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Re: [Rival] Windows Vista Still Too Risky to Add to Networks

  • Subject: Re: [Rival] Windows Vista Still Too Risky to Add to Networks
  • From: Rex Ballard <rex.ballard@xxxxxxxxx>
  • Date: Sun, 25 Nov 2007 19:57:11 -0800 (PST)
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On Nov 25, 6:34 pm, Roy Schestowitz <newsgro...@xxxxxxxxxxxxxxx>
> Anthony Doesburg: 'Wait and see' approach to Vista
> ,----[ Quote ]
> | But that doesn't mean everyone who's buying Vista is using it. In fact, XP
> | and the even older Windows 2000 remain the operating systems of choice at
> | most large organisations.

Microsoft has figured out how to turn XP licenses into Vista
Licenses.  The OEMS have to purchase Vista Home Premium or Home Basic
licenses, then they have to purchase upgrades to Vista Business, then
they can Upgrade to Windows XP.  Microsoft gets 2 Vista licenses for
each XP machine shipped by the OEM.

> | The reason is conservatism within the IT departments of big outfits; a home
> | user suffers inconvenience if a new operating system has a few teething
> | problems but a business or government department could be knocked out of
> | action if the changeover goes wrong.
> `----

There are other marketing trends that are also significant related to
Vista.  There seems to be a substantially higher number of PCs being
ordered via the Web in proportion to those sold at retail.
CompUSA had to close most of it's retail stores because losses were so
bad.  Gateway has been closing it's retail stores.  Other
multifunction retailers such as Best Buy, Circuit City, and other
major retailers have pretty much gutted the computer shelf space.
Often, there are empty slots, because the laptops and desktops
preloaded with Vista Home Basic or Vista Home Premium can't be sold
profitably.  For some campanies like HP and Lenovo, the retail floor
space is primarily a "show room" for machines that will be ordered via
the web.  Many of the retailers don't even have sales people who know
enough to demonstrate the Windows Vista features.  There was once a
time when selling a computer would yield a day's pay worth of
commission.  These days, more and more retailers aren't even paying
commissions for PC sales, and often the pay is only slightly above the
pay for working at Burger King or MacDonalds.

> http://www.nzherald.co.nz/section/story.cfm?c_id=5&objectid=10477799
> Surveys show Vista struggling one year on

The title is misleading.  Vista wasn't officially released until
January 31st of 2007.  While there were beta pre-releases distributed
to MSDN subscribers, these were not counted in SEC filings or other
official filings.  The previous year reported growth, but it was very
low growth and even that was after a reorganization (CEOs often use
reorganize to isolate lack of growth to fewer line items).

In the financial reports, we can also see that Microsoft often
"stuffed" the channel by pulling from it's huge cash reserves, taking
on additional debt, and funding much of it's "revenue growth".  Most
likely, Microsoft increased minimum commitments, but provided low-
interest or interest free financing, as indicated in the "unearned
revenue" portion of the financial report.



Microsoft's 10K and 10Q filings show that Microsoft has continued this
"channel stuffing" strategy, but they have also found ways to milk
additional revenue from each computer, and to increase the license
counts for each computer sold.

Although the "top line" numbers are misleading, to someone who is an
experienced financial analyst, the previous channel stuffing, combined
with the current channel stuffing haven't fooled anybody.  Microsoft's
additional revenue from the Upgrade-Downgrade to XP has resulted in
bumping Microsoft from being a $30 stock to a $34 dollar stock.
Ironically, the strongest growth indicators are in the entertainment
products division.  Still, there are clear indicators that Microsoft
is feeling the impact of Linux, OSS, and OS/X in their financial
reports, and Microsoft is careful to point out that it's too biggest
threats are legal proceedings and settlements, followed by Linux and
Open Source Software.


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