News
Vista problems could hurt Microsoft's revenue
The negative perception of Windows Vista may be catching up to Microsoft in the bank. On Wednesday a financial analyst firm lowered its revenue estimate for Microsoft's 2008 and 2009 fiscal years, citing a negative perception about the OS that is affecting its adoption by businesses.
The research report by Sanford C. Bernstein analysts also hinted at the release date for the next version of Windows, code-named Windows 7. In the report, analysts said they expect Windows 7 to be released in the second quarter of 2010.
In the report, analysts Charles J. Di Bona, Maureen Murphy and Mariel A. Hardi lowered their revenue estimates for Microsoft by US$49 million for fiscal 2008 and by $395 million for fiscal 2009. While the 2008 revision didn't affect the firm's earnings estimate of $1.91 per share for that year, it lowered its 2009 estimate to $2.17 from $2.20, according to the report.
"Support for Vista has been battered across all enterprise sizes and corporate constituencies," the report stated. "As a consequence, the Vista cycle looks likely to be materially less robust than indicated in our prior survey."
The key factor has been "overwhelmingly bad publicity" for Vista, particularly about the option for enterprise licensees to downgrade to XP from Vista, and the potential for companies to skip Vista in favor of Windows 7.
The downgrade option has been especially troublesome for Microsoft, which in some cases has had to extend the time it will sell XP due to customer demand.
The negative publicity has left businesses with a perception that there is no good reason for them to upgrade, according to the Bernstein report. "Almost no feature of the new OS is now seen as a meaningful positive driver for adoption," the analysts said.
Independent analyst Brian Madden concurred. "From a company standpoint, there is not a single damn reason people should use Vista," he said. "Will you sell another widget because of Vista? No. And besides, Vista has so many hardware requirements that you increase your costs."
The Bernstein report also cites costs associated with Vista, which would require some companies to upgrade their desktop hardware because of the increased system requirements, a further impediment to adoption.
Moreover, some features of Vista that Microsoft promoted as key reasons to upgrade, such as security, have been undermined by negative publicity around tools like User Account Control, a new security feature many customers have griped about, according to the report.
The research report by Sanford C. Bernstein analysts also hinted at the release date for the next version of Windows, code-named Windows 7. In the report, analysts said they expect Windows 7 to be released in the second quarter of 2010.
In the report, analysts Charles J. Di Bona, Maureen Murphy and Mariel A. Hardi lowered their revenue estimates for Microsoft by US$49 million for fiscal 2008 and by $395 million for fiscal 2009. While the 2008 revision didn't affect the firm's earnings estimate of $1.91 per share for that year, it lowered its 2009 estimate to $2.17 from $2.20, according to the report.
"Support for Vista has been battered across all enterprise sizes and corporate constituencies," the report stated. "As a consequence, the Vista cycle looks likely to be materially less robust than indicated in our prior survey."
The key factor has been "overwhelmingly bad publicity" for Vista, particularly about the option for enterprise licensees to downgrade to XP from Vista, and the potential for companies to skip Vista in favor of Windows 7.
The downgrade option has been especially troublesome for Microsoft, which in some cases has had to extend the time it will sell XP due to customer demand.
The negative publicity has left businesses with a perception that there is no good reason for them to upgrade, according to the Bernstein report. "Almost no feature of the new OS is now seen as a meaningful positive driver for adoption," the analysts said.
Independent analyst Brian Madden concurred. "From a company standpoint, there is not a single damn reason people should use Vista," he said. "Will you sell another widget because of Vista? No. And besides, Vista has so many hardware requirements that you increase your costs."
The Bernstein report also cites costs associated with Vista, which would require some companies to upgrade their desktop hardware because of the increased system requirements, a further impediment to adoption.
Moreover, some features of Vista that Microsoft promoted as key reasons to upgrade, such as security, have been undermined by negative publicity around tools like User Account Control, a new security feature many customers have griped about, according to the report.
Posted on 13 Jun 2008 by Vista Advice