Experimental feature

Listen to this article

Experimental feature

For hundreds of tech companies around the world, tomorrow’s Windows Vista launch will mark the end of five years of anxious preparations.

“We’ve devoted 150,000 man-hours to working with Microsoft on the Vista roll-out and testing,” says Shane Robison, head of strategy at Hewlett-Packard, the world’s biggest personal computer maker.

For many, however, the real work is only just beginning.

Some analysts expect Vista’s launch to result in a release of pent-up demand for new systems, with market research company iSuppli forecasting an increase in PC sales of 10 per cent over last year, roughly in line with last year’s growth rate.

According to forecasts by market research company Gartner, 58 per cent of new PC shipments this year will include Microsoft’s new operating system.

Any increase in sales may be partially offset by the higher cost of new hardware required to run Vista. Isuppli estimates PC makers will have to spend 20 per cent more on components – an average desktop costing $500 to make will now cost $600.

That is likely to eat further into margins already depressed by fierce price competition.

Steve Kleynhans, analyst at Gartner, says PC margins could also suffer if unexpected problems with Vista lead to a big increase in customer support calls.

“As soon as they pick up the phone, you are starting to lose whatever meagre profit you made on the sale.”

Michelle Pearcy, who is helping to lead the Vista transition at Dell, says the world’s number-two PC maker is shipping customised instructions to its new Vista customers.

“Based on our testing we predict [the transition] will go smoothly,” she says.

Both Dell and HP declined to provide a specific forecast of Vista’s impact on future PC sales, citing restrictions surrounding the “quiet periods” ahead of their quarterly earnings next month.

However, many other hardware companies will be affected by Vista’s launch.

Much of the extra cost of hardware required for Vista – worth about $91 – is for memory chips, with 512mb of memory being deemed sufficient by Microsoft, but many makers doubling this to 1Gb for optimal performance, according to iSuppli.

While this sounds like good news for chipmakers, analysts have warned that Vista hype could lead to a sharp fall in prices.

However, Samsung, the world’s largest memory chipmaker, is more optimistic, expecting Vista to expand the D-Ram market by 17 per cent this year to $35bn.

Component makers generally expect Vista to have a profound impact on the industry – its sophistication, power and better graphics creating demand for faster processors, more memory, extra storage and bigger, wider screens.

But the consensus appears to be that little pick-up is expected in Vista’s early days, particularly by big corporate customers.

Of 240 IT directors and helpdesk managers questioned by Axios Systems, only 5 per cent said they would deploy Vista in 2007.

“Large organisations are going to take whatever time they need to evaluate and deploy the technology,” says HP’s Mr Robison.

Paul Otellini, chief executive of Intel, was optimistic last week that Vista would help sell its chips to the consumer across the board, including in laptops, the hottest part of the market.

“[What] we do not know yet is whether the combination of Vista and the vPro product line [of processors for corporate use] will create a change in the refresh rate of enterprise-based PCs, outside of notebooks,” he said.

Intel rival AMD predicted uncertainty in the first quarter over whether there would be rapid adoption of Vista, whether it would suffer any problems at launch and what effect it would have on inventories.

“We’re very bullish on what Vista is going to do for the whole year, but the first quarter impact is rather questionable,” says Hector Ruiz, AMD chief executive.

Seagate, the hard-disk maker, expects to benefit in the long term from Vista – extra storage will be needed for digital media recorded and edited by consumers and for back-up purposes.

“Our sense is that it’s not going to be a big deal in the next quarter or two – we think it’s a consumer play for the most part early on,” says Bill Watkins, Seagate chief executive.

“But I don’t get the feeling a lot of consumers know about Vista yet.”

Get alerts on Technology sector when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article