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Vista License Sales in Context

Microsoft's sales figure of nearly 40 million Vista licenses is impressive. But it's no sign of surefire success. Yet. The PC market is much larger today than in 2001, diminishing comparisons to Windows XP license shipments.

On Tuesday, Microsoft Chairman Bill Gates claimed that Vista's adoption rate is about "twice as fast as the adoption of Windows XP." Maybe so, but it's off a much larger base.

As the chart below indicates, IDC preliminary data on first quarter 2007 worldwide PC shipments is 58.9 million units. Q1 would be the first after Vista shipped, if counting the Vista holiday coupon program and business release on Nov. 30, 2006. Microsoft shipped Windows XP in late October 2001—nearly five years to the day the Vista coupon program started—with PC shipments of 34.4 million in the quarter that followed.

Q1 PC shipments following Windows releases

In evaluating Microsoft's 40 million license figure, "Another important point here is the size of the PC market, which is much bigger," said Loren Loverde, program director for IDC's Worldwide PC and Mobile Phone Trackers.

Caveat: The comparisons aren't clean, because Microsoft's 40 million figure is for sales through last week. In late March, Microsoft made the audacious claim of 20 million Vista licenses sold in February. So the real number of Vista licenses sold during the first quarter is somewhere between the two figures. Since Gates said "nearly 40 million," I'll split the difference at 30 million licenses.

If Microsoft sold 30 million licenses during first quarter and manufacturers shipped around 59 million PCs, doesn't that work out to about half of the computers going out with Vista?

I wouldn't call that a flop, by any means, as some Microsoft Watch commenters might presume is the point. OEMs can still license Windows XP and fastest PC growth is in markets where Vista antipiracy mechanisms and shipments of lower-horsepower computers could affect shipments of the newer Windows.

Yesterday, HP announced robust earnings, in part because of strong PC sales. During a fiscal second quarter conference call yesterday HP CEO Mark Hurd cautiously praised Vista's contribution to earnings.

"I think any story out there that people want to tell about Vista, they can tell," he said, "Right now, I can tell you it has been good for us."

But HP reported year-over-year PC sales growth of about 24 percent, or about twice worldwide PC sales growth. Whatever HP is doing right, it's more than just Vista. I don't doubt Vista contributed something, but HP's success in context of Dell's troubles suggest other factors at work.

I still think that second 20 million of Vista sales—from March 1 through early May—is sign of increasing momentum. If Microsoft wasn't so hung up on XP comparisons as the benchmark, it could really demonstrate that Vista sales are increasing.

The first 20 million figure really represented four months of sales, and that could have been positive data because Microsoft protected its customers' holiday investments. For free! Instead of making that point, Microsoft got carried away with making comparisons back to XP.

I say, let Vista sales stand on their own. Past comparisons don't work, because mitigating factors—size of the PC market, for starters—have changed.