06/11/2008, 3:50pm, EDT
Wednesday, June 11thAnalyst: Vista to cost MS $395m in next year
Windows Vista's poor reception will cost Microsoft an estimated $395 million dollars over the next 12 months, says a new investment note by Bernstein senior analyst Charles Di Bona. The researcher predicts the sharp drop in revenue for Microsoft's fiscal 2009, starting in July, after a survey found mounting complaints about the new operating systems from companies concerned about problems with future upgrades.
Expectations that Vista will be used at the firms by 2011 has dropped from 68 percent in May 2007 to just 26 percent a year later; concerns about steep performance requirements has only 10 percent of those customers now planning to install Vista on existing systems versus 27 percent a year before.
Much of the resistance is believed to originate from a mixture of both actual and perceived flaws in Vista, including the higher system demands, compatibility with earlier third-party software, and an intrusive security policy. Few are also said to find the beneficial changes worth a significant upgrade and are instead placing some or all of their upgrades on hold until Windows 7, the next major release due in 2010.
"There aren't any features in there they find compelling -- even ones that haven't had bad PR," Di Bona says.
A recent investigation into Microsoft's results for the first quarter of calendar 2008 suggested that slow growth in the Windows division was behind PC sales benchmarks, hinting that more users at the time were buying computers preloaded with Windows XP or non-Microsoft platforms. A June 30th cut-off date will require most PC builders to drop Windows XP as a standard option on their systems and is anticipated to help Vista's adoption rates.
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Quoth Nelson Muntz
"Ha-HA!"
Too bad we will never truly know just how bad Vista sales are, since Microsoft is doing the "buy Vista and you can downgrade" thing to bolster their figures. It is truly the 'New Coke' of operating systems.
The damage done
My experience with Vista is that if you have the hardware specs to run it, its a fine OS. Very stable and fast, IF you have the hardware to back it up. (I recommend nothing less than a dual core machine and 2 gigs of RAM plus a 128 meg newer video card). Anything less and you might as well roll with XP.
Companies are a different story and it may prove to be a painful move for the ones that take the chance.
IF MS had waited until the fixes in SP1 were applied to the original code base and released vista a year later it may not have the reputation it has today, but it does not matter what the current state of the OS really is.
The public perception has been set and the damage is done.
In short, they made their bed and now they get to rest in it.
slappy
Thats pocket change. That money will come back quick, they have a guaranteed revenue stream remember?
re: slappy
slappy wrote: "Thats pocket change. ..."
Prior to Vista, only three of Microsoft's seven divisions were in the black. If its operating systems division goes into the red, then it will be left with only the Macintosh Business Unit and its office productivity software subsidizing the rest of the company. Microsoft stock holders will not be happy campers.
yeah but ...
The Office Productivity part is obscenely profitable still, so it doesn't seem so dire to me. This whole thing is more of a black eye in company perception than money IMHO.
Didn't I also read somewhere that the Xbox division is now profitable?
fixed
"A June 30th cut-off date will require most PC builders to drop Windows XP as a standard option on their systems and is anticipated to help OS X's adoption rates."
What's in a name
Microsoft's naming scheme continues to confuse me. They went from Windows 1.0-Windows 3.1, Windows 95, Windows 98/Second Edition, Windows NT, Windows 2000/Pro, Windows XP/XP Pro, Windows 2003 Server, Windows Vista, and now Windows 7.
How about: Microsoft Windows Vista SP4.
Pocket Change
Yes this is pocket change and XBox may be getting better, but the fall of rome started in the provinces.
Vista
I run Vista on two systems at home and absolutely love it. I like Mac OsX as well, but Vista is a damn good operating system. I don't know why people give it so much flack.
me too
"Didn't I also read somewhere that the Xbox division is now profitable?"
i think the division made like 200 mil or something last quarter, after totalling close to 7 billion in loss's. won't be long now before it's profitable as well.
scotte75ky - it's the big picture. you can look at one person's experience and say "hey, this rocks!". lots of other people (with completely different needs, configurations, etc.) don't agree.