Forecast has Office, Vista going in opposite directions

In Microsoft's fiscal first quarter of 2009, Vista sales grew sluggishly at 2 percent, while Office piles up 20 percent growth for its division

Microsoft's quarterly call with Wall Street on Thursday told the tale of two software franchises and their diverging financial fortunes.

Microsoft's Client revenue, which virtually all comes from sales of Windows Vista, grew just 2 percent year-over-year to US$4.22 billion in its fiscal first quarter of 2009.

"That fell pretty far short of Microsoft's expectations," said Matt Rosoff, an analyst with the independent research firm Directions on Microsoft. "That's always a worry, since it's the core of the company's business."

This was the second recent quarter out of three that saw Vista sales grow sluggishly or shrink. In Microsoft's third quarter of 2008, Client revenue fell 24 percent year-over-year , although sales grew 13 percent year-over-year in the intervening fourth quarter.

Vista's weak growth was in spite of 10 percent to 12 percent growth in PC shipments. Microsoft blamed the sluggishness on flat PC sales in developed countries and zooming sales of low-cost PCs, in particular, NetBooks. Customers in developing countries are more likely to buy PCs with cheaper, basic versions of Windows Vista installed. Or, if they buy NetBooks, they are likely to get Windows XP Home or Linux, which results in little or no revenue to the software maker.

As a result, sales to PC manufacturers, which supply 80 percent of Vista's sales, actually fell 1 percent (The rest of Vista revenue comes from volume licenses to big companies and retail purchases by consumers and small businesses).

Microsoft hopes Vista can rebound in the second quarter with 7 percent to 10 percent growth during the traditionally strong holiday season.

"We think, particularly with Christmas coming up, that overall sales will be relatively good," said Microsoft CFO Chris Liddell during the earnings call. "We have reasonably good visibility into this quarter in terms of the inventory positions. We feel pretty good about some of the initiatives that we have in the unlicensed area. We've got channel inventory down to where we would like to see it."

But Rosoff said he is "surprised they are that optimistic for the holiday quarter."

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags Windows Vistamicrosoft office

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Eric Lai

Computerworld
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?