s more that didn’t get a post of their own: [...]

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