Analysts not drinking Microsoft Windows Vista kool aid

Despite a bullish earnings report from Microsoft that credited its new operating system, Vista, with beating Wall Street expectations, and the announcement that the firm has now shipped 88 million copies of the software, some analysts aren’t drinking the silicon Kool-Aid. Sales figures from NPD Group, Port Washington, N.Y., show that on-shelf software sales (as […]

Despite a bullish earnings report from Microsoft that credited its new operating system, Vista, with beating Wall Street expectations, and the announcement that the firm has now shipped 88 million copies of the software, some analysts aren’t drinking the silicon Kool-Aid.

Sales figures from NPD Group, Port Washington, N.Y., show that on-shelf software sales (as opposed to sales of new PCs pre-loaded with the operating system) are only 40% of the sales XP was doing around the same time following its launch. “Though Chris Swenson, director of software industry analysis, acknowledges that 80% of Microsoft’s revenues come from OEM sales, and that consumers are buying about 100 million more PC computers today than during the launch of XP, he says that the company is missing a “big opportunity” in not marketing Vista through TV advertising.

“They’re not communicating the sexiness of Vista,” he said, pointing to the counterexample of Apple’s vigorous TV promotion of the “category busting” iPhone, which “were perfect in that they reduced the complexity of the product and incited consumer demand…I think that Vista will get lost in the shuffle even more as [ads for Apple’s new OS] Leopard come out. It’s not that Microsoft isn’t doing [any advertising], but the one area where they’re weak is the TV aspect and that’s a key area for talking about the product and convincing current users to upgrade.”

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Microsoft, Windows Vista