Microsoft's news that it sold more copies of Vista in a month than XP did in two months makes it sound as though everything is going great guns at the world's largest software company. Mary Jo Foley wonders aloud whether Steve Ballmer telling the financial community not to get too excited about Vista sales was just a bit of expectation management for investors rather than a clue about how the company feels about its latest offering.
But step back a bit from the headline figure of 20 million copies of Vista sold in one month this quarter, versus 17 million of XP shipped in two months of the autumn of 2002. The vast majority of Microsoft's licence sales come not from people walking into a shop and picking up an overpriced shiny DVD. Some 80 per cent of the company's quarterly sales of Windows products - about $3bn a quarter in recent years - comes from Windows pre-installed on OEM PCs. Consider that, in Q1 last year, some 53 million PCs shipped worldwide according to IDC: 17 million per calendar month. A total of 230 million were sold last year in total. And PC shipments should have grown another 10 per cent or so since this time last year. Factor that into the Q1 sales from 2006, that growth would take you close to 19 million before we start to factor in other sales - assuming of course, that everything shipped in February was sold with some form of Vista.
What about 2002? This was not a good time to be selling anything computer related. Even so, PC sales were reasonably robust. They just weren't anywhere near today's total. US sales have grown by about 45 per cent since 2002. But they have grown worldwide by 66 per cent from about 140 million per year to today's total.
Let's cut Microsoft a break here and acknowledge that sales in October and November, when XP was launched, are likely to be higher than the post-Christmas Q1 lull. February is not a great month for shipping consumer electronics. But, then bear in mind that the total cited by Microsoft includes upgrades ordered in February under the Express Upgrade programme. This programme provided vouchers to consumers who wanted a shiny new PC for Christmas that they could trade in for an upgrade to Vista when it became available - which did not happen until January. Microsoft booked a whopping $1.6bn in 'unearned' revenue, much of it from that programme, during its last financial quarter - money the company expected to earn properly this quarter. OK, everybody with a voucher probably didn't all ring the hotline straight after Vista went on sale, but you would expect the numbers to be pretty high being as Vista was what the computer salespeople promised these people when they bought their hardware.
Unfortunately, you can't just add the missing 20 per cent of Microsoft's Windows non-OEM sales to get an estimate of what we might have expected shipments to be ahead of Microsoft's announcement. The retail version is way more expensive, especially if you live in the UK, so the shipment volume will be much lower than the 3.75 million units a simple calculation might yield. But, if the total is a lot lower than that kind of figure, it's hardly a ringing endorsement of Microsoft's attempts to get people to upgrade.
But the reality is, Microsoft's total of 20 million Vista shipments for the first month of sales is nothing out of the ordinary and is a long way from the "splash" that the company has claimed for Vista's debut. If the upgrade programme was heavily subscribed, then it's not good news for Microsoft.
Perhaps the award for faint praise amidst Microsoft's "splash" should go to the canned quote in the release from Dell. Said Neil Hand, vice president of Dell’s consumer product group. “Customers' initial experience with Windows Vista has been quite positive, and we will continue to try to deliver the best customer experience possible."
Quite positive? We will try to deliver the best customer experience? Aren't you sure? I thought this was supposed to be some sort of groundbreaking operating system.
[Disclosure: I have three licences of XP: one runs under Virtual PC on a G5, one under Parallels on a MacBook Pro and one on a trusty but rather redundant Thinkpad (from the days when they made them out of magnesium alloy). I expect to upgrade none of those XP licences in anywhere like the near future.]