Windows Media Laptop Sales Spike as Prices Drop

SAN FRANCISCO -- Sales of Windows Media Center Edition notebook computers in the U.S. retail market had their biggest surge yet, as prices for the laptops dropped drastically between the end of December and the end of January, according to new research by Current Analysis Inc.

Computers running Microsoft's Windows Media Center OS accounted for 16.5 percent of notebook sales in retail chains such as Circuit City, Best Buy, and CompUSA in January, rising from a 4 percent share of laptop sales at those outlets in December, according to Nicole D'Onofrio, mobile computing analyst with the Sterling, Virginia, research firm.

The primary reason for the rise in sales is the drop in price, from an average retail price of $1735 in December 2005 to $1251 in January, she said.

Dell Not Included in Survey

Hardware companies selling Windows Media Center notebooks in the chain stores include Hewlett-Packard, Gateway, Toshiba, and Sony Electronics. Notebook computers sold at Wal-Mart were not included in the research sample, and neither were laptops sold by Dell, which doesn't sell its laptops in mainstream electronics stores, D'Onofrio said. However, she noted that Dell offers one model of Windows Media Center notebook for less than $1000 online.

While a spike in Windows Media Center sales is good news for Microsoft, one cause of the drop in price is the removal of the TV tuner from the system, D'Onofrio said. This indicates that consumers remain hesitant to embrace Microsoft's ultimate goal for the operating system, which is for Windows Media Center to be the console that drives the digital home, she said.

"People are not ready to marry their PC and TV together at this point," D'Onofrio said. "There is still some work to be done. What people are using Media Center for now is to organize, store, and share their digital libraries."

Customers can purchase a TV tuner for a Windows Media Center computer as an add-on for about $100 to $200, she added.

Good News for Vista

Still, the strength of Media Center notebooks and PCs--the latter currently make up about 60 percent of all desktops sold in U.S. retail stores--should bode well for the release of Windows Vista later this year, D'Onofrio said. Analysts expect Windows Vista to have some of the premium functionality now found in Windows Media Center Edition built into some of its more standard editions.

Another reason for the recent drop in notebook prices: January was the first month that Media Center laptops using processors from Advanced Micro Devices (AMD) entered the retail channel, D'Onofrio said. Because AMD is struggling against Intel for brand recognition in the retail market, laptops with its chips cost less. The average selling price for an AMD Windows Media Center notebook in January was $1140, while the average price for an Intel-based laptop was $1600.