Vista Delay Could Hurt System Sales

The software giant's admission last month that it will delay the consumer versions of its next-generation Windows Vista until early 2007 sent shockwaves through the system builder channel. The delay will impact end-of-year sales for OEMs, system builders and Intel, channel partners say. Intel's recently introduced Viiv platform requires a PC running Microsoft's Windows XP Media Center Edition 2005 or Windows Vista. Media Center is currently a stand-alone product but will be integrated into the core Windows consumer OS for the first time in Vista. Many integrators fear that customers will hold off on purchases of Media Center PCs until Vista becomes available.

"Until Vista ships, why does the customer need Viiv? Nobody has ever asked me for a Viiv system," says Richard Shook, COO of integrator Automated Homes of New England, Winchester, Mass. "I will have to pause until the release."

Sources speculate the delay could stall the release of Viiv version 1.5, which had been slated for release this summer, because it is expected to include updated software for Vista. An Intel spokeswoman says Intel does not expect a negative impact on sales of Viiv systems because Viiv also runs the existing Media Center XP 2005.

Another system builder shot back that market anticipation for Vista is already limiting sales of Media Center PCs and the delay of the new OS into 2007 only exacerbates the problem. "The Vista delay will slow down what could have been a blowout summer for Media Center PCs," says Frank DeFilippis, vice president of marketing at integrator Link Your House, Norcross, Ga. "Regretfully, this will cause many to wait for Vista."

Microsoft, Redmond, Wash., had promised partners it would ship six versions of Vista by the end of 2006. While the slip is relatively minor in time, its impact on systems could be large, as OEMs and system builders had planned to preload the two Vista consumer versions that include Media Center features--Windows Vista Premium Home Edition and Windows Vista Ultimate--on their holiday PCs.

"Vista's consumer delay could be a major hit for consumer PC manufacturers," says Michael Healey, president of TenCorp., a system builder and integrator in Needham, Mass., that was recently acquired by GreenPages. "There will be a huge wait for Vista as far as new purchases go, so I think this is going to hurt Christmas sales big time."

Yet other system builders say factors other than Vista's delay are stalling sales. "The bigger issue is the high-definition limitations in the current Viiv platform. I don't know of many people that are going to spend $1,500 to $2,000 on a home entertainment solution that does not support HD," says Jeff DiBella, president of AOpen, San Jose, Calif.

Partners hope that Microsoft will help cushion the blow, although it has not unveiled any contingency plans for system builders. "Vista's delay will impact OEMs who ship the consumer bits with a new system more than anyone, but I expect to see a lot of free and reduced price upgrades to Vista coupons in systems shipped during the holidays," says one source.