On Jan 1, 3:11 am, Roy Schestowitz <newsgro...@xxxxxxxxxxxxxxx> wrote:
> Microsoft offers a Vista two-for deal
> Interesting comment from CompUSA
>
> ,----[ Quote ]
> | Every single one of them he said was returned from consumers... and that they
> | (CompUSA) couldn't ship them back.
This is not new. Microsoft started this practice back with Windows
95. Later, Microsoft even began to provide the financing (called
"Flooring" in retail jargon), and eventually offered interest free
financing. The deal was that the retailer had to accept a minimum
commitment, in exchange for a substantial discount, which Microsoft
would finance - interest free. This allowed Microsoft to claim
"shipments" to the stores in it's Securities Exchange filings. This
was critical to NT 4.0 and Windows ME, both of which did not actually
SELL very well in retail stores, but were shipped to stores who had
accepted minimum commitments. In most cases, they were given very
deep discounts, as high as 70%, in exchange for the minimum
commitments, which means that even if 2/3 of the inventory was
returned, they could still "break even".
The other part of the deal was that they were only allowed to discount
the boxes a certain amount, usually no more than 20%. So the
retailer would buy 10 million boxes, for $30 each, and sell them for
$169 each, even though the MSRP was $199. The catch was that CompUSA
would take 10 million, Staples would take 10 million, Office Max would
take 5 million, and so on, allowing Microsoft to claim "Shipments" of
30 million in the first 30 days, even if 2/3 of the inventory was
still sitting in storage, or was in the form of "commitments" that
haven't actually been delivered.
> | As he heard, Microsoft wasn't giving
> | credit back for unsold or returned copies... and didn't want the returned
> | figures made public...
A legitimate request, given that Microsoft was offering them copies at
wholesale prices that were often as low as the OEM prices. If they
pay $30 per copy, and sell for $150/copy, that's a profit of $120/
copy. Even if 50% are returned, or unsold, that's still an average
revenue of $70/copy and a profit of $40 per copy. And all Microsoft
requested, was that returns not be "entered into the books". Sure it
was a gamble for the store, but if it was as popular as Windows 95,
Windows 98, or Windows XP, they had the ability to make some huge
profits over the year.
> | He wouldn't say that every single one of them
> | exchanged for a copy of Xp, he didn't know if that was true. So, I asked how
> | many boxes did they have. Same glare, followed with a "You do not want to
> | know" type statement.
I think an even bigger problem for CompUSA was that so many of the
Vista machines weren't capable of delivering the advertized Aero-Glass
features shown on television commercials. It was a pretty clear-cut
case of fraud, and since CompUSA had a liberal return policy, they
were getting back a LOT of machines that had Vista Home Premium,
DirectX/9 video cards (not good for Vista OR Linux), and couldn't
replace them with machines that worked "as advertized".
There were even people at many of the stores who were trying to get
Aeroglass to work on the display machines, and being told, either by
the sales people, or by other frustrated customers, that these
machines didn't support Aero-Glass. Microsoft slit it's own throat on
this one.
Best Buy hasn't gone out of business, but the computer section has
fallen into severe disrepair. Vista boxes are locked into a cabinet,
Vista display shelves are sitting with empty "holes" where the display
machines used to be, other machines are marked "Special price -
DISPLAY ONLY", and many of the available machines where there were
boxes below the shelves, were boxes that were torn open, obviously
returns.
Staples has an inventory and up to date displays, but almost all of
the machines on display are "Linux ready" and are displayed in a way
that lets you determine this for yourself. Even the prices of the
machines preloaded with Vista Ultimate have dropped to $900, from
almost $1600 when Vista was first released. Even so, it's pretty
obvious that you are paying at least $300 just for Vista Ultimate.
How much of that profit is going directly to Microsoft?
> http://zerias.blogspot.com/2007/12/interesting-comment-from-compusa.html
>
> Related:
>
> Windows Vista: Sold but not deployed
>
> ,----[ Quote ]
> | Microsoft says it remains happy with enterprise sales of Vista -- however,
> | the software behemoth acknowledges that many businesses which have bought
> | Vista licences are yet to deploy the software.
Remember that many of those who have "bought" Vista licenses, were
actually
"Support Contracts". They had been promised automatic upgrades, and
Microsoft gave them Vista, without raising their support contract
rates, in hopes of getting them to accept the excess shipments. The
tactic worked. Remember, the "shipment" simply involved granting
"permission" to install Vista and have it authenticated using a volume
license manager server that was authenticated by Microsoft. The VLM
server tracks which licenses are attached to which PCs. Ironically,
even though Microsoft knows that Vista was not deployed (reported by
the VLM servers), they claimed the "shipments" by automatically
granting permission to install Vista on the PCs of every employee.
