Vista shifts 40m units in Microsoft's fastest launch
Thursday, 17 May 2007
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Microsoft has sold 40 million copies of its new operating system, Windows Vista, which was released to consumers in January, making it the company's fastest product launch ever and confounding sceptics.
The figures are a rebuke to critics who initially said Vista sales were proving lacklustre, and they pushed Microsoft shares back to the levels reached in the days before the launch.
And the announcement neatly coincided with the revelation that George Soros, the investment guru, had doubled his holding of Microsoft shares when they were in the doldrums a few weeks ago. In a regulatory filing late on Tuesday, he disclosed that his hedge fund, Soros Fund Management, held 415,497 shares at the end of March, up from a previously announced stake of 198,075 shares. In addition, Mr Soros has been betting in the derivatives market that Microsoft shares will rise still higher. In total, he now has a $30.6m (£15.5m) interest in the technology pioneer's shares, up from $5.9m.
Vista is Microsoft's most important product launch for five years. It is an improved version of the Windows XP operating system which is used on 95 per cent of the world's PCs. The product is a cash cow for Microsoft, enabling it to fund new ventures on the internet, where its MSN network of websites is struggling to compete against Google and Yahoo!. The anti-hacker features of Vista were so complicated that the product took five years to produce, and a number of glitches are still being ironed out.
The Microsoft chairman Bill Gates announced the 40 million figure in a speech to the company's annual Windows hardware engineering conference in Los Angeles. "I'm really thrilled at how this has come together," he said. His comments came on the heels of Microsoft's most recent results, which far exceeded expectations, thanks in part to Vista sales. Consumers appear to be opting for the more expensive "Home Premium" version in greater numbers than initially thought.
It is all a far cry from the debacle in February, when Steve Ballmer, the company's chief executive, told analysts that their forecasts for Vista sales were "overly aggressive", and complained that software pirates in China were flooding the market and crimping Vista sales. That sent Microsoft shares into a funk and added to the gloom surrounding Vista, just as Dell - one of the giant PC makers - said it would go back to offering XP on new computers if consumers requested it.
At the same time, Apple was mocking Vista ads as part of its "I'm a Mac, I'm a PC" campaign, depicting the PC in a hospital gown awaiting some major surgery for its upgrade from XP to Vista - adverts that clearly needled Mr Gates, who got uncharacteristically shirty in an interview with Newsweek. "I don't know why Apple is acting like it's superior," he said at the time. "What are they trying to say? Does honesty matter in these things? If you're really cool, that means you get to be a lying person whenever you feel like it? There's not even the slightest shred of truth to it."
Michael Silver, of Gartner, the technology research firm, said early glitches in Vista - which mainly reflect poor compatibility with older software programs - have been overblown. "But one thing it is teaching Microsoft is that - since consumers are pretty satisfied with Windows XP, people just expect more today and the historic bumps that a professional might accept are not acceptable now in the consumer market," he said.
Analysts say there is still some way to go before Vista reaches maturity and the big test will come when businesses decide whether to adopt it in significant numbers, which may not begin until next year. Mr Silver added: "I wouldn't call anything that ships 40 million units unsuccessful. But it is really hard to gauge from that number how many of those copies are still in the sales channel and how many are actually in use. A lot of the 40 million will have been pre-installed on PCs that are still in the inventory of hardware vendors."
