Vista Sales Perhaps Not as Dire as Feared

By Scott M. Fulton, III, BetaNews

February 16, 2007, 11:45 AM

This morning, NPD marketing manager David Riley offered to clear up some potential discrepancies with regard to how previous NPD launch week data for Windows operating systems has been reported, and how it's currently stated. Accounting for a change in tabulation strategies, what yesterday looked like a 58.9% decline in first-week retail sales for Windows Vista over Windows XP, might actually even out.

The problem, Riley said, is that over the years some retailers surveyed provided NPD with monthly sales data rather than weekly. As a result, NPD decided to no longer extrapolate weekly volume numbers, though for comparison's sake, the company continues to calculate weekly trend numbers, which is what NPD reported yesterday.

However, when you apply those weekly trends to the historical volumes -- as we tried to do yesterday -- NPD tells us the totals don't match up. Based on what we were told this morning, it appears only half of the retailers surveyed for the historical data figures actually supplied weekly sales data. To make a fair comparison between weekly figures then and weekly figures now, we'd have to know which retailers were the weekly ones and which were the monthly - whose figures should be excluded from consideration.

Thus the trend line, which BetaNews projected yesterday to mean retail sales for Vista could be 25% per day of what they were for XP, would actually not be so steep a decline - if it's even a decline.

Lesson learned: The early trend numbers don't apply historically, and should perhaps be treated like early indicators that Gore won in Florida.

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6:25 pm February 15, 2007 - [with updates] As NPD marketing manager David Riley told BetaNews, NPD has always tabulated weeks as periods extending from Sunday to the following Saturday, regardless of what day the product may have actually launched. So a "launch week" is not seven days' worth of data.

Previous NPD data reported that Windows XP sold around 300,000 copies during its launch week. But with XP launching on a Thursday, that figure only accounted for three days of sales. Windows 98 sold 400,000 during its launch week in June 1998, although it was also launched on a Thursday. Windows Me, which was an admittedly lackluster launch of about 200,000 copies, first hit shelves in September 2000...on a Thursday. Windows Vista launched on Tuesday, January 30, so NPD's sales figures - which NPD confirmed yesterday - accounts for a full five days of sales.

From an initial read, and especially after comparing the trend data to historical figures -- which BetaNews learned this morning you can't do accurately -- one would get the impression that Vista is less popular, at least among retail consumers.

But there are other compensating factors which dampen the blow for Microsoft. According to this morning's memo from NPD analyst Chris Swenson, the firm's retail point-of-sale dataset is comprised of data submitted by major US retailers, including both online retailers such as Amazon and storefronts such as Best Buy, Circuit City, CompUSA, and office supply stores. With just that knowledge in hand, two factors may help compensate for what otherwise would appear terrible news:

• First, the download channel may be more popular, as XP owners could be finding it easier to simply buy and burn the disc themselves than drive home with a useless box.
• Second, Windows Vista's launch is the first to have been split between business and consumers, with businesses having gained access starting last November. In 2001, many small businesses still upgraded to XP by driving down to Best Buy and picking up a copy, as many per-hour computer consultants at that time would attest. With Vista Enterprise's capability to be installed by way of a server through a company network, enterprises may now have more incentive to download the operating system now -- since prices are not likely to decline -- and implement their network migrations on a per-seat basis using the Software Assurance program, even though the migration process may take years.

NPD itself may have provided some evidence to back up the contention that retail customers represent a smaller segment of the overall market than before, with its revelation last month that commercial sales of Vista reaped 62.5% more revenue for Microsoft during the complete first month of March than did Windows 2000 during its first complete month of sales in March 2000.

Of course, Vista's average selling prices are as much as two-thirds higher as well, which evens things out significantly. But judging from Vista's total sales just to businesses in January, NPD's Swenson estimated last month that this figure was only lower than XP's total sales to all customers in November 2001, by a meager 3.7%.

If these figures are confirmed, we could be seeing a reverse of the trend many analysts anticipated: Businesses are investing in Vista now even if they can't adopt it until later, while retail consumers could be reticent.

Still, if data still to be tabulated accounts for all of Microsoft's missing sales from formerly traditional retail channels, there's a reasonable possibility that Vista will not have significantly impacted operating system or even computer sales other than a minor bump.