This would mean that Microsoft may have overclaimed as much as 70% of
it's Vista "shipments" since these were never deployed. Ironically,
most of these "overships" expire within a year after their original
shipment. For example, OEMs have to meet their commitment levels, but
cannot sell them or get direct credit (returns) in the previous year.
Instead, Microsoft adjusts the discounts on the next year's order,
offering deeper discounts in exchange for even higher minimum
commitments.
The crazy thing is that even though chip makers are freaking over low
chip volumes, PC makers are undewhelmed by the demand for Vista, and
have had to deeply discount even laptops to levels even lower than
prices at which XP machines were sold a year ago. And yet Microsoft
is claiming 40% increases in volumes, revenues, and profts, most of
which were financed by Microsoft's interest-free flooring plans.
> http://www.zdnet.com.au/news/software/soa/Windows-Vista-Sold-but-not-...
> Currys group blames Vista for poor sales
The retailers have really been taking it on the chin. Microsoft isn't
the only company who offers deep discounts in exchange for minimum
commitments. Other companies like HP, Sony, and E-Machines also use
similar tactics to get reliable revenue streams. They offer deep
discounts, as much as 1/2 off, in exchange for minimum commitments.
The problem is that when the the retailers get stuck with excess
physical inventory that isn't selling, it's often better for them to
simply take the penalty and stop selling PCs.
> ,----[ Quote ]
> | DSG, the group behind Currys and PC World, has warned that poor sales of
> | Vista could slash its profits by around £20 million.
> `----
>
> http://www.pcpro.co.uk/news/131507/currys-group-blames-vista-for-poor...
> Dell casts doubts on Vista
>
> ,----[ Quote ]
> | Dell today revealed that it will restore the option to use Windows XP on
> | some of its home systems, marking a potentially damaging blow to
> | Microsoft's hopes for the newer Windows Vista.
Microsoft seems to be between a rock and a hard place. Dell has been
saying that "most" of the PCs they have been selling via web are being
ordered with Windows XP. Microsoft wants to stop shipments of XP at
the end of the year (january 30th), and has already extended the XP
option to June 30, 2008.
Microsoft is starting to experience the same kind of pushback they
experienced when they tried to terminate support for NT 4.0 and force
customers to upgrade to Windows 2003. Many customers simply switched
as much as they could to Linux, and Microsoft's server counts went
down. The only thing keeping their count up was the need for
excessive redundancy and lack of scalability. Linux and Unix servers
often perform multiple functions on a single server, and because Linux
is more efficient with memory, it's possible to put more virtual
servers on the same amount of hardware. Microsoft has finally,
reluctantly, started to support virtualization, but since Windows eats
more memory and CPU for graphics, user interfaces, terminal servers,
and remote access, each virtual machine tends to be much larger,
meaning that fewer servers fit on a single server.
It looks like Vista is having similar problems. Customers are
refusing to upgrade, and the harder Microsoft tries to push the issue,
the more open the resistance and dissatisfaction with Vista becomes.
Reviewers are openly declaring "I'd rather have a Mac". More and more
of the OEMs are making more and more of their product line "Linux
Ready". If the courts let the judgement lapse, there is a good chance
that OEMs will even be bolder.
Remember that Dell has also been watching their order chain. Since
most of the Web order customers are ordering their PCs with XP rather
than Vista, it's probably even more telling than a "suggestion box".
> | [...]
> | While a popular request through the company's IdeaStorm website, the
> | choice was substantially outnumbered by requests for pre-installed
> | Linux, US-based technical support, and other features -- pointing to a
> | larger general demand for the change.
This could be more significant. It seems that more and more customers
are willing to forego Windows Vista entirely and switch to Linux
exclusively if Microsoft attempts to discontinue Windows XP under the
XP licensing terms. Vista is simply too bulky, too resource
inefficient, and offers too little incremental value to customers who
are loyal to their iPods, Antivirus, and need AntiSpyware. These
third party products have gained the loyalty and trust of perhaps
hundreds of millions of customers, and Microsoft's attempts to "shut
them out" may have triggered a more open backlash, since these loyal
customers are seeing THEIR ox being gored.
