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Report: Vista's business sales stronger than expected

Market researcher NPD says commercial sales far ahead of Windows 2000 in first month and just behind that of Windows XP.

Sales of Windows Vista to businesses were stronger than expected during the operating system's debut month, according to a report from NPD Group.

The sales outpaced the first month's tally for Windows 2000 and only slightly trailed that for Windows XP, the market researcher said Thursday. Commercial revenue from Vista in December was 62.5 percent above that racked up by Windows 2000 in March 2000, its first month after launch. But Vista's total is 3.7 percent below what Microsoft got in the commercial channel for Windows XP in November 2001, its first month on the market.

In addition, the average price of Vista was about 4 percent higher than of Windows 2000 and roughly similar to that of Windows XP, NPD said.

"I think these results could be classified as 'strong,' or at least 'stronger than expected,'" NPD analyst Chris Swenson said in an e-mail interview. "Although Vista dollars were slightly lower than XP dollars in its first full month, I consider Microsoft's December results to be very impressive, given the commercial-only 'soft launch' approach that Microsoft took with the OS."

The results track only U.S. licenses sold indirectly to businesses, through resellers such as Soft Mart, Software Spectrum and CompuCom, Swenson said; NPD does not track software licensed directly from Microsoft. Vista went on sale to businesses at the end of November and should start showing up on new PCs and on retail shelves at the end of this month.

The marketing muscle behind the consumer launch should allow Vista sales to businesses to start eclipsing what Microsoft saw with Windows XP.

"Sometime after January 30, when Microsoft makes Vista available to the general public and ratchets up the marketing campaign, I suspect that we will likely see sales of Vista in the commercial channel begin to meet or surpass levels previously set by XP," Swenson said.

A key question around Vista is how quickly businesses will move to the new operating system. Microsoft has said that a year after Vista's launch, it expects twice the number of business users it had in the first year after Windows XP launched.

Microsoft did not say exactly how many PCs that would be. It did point to figures from analyst firm IDC, which said about 10 percent of business PCs were running Windows XP a year after launch. IDC has said it does not expect 20 percent of businesses to be running Vista in a year's time.

One of the key factors as to whether Microsoft can meet its goal is the pace of sales of new computers for the remainder of the year. Microsoft recently noted that in the unit that sells Windows for laptops and desktops, 80 percent of revenue comes from new PCs.

"Thus, although the commercial software sales figures are a telling indicator of corporate behavior, the real key to predicting the success of the new operating system among businesses will be to look at sales of PCs in the commercial channel over the next few months," Swenson said.

Ultimate popularity
Swenson noted that not many businesses opted for Windows Vista Ultimate Edition--not terribly surprising, since the ultrahigh-end version is targeted mainly at consumers.

However, he also noted that buying Ultimate is "the only way a small business can get their hands on one of the most compelling features of the new operating system: the new BitLocker security feature that fully encrypts an OS volume, similar in some respects to Apple's FileVault."

BitLocker is also available in the Enterprise Edition of Vista, but that is sold only to volume license customers and therefore not an option for most small businesses.

"Assuming Microsoft does a better job of marketing Ultimate to small businesses and other organizations, we might actually see sales of Ultimate increase in the commercial channel over time," he said.