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PC Makers Hedge on Vista Effect

Industry caution raises questions about PC sales.

Is Vista-mania sweeping the nation?

PC makers love to talk about the excitementsurrounding


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new operating system. But their actions tell a slightly different story.

More than a month after

Vista's long-awaited release, some PC makers appear in no hurry to retire from their product catalog computers running the old Windows XP.

While one would expect leftover inventory of XP machines to turn up in bargain bins, some PC makers continue to build brand-new, top-of-the-line consumer systems featuring the old XP operating system.

In an industry obsessed with the latest and greatest, selling yesterday's technology seems curiously out of character. It also raises questions about how much of a tonic Vista will actually provide to PC sales in the near term: After all, if Vista presents such an irresistible reason for consumers to replace their old PCs, why continue to offer XP?

For the conservative corporations that purchase PCs in bulk to run their businesses, a gradual transition to Vista was always the expectation.

But some PC makers, including Lenovo, are also hedging their bets on consumers' immediate reaction to Vista.

"While we expect most of our customers will be moving to Vista, we do have some customers that want to order XP, so we'll keep that window open," says Lenovo spokesman Ray Gorman.

Lenovo, the world's third-largest PC company, offers consumer notebooks and desktops with the choice of either Vista or XP through its Web site and retail partners, although Gorman says the retail product mix is "tipping" in favor of Vista.

Gorman would not say what share of Lenovo PC sales are tied to Vista at this point, but said that the company was encouraged by Vista sales, which he said are coming in line with expectations.

No one doubts that Vista will become the de facto PC operating system. Whether it happens through a mad rush of PC upgrades or more gradually with consumers replacing their PCs at their leisure is still uncertain.

Industry research firm Gartner says the picture will become clearer when first-quarter PC sales figures come out in April.

Early reports from some of the smaller PC companies are mixed.

"From a sales standpoint, we definitely have more people holding off than I expected," says Kelt Reeves, CEO of

Falcon Northwest

, a small PC maker dedicated to high-end gaming systems. "We still think they're probably this year's customer; they're not putting it off entirely. It's more that there's no pressing need to buy it now."

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Reeves, who believes that Vista greatly improves a PC's stability, says that a quarter of the PCs his company is building for customers are still loaded with Windows XP. And he has begun offering special dual-boot computers that run both XP and Vista.

What's in the Box

For Falcon Northwest's customers, the lack of a pressing need for a Vista PC relates to the fact that most video games don't yet support Vista's new DirectX 10 technology, which promises to make computer graphics more lifelike.

Mainstream PC buyers have other reasons to hold off, including concerns about incompatibility with the drivers that control peripherals such as printers, security holes and the inevitable bugs. Most of these are likely to be resolved in the coming months.

And while Microsoft is spending hundreds of millions of dollars on marketing Vista, it's not clear that the message, which focuses on Vista's snazzy new interface, is resonating with consumers.

"I don't think people know what they're getting with Vista besides a cool new look," says Randy Copeland, CEO of

Velocity Micro

, which sells PCs through

Best Buy

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stores as well as directly.

Nonetheless, Copeland says he's seeing strong interest for Vista among his customers, estimating that 95% of the PCs the company ships now feature Vista. Though he expects a better-than-seasonal first quarter, he says that unit shipments have been growing at a 200% clip in recent years, anyway, making it difficult to know how much credit Vista deserves.

A look at past transitions reveals no clear correlation between the introduction of a new operating system and PC sales. In the first quarter that Windows 95 was available, worldwide PC sales grew 27.9% year over year, according to Gartner. But PC sales were up 27% in the two quarters before Windows 95 arrived, as well.

When Windows XP came out in October 2001 -- weeks after the 9/11 terrorist attacks and in the wake of the dot-com bust -- PC sales dropped 2.3% during the quarter, in keeping with the overall trend during that period.

With or without Vista, selling PCs is tough business these days, with electronic gadgets such as MP3 players and smartphones competing for consumer dollars and with many consumers having recently purchased new laptop PCs.

Still, some PC makers have high hopes that Vista will give PC sales a boost.


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is placing all its chips on Vista when it comes to consumer PCs. Save for one or two models in which Dell is still tweaking driver support, the company's consumer PCs are available only with Vista, says Dell spokesman Bob Kaufman.

"The excitement is real," says Kaufman. "We're getting a lot of questions and a lot of very positive feedback from customers about what Vista can deliver."

According to Dell, the company took orders for thousands of desktop and notebook PCs loaded with Vista in the first weekend of availability.

Without the safety net of XP systems to fall back on, Dell had better hope the Vista excitement keeps up.