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Commentary: XP won't boost PC sales

Even for the rest of this year, the $500 million hype campaign surrounding the launch of Microsoft's new operating system won't be enough to increase PC sales much.

    By Michael Silver and Charles Smulders, Gartner analysts

    Despite a $500 million advertising and promotional campaign, Microsoft's newest operating system, Windows XP, will be picked up faster by consumers than by businesses.

    See news story:
    Gates takes wraps off Windows XP

    It's unlikely that the PC industry's hopes for the Windows XP introduction to boost PC sales dramatically will be fulfilled. Even for the rest of this year, the hype surrounding the launch will not be enough to increase PC sales very much.

    Other issues--especially market saturation and economic conditions--will be greater factors in determining growth rates. Worldwide PC shipments in the fourth quarter are expected to decline by 13.2 percent compared with the same period last year. For 2001, worldwide PC shipments are expected to decline by 6.6 percent compared with 2000.

    Windows XP Professional will likely have little uptake in new commercial PCs this year because of testing and preparation cycles. However, some modest uptake will occur next year, with the operating system being loaded in approximately 16 percent of new commercial PCs. In 2002, though, Windows 2000 Professional will lead with 41 percent of new business PCs using it.

    Many companies that are still not prepared for Windows 2000 technology will continue to use Windows 9x and NT Workstation version 4.0 on new PCs, with 41 percent of new commercial PCs running legacy operating systems in 2002. While Windows 2000 technology (which includes Windows XP) will reach half of the commercial PC installed base by the end of 2003, most will continue to use Windows 9x into 2002.

    Windows XP Home will likely have some modest success in the fourth quarter of this year, but sales will be hurt by PCs stuck in the sales channel and by some "no-name" vendors continuing to ship older operating systems. In fact, the consumer PC installed base will be heavily weighted toward Windows 9x into 2002. Windows XP technology will reach parity only in 2003, but will eventually take the lead in the consumer PC installed base in 2004.

    Gartner's recommendations to companies are as follows:

    • Deploy all new PCs with Windows 2000 or Windows XP as soon as possible. Legacy operating systems should not be installed on new PCs.

    • Companies that have started deploying, testing or planning around Windows 2000 Professional should continue to do so, but should plan to switch to Windows XP Professional for new PCs in mid 2002 or early 2003. That way, the new PCs will deploy an operating system that will be supported by Microsoft through the life of the PC. Microsoft could extend the life cycle of Windows 2000 Professional, but it has committed itself to supporting it only until the first quarter of 2004.

    • Companies that have not made significant investments in Windows 2000 should consider skipping it and deploying Windows XP Professional, provided they can train their staff and ensure application compatibility.

    • Most companies will gain little return on investment by upgrading Windows 2000 machines to Windows XP. Moreover, any PCs likely to be around for less than a year should generally not be upgraded. Instead, they should be replaced during normal refresh cycles with a new PC and a new operating system.

    (For a related commentary on Windows XP, see Gartner.com.)

    Entire contents, Copyright © 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.