The Microsoft ( MSFT) marketing machine has kicked into overdrive as the software giant released the consumer version of Vista, the much-delayed successor to its Windows XP operating software. On Tuesday morning, Vista, Office and other related products will be available in as many as 39,000 retail outlets in 70 countries and translated from English into 98 other languages. The launch is the biggest Microsoft event since it unveiled Windows XP in 2001, and Vista is probably the company's most important product since Windows 95. Investors have high hopes for the new product cycle and have bid up shares nearly 40% since mid-June in anticipation of stronger revenue and earnings generated by the operating system and other new products hitting store shelves and Web sites around the world. Marketing expenditures to support sales of the new product will be huge. Microsoft won't say exactly how much, but the phrase "hundreds of millions" of dollars has been used by company executives. Microsoft Chairman Bill Gates and CEO Steve Ballmer took the stage in New York City on Monday, touting the product's "Wow" factor in a lavish Webcast production. "This is the biggest launch in software history," said Ballmer. And responding to pundits who say the rise of the Internet, digital entertainment and a wide variety of handheld devices have turned the PC into something of an afterthought, Ballmer said, "The product that brings it all together is really the PC running Windows."
Although wide-scale deployment of Vista by large businesses is not expected until 2008, the consumer version will sell quickly, since most PC companies will preinstall it on new computers. Over the weekend, Dell ( DELL) started taking orders for PCs with Vista for delivery beginning Tuesday. Kevin Rollins, Dell's chief executive, said the company's Web site saw a 20% jump in traffic and that "tens of thousands of copies" of Vista were sold, according to the Associated Press. Vista retails for $100 to $400, depending on the version, a bump from earlier versions of Windows, and a price that will help the company's margins. Wall Street has awaited Vista for some time and the company's
solid second quarter provided some evidence that initial sales have been strong. Deferred revenue, a key metric, came in at $1.64 billion, above the company's earlier guidance of $1.5 billion, largely because the company offered customers coupons that will allow them to upgrade to new versions of Office and Windows when the products are generally available.
The first copies of Vista were shipped to the company's largest customers in November, but writers for trade and consumer publications have had the software for some time. "The general consensus is pretty guarded," says Harry McCracken, editor-in-chief of PC World. "Everyone agrees there is good stuff, but everyone also agrees that after waiting so long since XP, this is not a huge improvement." Even so, McCracken notes that interest in the software is stronger than he had expected, and says that "under the hood" features of Vista, such as the ability to work better with Intel's ( INTC) new dual-core processors, and support for powerful new graphics cards, will tempt buyers as new applications that take advantage of the software's hidden strengths come to market. But that, he says, could take some time.