Few System Builders Benefit From Vista Sales Surge

Microsoft Monday claimed it had sold more than 20 million licenses of Windows Vista in the operating system's first full month on the market, more than double the number of Windows XP copies that sold in the same timeframe in 2001.

That number represents licenses sold to PC makers, copies sold to retailers and upgrades ordered by consumers through the Windows Vista Express Upgrade program from Jan. 30 to Feb. 28, Microsoft said.

But system builders are not enjoying the party. A group of system builders who gathered for a CRN roundtable at the Intel Solutions Summit last week said Windows Vista is having little if any impact on channel sales since the OS upgrade became widely available on Jan. 30.

"It's been a significant investment on most channel partners' parts to get prepared, do testing and frankly there's been very little return on that because it hasn't generated new customer demand. Customers are not clamoring for it," said Steve Bohman, vice president of operations at Columbus Micro Systems, Columbus, Ohio. "It's been very unsuccessful, in my opinion."

Partners are not very surprised because consumers are typically early adopters of operating system upgrades and buy systems at retail. But partners also say adoption of Vista among business clients is being hindered by the lack of applications certified to run on the new operating system.

"The challenge has been is that their core applications have not been validated yet. Microsoft does have answers to address that, but it complicates the image a little bit," said Chris Thorsen, vice president of product development at Paragon Development Systems in Oconomowoc, Wis. "So really what we're seeing is that 2007 is a year of understanding their environments, their apps, what they're currently going through and getting it set up and ready for deployment in 2008.

Customers are waiting to deploy Vista until service pack one ships, and more application drivers are available, partners say.

Others are also waiting until the server complement to Vista, the Longhorn Server, ships later this year so they can do a full client/server upgrade at the same time, those partners said.

"They're not particularly excited, because it's not a cohesive system. Vista's here for the desktop, but it's not a solid server play," said Pat Taylor, president of Proactive Technologies in Carrollton, Texas. "And they're not going to mess with the systems that are running right now. Especially in a three-shift shop, a 24-hour environment. They're not even interested."

The hefty system requirements of Windows Vista is another nonstarter, partners say. Bumping up the PC price tag is viewed by some as a good way to improve profitability for the channel but it's a negative for some system builders that serve the more cost-conscious SMB customers and education accounts.

"If anything, it has actually raised the cost of the systems because of the graphics you need, the larger hard drives, you know," said Samuel Sanchez, vice president of marketing at Coastline Micro in Irvine, Calif. "So that takes the system for us from $599 to compete against the [multinational companies] to $899 or even $999. So all of a sudden, the cost of the systems are going up."

Still, some system builders are seeing an uptick in Vista sales. Equus Computer Systems, for example, is enjoying a 10 percent attach rate of Vista on its system sales. System builders who sell Vista pre-installed will fare better than those that configure to order (CTO).

"I think [10 percent] is very high [for] the channel, "said Joe Toste, vice president of operations at Equus. "The multinational companies are shipping Vista for large volume SKUs. The problem for system builders is that it is challenging to make Vista to work in a lot of different CTO configurations. We have been relatively successful because we spent a lot of time in the certifications and we are shipping Vista in our ready-to-ship systems."