News

Vista for Consumers Sets Sail

• By Scott Bekker and Ed Scannell
• 03/01/2007

Despite aerial acrobats dangling on ropes from tall buildings, an extravagant launch party, top third-party executives offering their homage and Microsoft promising the "Wow Starts Now," many industry observers were not dissuaded in their opinion about the early acceptance of Windows Vista.

At the long-overdue operating system's launch on a bitterly cold day in New York, many believed Vista's ramp-up would be slower among both consumers and business users than what Microsoft officials are predicting. Some say they'll hold off on implementing it until there are many more applications that fully exploit the new operating system, or simply wait until they buy their next PC.

"It's going to be a slow uptake, something we have been saying for quite some time. We don't expect this to have a big impact on PCs in either the business or consumer markets for much of 2007," says Al Gillen, research vice president at System Software for IDC, a market researcher based in Framingham, Mass.

Event attendees (L-R): now former Dell CEO Kevin Rollins, Intel Executive Vice President Sean Maloney, Microsoft CEO Steve Ballmer, Toshiba President and CEO Hisatsugu Nonaka, AMD Chairman and CEO Hector Ruiz and HP Executive Vice President Todd Bradley.

But Steve Ballmer, Microsoft's ever ebullient CEO, predicted that in its first three months on the market Vista will sell five times as many copies as did Windows 95 and twice the number that Windows XP did over the same period of time.

"This is the biggest launch in the history of the company. We think this [Vista] will be a tremendously exciting product for customers to use and for developers to innovate with given all of the new technologies in chips, systems and devices we expect to arrive in the next year," Ballmer bellowed.

"I hope your forecasts are right," chimed in Todd Bradley, executive vice president of the Personal Systems Group at Hewlett-Packard Co., referring to Ballmer's sales predictions. He added that his company was officially the first to sell a Vista-based system, which was transacted at 12:01 a.m. on launch day in Auckland, New Zealand.

Kevin Rollins, the now-former CEO of Dell Inc., underlined Ballmer's optimism, saying his company saw a 20 percent bounce in Web traffic over the weekend just before the launch as the company began taking advance orders for Vista systems.

Microsoft Chairman and Chief Software Architect Bill Gates promised more frequent but less ambitious releases of Windows in the future, but insisted that the era of the "big operating system release" is not over.

"There's been a lot of pent-up demand building for Vista and that's been reflected in the amount of increased Web traffic we've been seeing. We have some reason to believe it will continue," said Rollins, who was ousted as Dell's top executive just a couple days after this event.

But in a calmer moment during the rollout Ballmer did acknowledge that most sales of Vista, which has a steeper hardware requirement than its predecessor Windows XP, will be with the purchase of new PCs, implying the uptake could be more measured.

Over the years, Windows sales have closely tracked those of PCs, which increase every year, either because of or in spite of what Microsoft does. In meetings with financial analysts, Microsoft regularly portrays its Windows growth as being at the mercy of the growth of PC sales in general.

In a Cirque du Soleil-style performance, aerial acrobats formed a "human billboard," unfurling the Windows logo on the side of the Terminal Building in downtown New York.

IDC's Gillen says he sees no reason why the recent growth rates for PCs should not continue. Averaged over the course of the year, Gillen says, Microsoft's failure to hit its goal of delivering Vista for Christmas will make little difference in its overall shipments. Conversely, Gillen says, Vista itself probably won't drive a huge increase in PC shipments on its own.

No one less than Microsoft Chairman Bill Gates reinforced Gillen's point. Speaking at the event Gates drew some parallels to Windows 95: "There were a fifth as many PCs [in 1995] as there are today." Gates' observation dovetails with Ballmer's prediction that Vista will ship at five times the rate that Windows 95 did.

Many of Microsoft's business partners present at the launch, although self-serving, believe PC sales will continue to be robust and with them sales of Vista, proving the PC remains an important and useful platform for both consumers and businesses.

"The PC has never been more important than it is now," said Sean Maloney, an executive vice president at Intel Corp

The New York rollout in January focused on consumers, unlike the late November launch, which targeted businesses. Consequently, Ballmer and several business partners focused on some of the ways they believed Vista could help make the PC more integral to coordinating a range of different entertainment devices in the home. They described scenarios in which PCs could feed content from the Web or digital cameras to wide-screen, high-definition TVs in a living room.

Even on its first day of availability, Microsoft officials were being asked if the first service pack for Vista was being planned, what might be in it and when it would ship. Ballmer said the company has yet to set a date for the first service pack.

Again focusing on the future, analysts asked if Vista would be Microsoft's last major client operating system the company ships, given the difficulty the company had in completing it and the rising tide of swift Web 2.0 class competitors the company now faces.

While he wouldn't say "no" directly, Ballmer did say there was too much work left to do on operating systems for there not to be a next Windows release. "We've got a very long list of stuff our engineers want us to do," he said.

Asked if he was disappointed that Vista was late and missing a couple of promised core capabilities, including the infamous Win/FS file system, Ballmer smiled wryly and said, "I'm tremendously excited about what we're delivering."

It remains to be seen if the rest of the industry will share his excitement.