The balance sheet on Windows Vista

The OS is chugging along on strong PC sales and antipiracy efforts, but Microsoft still faces some grumbling and a long haul in corporate sales.

Windows Vista has certainly had its fair share of naysayers, but the operating system is clearly finding its way onto lots and lots of PCs.

In last week's earnings announcement, Microsoft reported a 25 percent increase in revenue from the unit that sells Windows for notebook and desktop PCs. Granted, some of that bump came from a crackdown in piracy and because more people are opting for "premium" versions of Vista. Still, the company has now managed to sell 88 million copies of the operating system, a significant tally.

"We have a lot of consumer interest and enthusiasm around it," CEO Steve Ballmer said in an interview with CNET last week.

Vista has picked up momentum in recent months, said Samir Bhavnani, an analyst at Current Analysis West.

"It got off to kind of a rocky start," he said. "There was a very vocal minority of people that were kind of ripping into Vista."

On the corporate side, momentum has been harder to come by. Microsoft finally acknowledged that it won't hit its lofty goal of having Vista in use on twice as many business PCs as were running XP in its first 12 months on the market.

"Yes, there's one or two models you can find someplace in the world of PCs that don't run Windows Vista. But the machines that sell all run Windows Vista."
--Steve Ballmer, CEO, Microsoft

"We think the adoption is pretty much at the rate commensurate with past releases," said Neil Charney, a general manager in Microsoft's Windows Client unit. Charney said that the original goal represented an "enthusiastic assessment" of where Microsoft might be able to get. Analysts at the time said Microsoft's prediction was overly ambitious.

The company said it is seeing some positive signs on the business front, notably a rise in the number of businesses signing long-term deals that cover Windows.

"They wouldn't be signing these agreements if they didn't have the intent to (deploy Vista)," said Mike Nash, vice president of Windows product management.

But while corporations may be planning their Vista move, most large companies that are buying PCs are still immediately reinstalling Windows XP, said IDC analyst Al Gillen.

"That's completely normal behavior," Gillen said, though it has quashed Microsoft's hopes of getting businesses to move more quickly to a new operating system by developing new tools for running compatibility checks and aiding in deployment.

Businesses are "certainly not rushing into it more quickly than they have other Windows (releases)," Gillen said.

Historically, large companies tend to drag their feet on deploying new operating systems, he said, not wanting to be in the leading edge and preferring to wait as bugs and compatibility issues are ironed out. A catalyst for some businesses could be the first service pack update of Vista, due early next year.

Even some consumers and small businesses have been opting for the downgrade path. Dell and other PC makers brought back XP on consumer and small-business machines early in the year, while more recently, some PC makers have made it easier for those buying Vista machines to return to XP.

Ballmer said that while there may be a few PCs still on the market that have XP, it's Vista that consumers are buying.

"Yes, there's one or two models you can find someplace in the world of PCs that don't run Windows Vista," Ballmer said. "But the machines that sell all run Windows Vista."

Still, Microsoft recently bowed to concerns from large PC makers and said they wouldn't have to stop selling XP machines in January, giving them instead until the end of June to sell the operating system.

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