Microsoft 'Broadly Happy' With Vista Uptake

have been busily replacing Windows Vista with XP

However, in Microsoft's fourth quarter earnings call Thursday, executives were more sanguine about the inroads Vista is making in the market.

"It's early days yet and we are broadly happy with how we are seeing Vista adoption, both from a consumer and a business point of view," said Chris Liddell, chief financial officer at Microsoft, who expects adoption to progress steadily over the next 12 to 18 months.

Despite the rising chatter in the channel about Vista downgrade rights, which allow partners to legally roll a copy of Vista back to XP, Microsoft claims to have received very few calls into its call center to take advantage of that opportunity, said Tracy Immel, group marketing manager of the U.S. System Builder Partner Group at Microsoft.

"While we're not able to verify the exact number, we do know that it's a very small portion of the 40 million copies of Vista sold worldwide to date," said Immel.

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Microsoft is clearly in full smokescreen mode with Vista, and is trying to make the OS appear to be catching on faster than it is, said one Microsoft system builder partner.

"The problem Microsoft faces is that they waited too long to release Vista, and XP got too ingrained. And what makes it even tougher to switch is that XP is a great product," said the source, who requested anonymity.

Businesses still haven't seen compelling reasons to switch to Vista, according to the source. "While Microsoft says security [in Vista] is a lot better, that's still not the killer app that's going to lead to mass market adoption," the source added.

Many partners have said their customers are delaying their Vista plans until Microsoft releases Vista service pack 1, the first major update for the OS. But Microsoft has been characteristically vague about the release timeframe, although partners believe it will be sometime around the end of the year.

"Clearly there will be [a Vista service pack 1], but it looks like we're not talking about exactly when that is," said Liddell in the earnings call. "We don't see it as a massive driver of uptake in its own right."

Sources told CRN that Microsoft is considering moving up the release of service pack 1 to the September timeframe to account for the fact that customers are in a holding pattern with regard to Vista.

Microsoft has also extended Buy Local, a promotional program that helps system builders compete more effectively by differentiating their offerings, and makes qualified partners' contact information accessible through a web-based tool.

Now in its third version, Buy Local been extended to Sept. 30 from its original stop date of Jun 30. according to John Ball, general manager of the U.S. System Builder group at Microsoft.

When a system builder sells a PC that has a genuine copy of Vista loaded on it, the customer can then validate that through Windows Genuine Advantage and receive giveaways such as flash drives, wireless routers, and printers, said Ball.

"I'm glad Microsoft hears the pain in the system builder channel and is doing something that can help us to compete with the multinational tier one partners," said David Stinner, president of US itek Group, a system builder in Buffalo, N.Y.