Four months after its official, belated release, figuring out how Windows Vista is doing in the market involves as much decoding as a Dan Brown mystery. Microsoft Corp. may trumpet impressive stats - 40 million copies shipped in 100 days, twice as fast as XP - but it politely ducks and weaves when the professionally curious seek many of the details behind those numbers.
Instead, there's so much spin - from Microsoft, from rivals such as Apple Inc., from market analysts pushing research and more research - it would even leave Sasha Cohen dizzy. Here's our attempt to unravel this puzzle shrink-wrapped in a mystery.
1. Why does Microsoft talk about having shipped 40 million copies of Vista when everyone knows that doesn't equal the actual number of users?
To give Microsoft the benefit of the doubt, 40 million is the only number it can verify, and it's the one Wall Street cares about in any case.
To arrive at that 40 million figure, according to Kevin Kutz, a director in the Windows client division, Microsoft tallied four numbers:
a) all licences sold to PC makers for pre-installing Vista on their computers;
b) full and upgrade versions of Vista to be sold either as boxed product on retail shelves or at e-tail Web sites;
c) pay-per-downloads, via a new Web site called Windows MarketPlace, which it runs in partnership with retailers such as Circuit City; and
d) customers who redeemed coupons issued for free or discounted Vista upgrades if they bought PCs installed with XP between October 26, 2006, and March 15, 2007.
Apart from d) and its direct sales to businesses (both of which we'll get to later), Microsoft relies heavily on its ecosystem of channel partners to sell its software. That's in contrast to firms such as Oracle Corp., which sells most of its software direct. But as a result, Microsoft counts shipments into the channel - because they're easier to track, and because its partners are the ones actually paying Microsoft.
Microsoft's Kutz acknowledges that because of the time it takes for Vista to wend its way through the channel into customers' hands - about one month, according to IDC analyst David Daoud - its 40 million figure was higher than the actual number of users after 100 days.
2. Hey, doesn't Microsoft also sell Vista directly to some big customers, too?
Yes, indeed. Microsoft does sell a lot of software straight to large enterprises and governments, though it declines to reveal how much. Moreover, those customers were actually allowed to start buying Vista on November 30, two months before its official launch.
However, Microsoft is actually excluding all of those sales from its ongoing Vista licence count. Why? Because despite announced reforms to its volume licence policies, Microsoft has been slow to roll out some of the corresponding back-end technology. As a result, it still can't get an accurate count of volume licences. In any case, enterprise adoption of Vista appears to be slow among enterprises and governments.
Big organizations are generally slow to upgrade to new versions of Windows because of software compatibility problems, retraining and other management headaches. Of the six million PCs sold to large U.S. enterprises in the first quarter, only a million came with Vista, says IDC's Daoud.
And a huge percentage of those million PCs were immediately wiped clean of Vista and re-installed with XP. The pricey contracts these customers hold with Microsoft allow them to re-install Vista later, when they are ready to upgrade.
3. But what about the Vista Express Upgrade program? Didn't that essentially give Microsoft a three-month head start on selling Vista? And doesn't that undermine Microsoft's claim to be doubling XP's shipment rate?
Yes and no. On the head start issue, Microsoft's excuses boil down to two: first, that customers couldn't receive their copies of Vista until after the official launch date (with many complaining that they had to wait much longer after that); second, that the total number of customers that actually redeemed the upgrade coupons was small.
How many redeemed the coupons? Kutz won't say. But according to Microsoft's earnings statements, Microsoft deferred about US$1.2 billion in revenue from its fiscal Q2 (Oct-Dec '06) to its Q3 to account for two things: shipping Vista to hardware makers or retailers in late 2006, so they could install it on PCs or stock their shelves in time for the Jan. 30 launch; and "technology guarantees" to consumers, aka the Vista Express Upgrade program.
Microsoft insists that the portion of the $1.2 billion that came from Vista Express upgrades was tiny, although, in lieu of an actual number, we'll have to take Redmond's word for it.
As for whether the upgrade program negates an apples-to-apples comparison with XP, it actually turns out that Microsoft did also grant upgrade coupons to buyers of PCs in the months immediately before XP's late 2001 release, to appease partners worried that PC sales would plummet.
Continued: How meaningful is it for Microsoft to boast about Vista shipping twice as fast as XP?
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