Trilight Zone

[tricore]

Windows Vista got off to a slow consumer start compared to its predecessor. U.S. retail Vista sales were significantly lower than sales of Windows XP during their respective launch weeks.

NPD released sales figures today for software that users install themselves on their computers. Windows Vista unit sales decreased 58.9 percent in units compared to Windows XP during their respective launch weeks, while revenue decreased 32.1 percent.

Vista's launch starkly contrasts to that of Office 2007, for which sales increased more than 100 percent compared with Office 2003 during their respective launch weeks.

Microsoft launched Windows Vista on Jan. 30, 2007 and Windows XP on Oct. 25, 2001. Some important distinctions:

* Windows XP PCs went on sale about a month before box stock reached store shelves. Windows Vista was available on new PCs and in boxes on the same day.

* Microsoft offers a Family Discount for Windows Vista Ultimate buyers. Windows XP was sold in standard upgrade and full-price SKUs.

* Windows Vista is available in two more versions than Windows XP was.

* Windows XP launched during one of the busiest sales periods of the year, while Vista was released during one of the slowest sales periods.

* More than five years separated Windows XP and Windows Vista. XP predecessors Millennium Edition and 2000 were released about a year and 18 months earlier, respectively.

* Windows Vista benefited from a massive marketing campaign and the simultaneous retail launch of Office 2007.

Conceptually, many of the differences between the two operating systems should favor Vista: pent-up demand, a massive marketing campaign, new versions and lower-cost family upgrades. Chris Swenson, NPD's director of Software Industry Analysis, cited hardware concerns as a major factor likely affecting Vista retail sales.

"All the reviewers have been beating people over the head about hardware requirements," he said. "The preliminary data suggests that consumers are getting the message that they need a more robust system to take advantage of some of the new features in Vista." More consumers are choosing to "get Vista on a new PC rather than at retail."

Deeper in the numbers, good news can be found for Microsoft and retailers.

Retailers are successfully turning Vista hardware concerns into services sales. Services like Best Buy Geek Squad, Circuit City Firedog, CompUSA Tech Pros and Staples Easy Tech offer low-cost Vista installation services.

NPD expects that these services will lead to a "tech bench bump in OS sales similar to the bump in sales that we've seen in security software due to tech bench service offerings, though not as large of a bump," Swenson said.

The volume of Microsoft operating system sales was five times greater during Vista's launch week compared with the same period a year earlier. Microsoft also gained significant benefit from the new SKUs, with new version Windows Vista Ultimate accounting for 30 percent of Vista unit volumes.

At the Windows Vista launch event last month, Brad Goldberg, general manager of Microsoft's Windows Client Product Management Group, told me the company expected Ultimate to do much better at retail than on new PCs.

"The preliminary data shows that Microsoft's gamble on a new high-end Vista SKU will help keep dollar volumes from declining as rapidly as unit volumes in the near term," Swenson said.

Windows ASPs (average selling prices) rose 65.5 percent to $207.13.

"It would have been a bleaker story for Microsoft had they stuck with [just] the Pro version and not introduced Ultimate," Swenson said.