Meanwhile, companies like Adobe, Borland, and Sun are becoming much
more aggressive about their support for OS/X and Linux. The irony is
that it's actually very easily to generate an OS/X application from a
Linux application, while it is very difficult to create reliable,
fully functional, fully compatible applications using "Microsoft"
application programming interfaces, languages, and tools.
> | The turnaround may be a reflection of
> | an overall backlash against Vista, observed IDC analyst Richard Shim.
There seems to be a backlash against Vista at all levels.
Retailers hate it, they are losing money and have had to take huge
write-downs on Vista Home Premium machines, Vista Upgrades, and vista
documentation.
Customers seem to hate it - they seem to be willing to forgo the
convenience of immediate gratification and opt to go shopping via Web
order services, or even telephone orders, to get machines with Windows
XP rather than Vista.
OEMs hate it, because Vista prices have not held. In fact, Vista PC
prices have fallen BELOW the prices for similarly equipped Windows XP
machines, even though they have nearly double the RAM and CPU
bandwidth.
Software Vendors hate it, because they have had to spend $millions
rewriting software for vista, getting the proper certifications, and
distributing and flooring new inventory, and have not seen a huge
surge in sales or funded upgrades. Many corporate customers have
either requested unfunded upgrades, or have simply refused to install
Vista on ANY machines. Some companies have even BANNED the order of
new machines with Vista, insisting that machines be ordered with XP -
or not at all.
Employees aren't happy. Many companies are holding back upgrades,
refusing to upgrade new machines until they can decide how the want to
chart their upgraded path. Some companies are now expecting employees
to fund their own upgrades, such as external hard drives and
additional memory - rather than order new machines.
There seems to be a clear trend in favor of "Linux Ready" machines,
which means that very few machines will be capable of running Vista's
Aero-Glass. Instead, all Vista means is that the machines will run
slower. Even upgrading the machines beyond 2 Gigabytes is not
supported without upgrading the software.
Keep in mind that all Intel Duo and Turion/64 X2 machines have the
capability to run DUAL 64 bit processors, and Linux can fully exploit
these capabilities without making any sacrificed.
> http://www.macnn.com/articles/07/04/19/dell.casts.doubts.on.vista/
> Lenovo offers downgrade from Windows Vista to Windows XP
Lenovo is one of the vendors who never stopped offering XP. Many
people even scrambled to get PCs with XP before it stopped being an
option, and Lenovo has continued to offer XP as an option ever since.
> ,----[ Quote ]
> | My colleague Stian just sent me this interesting link regarding my
> | experiences with Windows Vista. Since I assume the link will NOT have the
> | visual appearence it has right now for very many more hours (days) I've
> | created a screenshot of how it looked when I went into the site.
According to the cited article, Lenovo is willing to offer purchasers
of Lenovo systems who got their machines with Vista the ability to
downgrade to Windows XP at no additional charge. I'm not sure if this
means that you can download an ISO image, or if they will send you an
XP installation disk.
> http://jaxed.org/lenovo-offers-downgrade-from-windows-vista-to-window...
I also noticed that more PC magazines are offering CDs or DVDs that
include "XP Recovery Images" which are intended to let XP users
reinstall XP, but can also be used by Vista users to install XP.
> Acer: PC industry 'disappointed' with Vista
>
> ,----[ Quote
> | Acer president Gianfranco Lanci became the first major PC manufacturer to
> | openly attack Microsoft over the Windows Vista operating system in the
> | Financial Times Deutschland on Monday.
Acer has been a major producer of "Linux Ready" machines almost since
it's inception. It's not insignificant that they have been making
bigger profits, while Gateway, who has pretty much always gone
"Windows Only" was on the verge of watching it's stock be delisted
because the price had fallen below $1 per share just before Acer
offered to buy Gateway. It's possible that Acer will be doing with
the Gateway stores what Apple has been doing with it's stores, but in
this case, it will be offering Acer machines pre-loaded with Linux
which can be seen and taken for a "Test Drive" in their stores,
without fear of reprisals from Microsoft.
> | Lanci said the operating system was riddled with problems and gave users and
> | businesses no reason to buy a new PC, according to the report. Taiwan-based
> | Acer is the world's fourth-largest PC manufacturer, after HP, Dell and
> | Lenovo.
As I pointed out before, Acer has always been "Linux Friendly" and
this has been a critical element of their success. Many Linux users
have purchased Acer machines simply because Acer machines run Linux so
well. This is significant since Acer has now grown to become the
fourth largest PC maker, and one of the few "Pure PC" companies. Dell
had to go into the HDTV business to sibsidize their PC business. HP
had to subsidize their PC business with revenue from printers and
other "tie-in" sales. Even Lenovo was originally IBM, who subsidized
the PC business with revenue from consulting and support. Even today,
Lenovo depends on their support and warranty sales to subsidize their
PC revenues. Fortunately, the Thinkpad line is so reliable that they
don't lose much money on that market.
