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Will 2008 Be Vista’s Golden Year?

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Despite months of rumors and innuendo suggesting that sales of Windows Vista were lackluster, Microsoft last week turned in its best first quarter in eight years.

And among the products credited with driving that revenue jump was Vista. However, Microsoft officials are being even cagier than usual when it comes to talking about the specifics behind those numbers.

Chief Financial Officer Chris Liddell told financial analysts during the company’s quarterly earnings call Thursday that sales of Vista so far stand at 88 million units. He said that compares to 45 million units for Windows XP in a similar time period after XP first shipped.

That number, according to a Microsoft spokesperson, includes sales of Vista installed in new PCs and as retail packages. In July, Liddell told analysts that Vista units sold via PC makers and at retail locations totaled 60 million to that point. (Vista began shipping to corporate customers last November and to consumers in late January 2007.)

But that doesn’t even begin to tell the whole story when it comes to license sales.

In late August, David Zipkin, senior product manager for the Windows client, told, that besides the OEM and retail numbers, Microsoft had also sold some
42 million units
through volume license agreements with large customers.

However, as Liddell pointed out, volume license numbers are not directly comparable to installed units. They are rather an indication of the “intent” to install Vista. In that regard, he said volume licenses were up significantly during the quarter that ended September 30.

“The volume licensing portion of our business was up 27 percent in the client area so that’s a very good leading indicator from our point of view,” Liddell added.

Compare that to a statement made by CEO Steve Ballmer at the company’s annual financial analyst meeting in July when he said that by the end of the current fiscal year—which concludes at the end of June 2008—there will be more than 1 billion PCs running Windows worldwide.

Indeed, sales of new PCs remain strong. In late September researcher Gartner predicted worldwide PC sales in 2007 will increase 12.3 percent compared to 2006, and will grow by another 11 percent in 2008. For 2007, that translates into 260 million PCs sold worldwide.

Microsoft’s own predictions, while not directly comparable, see the industry selling between 14 percent and 16 percent more new PCs in fiscal 2008. Perhaps even more aggressive is the firm’s “guidance” for analysts regarding sales of Windows “clients,” which includes XP as well as Vista.

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