Why are Vista sales tapering off?

Microsoft is blaming its disappointing third quarter client software sales on factors that exclude Vista. Meanwhile, though, a variety of evidence indicates that many Windows XP users aren't upgrading, but switching to Mac or Linux.

"With respect to [the] third-quarter in particular, there's really no Vista-related issues at all," said Microsoft CFO and Senior VP Chris Liddell, during a conference call on Thursday. There, Microsoft reported a year-over-year drop in sales of 24% for Windows desktop operating systems in the third quarter of Microsoft's fiscal year.

"Unlicensed PCs [is] not a Vista issue. Emerging markets growing faster than mature markets, that's not really a Vista issue. A bit of a channel shift to larger OEMs, again not a Vista issue," according to Liddell. "I guess the only impact really is the [Vista] launch last year, and the very strong comparables that we have. But that's not really a comment about this quarter. It's more a comment on the year ago quarter and the comparable."

With his comment about the "comparables," Liddell was referring to Microsoft's revenues of $4 billion for all Windows desktop OS software for the third quarter of the current fiscal year, in comparison to $5.3 billion for the same quarter the year before.

According to Microsoft, the figures from the year before were unusually high because they included not just desktop OS licenses sold during that quarter, but also $1.2 billion in pre-release sales of Vista from a Vista upgrade program held the previous fall, which were rolled in with Microsoft's third quarter numbers for early last year.

With the pre-release sales taken out of the equation, however, year-to-year sales of Windows desktop versions were just about the same for the two quarters, showing no real improvement in the three months that ended on March 31, despite Microsoft's introduction of a major new edition of its desktop OS.

Yet as one big indicator that a lot of users are still sticking with Windows XP, Lenovo and Hewlett-Packard have now joined Dell in offering customers "downgrade" licenses for pre-installing XP, for use after Microsoft's stated XP sales cutoff date.

The downgrade licenses will take advantage of a licensing loophole in Vista Ultimate and Vista Business that allow customers to buy XP under a Vista wrapper, so that Microsoft can count the sales as Vista rather than XP licenses.

Meanwhile, after its own most recent quarter, Apple announced sales of 2.29 million Macs during the quarter, representing a 51% growth rate over the same period the previous year.

Also during Microsoft's financial conference call, Liddell seemed to equate "unlicensed PCs" directly with software piracy.

"We believe there was an increase in shipments of unlicensed PCs particularly in Asia. While we generally feel good about the gains we are making in piracy for the year, piracy is a tough battle in an area where we will need to continue investing in order to make progress," Liddell said.

But some observers are questioning whether other factors might be at play around these "unlicensed PCs," which could be interpreted by some to simply mean PCs without Windows.

Another explanation for these PCs might be "the growth of open source software such as Linux," contended financial blogger Dennis Byron. In some parts of the world, at least, desktop Linux could be emerging as a stronger rival to Windows these days.

"Perhaps these PCs are not unlicensed [so that pirates can put Vista or XP on them] but just unlicensed in terms of a Microsoft operating system?" he asked.

© 1998-2019 BetaNews, Inc. All Rights Reserved. Privacy Policy - Cookie Policy.