> | "The whole industry is disappointed with Windows Vista," Lanci said.
> `----
> http://www.techworld.com/opsys/news/index.cfm?RSS&NewsID=9579
Microsoft has a big problem. They put out a new version of Windows
which is as unpopular as Windows ME or Windows NT 3.1 or NT 3.5.
Microsoft has no "vapor-ware" that is credible, especially after the
mess they made of the Longhorn Vaporware.
To make matters worse, Microsoft has a direct competitor in the form
of Apple, who is making record profits, can't keep up with demand, and
has even reduced it's advertising because they can't keep up with
demand, even at prices nearly triple those being charged for
comparable PCs.
And at the same time, Linux has created the opportunity for PC makers
to establish their own brand identity. Dell is offering Ubuntu, HP is
offering SUSE, and IBM is offering Red Hat on their intellistation
workstations. Even though most of the machines are shipped with Vista
or XP, the message is clear - "buy my PC and you can be running Linux
in less than an hour".
Yet even today, none of these OEMs are willing to take the risk of
putting Linux on their Retail machines, even though the retailers are
hurting worse than anyone. I wouldn't be surprised if the retailers
cancelled their orders for Vista machines and demanded machines
preloaded with Linux - as a way to generate higher profits from retail
PCs.
One thing seems to be crystal clear. Vista is not doing well in the
retail market. End users don't like it. Corporate users don't like
Vista much either.
The big problem for Microsoft, is that the "boost" in year-over-year
sales where Vista sales caused an increase over the previous year's
stale XP sales (along with customers scrambling to buy XP systems
while they were still available).
Microsoft has been funding their sales channels, including OEM,
Retail, and even corporate channels, but at the end of the year,
actual Vista deployments are far less than what these channels paid
for. Revenue was far less than expected. Vista deployments are far
lower than expected. The problem is that the bill is due. Will
Microsoft simply "write off" the excess funding? Will they somehow
roll the receivables into this year's quotas and minimum commitments?
Will they attempt to "force" deployments?
If Judge Kollar-Kotelly drops the antitrust judgement, and lets all of
the terms of the settlement lapse except for the disclosure
requirements, will Microsoft try to push even harder? Will OEMs cave
in to another 25 years of Microsoft monopoly? Will Corporate
customers fork over $millions or even $billions in additional revenue
to Microsoft for Vista and Vista support?
Or is there a real possibility that the OEMs, corporate customers, and
Retailers decide that this is the time to act and openly defy
Microsoft. Many organizations and corporations are beginning to
formally or informally adopt Open Document Format, along with
supporting software such as Open Office and Star Office. IBM is
releasing Lotus Notes 8 for both Windows and Linux, and is including
an ODF compliant Office Suite as part of the package. Ironically, the
IBM version does not provide the best support of Microsoft Office
formats.
Microsoft might even find itself "locked out" of the market, depending
on companies like Sun for patches, that will allow older versions of
Office (but probably NOT Office 2007) to access and review ODF
documents.
FireFox is also giving IE a run for the money. Even when Microsoft
released IE7, most customers have opted to stick with IE6 and/or use
FireFox rather than upgrade to IE7.
According to:
http://www.upsdell.com/BrowserNews/stat.htm
IE7 is still less than 30% of the browser market, with IE6 being
another 30%
Gecko based browsers (FireFox, Mozilla, Netscape) is anoter 30%.
KHTML (konqueror) is as high as 4.3%.
Another site
http://www.w3counter.com/globalstats.php
Shows IE7 at less than 20% and FireFox at over 26%.
Also interesting, even though only about 10% of the browsers using
with Linux identify themselves as Linux - Vista is only 4.75% while OS/
X is 4.56%, and Linux is 1.77% which means that even without
calculating the "other" segment, OS/X and Linux have combined to beat
Vista in the marketplace.
Another 2.16% was "other" which was also probably Linux. Again, this
is a survey of IP addresses, not uniquely identified PCs, but it does
represent 16 million visits to almost 7,000 sites. Though it only
counts the last 25,000 page-views.
This survey may also be skewed by the fact that most Linux users use
Squid, which caches most of these page views, while Windows tends to
at least "tally" the views.
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