Strong Demand for Windows Vista Reported

Best Buy Co. Inc. and Circuit City Stores Inc. Wednesday both reported high demand for Windows Vista in their retail stores, though this demand had a different effect on each company's business.

In separate earnings statements, the two retail companies said that PCs with Vista preinstalled have been selling well since the Jan. 30 release of the new OS. However, while this drove sales of PCs and computer services up 10 percent at Best Buy, Circuit City was affected negatively because it did not keep enough Vista PCs in stock to meet customer demand.

Best Buy said sales of Vista helped it gain market share in laptop and desktop computer sales. The company reported positive results for its fiscal fourth quarter, with profit that rose more than 18 percent year over year.

Circuit City, on the other hand, reported a US$12.2 million loss for the quarter, and admitted sales were less than expected. The company acknowledged in a news statement it was negatively affected by "volatility" around the Vista sales transition due to the fact it kept its Vista PC inventory "lean" and so could not fulfill customer demand.

News from retailers drove Microsoft stock (MSFT) up more than 3 percent on Wednesday at midday Eastern Daylight Time. The opening price was $28; by 12:35 p.m. EDT stock was trading for $28.73.

Reports from retailers come on the heels of comments Microsoft made last week that Vista sales in its first month of release were more than double the sales its predecessor Windows XP racked up in twice the time. The company said it sold more than 20 million Vista licenses in its first month, compared to selling 17 million licenses of XP in its first two months of release.

These figures appear to point to a successful launch for Vista, as Microsoft's prediction that Vista would outsell XP considerably in the early days of its release is coming true. One factor to keep in mind, however, is that Vista had more time to build up customer demand, as it came more than five years after XP's Oct. 25, 2001 release. Windows XP made its debut a little more than three years after its predecessor, Windows 98, and just about a year before an interim client OS release, Windows ME.

There also are more computer users now than there were five years ago, and Windows XP's release came just after the industry was reeling from the dot-com industry bust, which negatively affected PC sales.