Vista Growth Surges as Corporate Adoption Kicks In

Last month, Microsoft announced that it had sold 85 million copies of Windows Vista, compared with just 45 million copies of Windows XP during the same time span in its initial release. This milestone is particularly impressive given the widespread negative articles one reads everywhere online about Vista, though most of that is anecdotal. But Microsoft says the reality of Vista is all upside and that Vista's growth is making a sudden surge.

The reason, Microsoft says, is that its biggest Windows customers, slow-moving corporations, are now starting to move to Vista. They're doing so as they always do, on their own schedules, but now that Vista has been in the market for most of a year, the sudden jump in sales is coming at an opportune time. Combined with holiday PC sales, this surge could make a huge quarter for the supposedly flailing OS. That's good news, unless of course you were playing the Chicken Little role in this invented tech farce.

"We feel like we are starting to hit our stride not only in demand, but in deployment in business," Microsoft president Kevin Johnson told Reuters this week. Growth in the Windows business has exceeded 20 percent each quarter since Vista first shipped, and the company is on track for 25 percent annual growth. Most impressive, perhaps, is that Microsoft makes 75 cents of profit on each dollar in Windows sales.

Part of the reason for Vista's huge financial success is that consumers are turning to high-end versions of the system in record numbers. In the previous quarter, over 75 percent of all Vista sales were for the high-end (and higher cost) Vista Home Premium and Vista Ultimate versions. (With XP, 59 percent of customers opted for premium versions of the OS.) While the software giant's decision to bifurcate Vista into more product versions than any previous Windows version was widely criticized, it's clearly been successful doing so. The company credits its progress on "educating consumers" about the benefits of the higher-end versions.

After the holiday sales season is over, Johnson expects another Vista sales boost, this time from the corporate market, when Microsoft ships the system's first service pack in the first quarter of 2008. Many of Microsoft's business customers wait for the first service pack before deploying a new Windows version. Microsoft's unearned revenue in the Windows business jumped 27 percent in the previous quarter, indicating that its customers were getting ready to make the jump to Vista: Unearned revenue is revenue that has been signed but not yet recognized because the product has yet to be delivered to and deployed by customers. That's all from upcoming Vista deployments, Johnson says.

TAGS: Windows 8
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