Microsoft CEO Steve Ballmer told analysts they were “somewhat too bullish” about the sales of Microsoft’s new Vista operating system at a recent financial analyst briefing in New York. Ballmer also revealed that while he believed that the controversial Windows Genuine Advantage anti-piracy program might improve revenue growth, he wasn’t counting on it to be a ”huge thing on the scale of this business”.

“People have to understand our revenue models because I think some of the revenue forecasts I’ve seen out there for Windows Vista in fiscal year ‘08 are overly aggressive,” said Ballmer.

Ballmer explained that PC growth is a driver of Windows revenue, but that there was a disconnect between PC sales forecasts and Vista sales forecasts.

“Either you have to increase your forecast for the total PC market, and then Vista will do just fine, or those two things are out of whack … I mean, if Vista is going to drive a major sort of surge in PC market growth rate, you would think that would also show up in what people think about HP, Dell, Intel,” said Ballmer.

Ballmer also said that the consumer market would see more growth than the business market, which would mean that Microsoft would achieve a lower average price for each unit sold. He was hopeful that piracy reduction in high-piracy countries could be a source of Windows revenue growth.

“We have new technologies built into Windows Vista, something we call Windows Genuine Advantage we’ve really dialed up in capabilities with the Vista release, and I do think that that will bring some revenue growth.”

Interestingly, despite the hype surrounding the controversial Windows Genuine Advantage anti-piracy program, Ballmer isn’t counting on it to be a huge source of revenue growth:

“I still don’t count on it to be a huge thing on the scale of this business as we really ferret through how far we can dial it up, and what that means for customer experience and customer satisfaction,” he said.

Ballmer admitted Windows was experiencing strong growth in emerging markets like China, India, Brazil, and Russia, but noted it was from a low revenue base:

“Those markets are very high piracy. In some cases we also have much lower pricing in some of those markets with our Starter Edition.”

With corporate upgrades, Ballmer explained that Microsoft had already sold many Vista upgrades through previously signed Enterprise Agreements.

“I think people might underestimate the degree to which we already have a very strong base of Enterprise Agreement bookings … that essentially include Windows Vista,” he told the analysts.

WIth non-corporate upgrades, Ballmer believed that most sales would be in the first three months after the consumer launch of Vista (February, March, and April), and that if anything, non-corporate upgrades might be down in the 2008 fiscal year.

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Entry was posted on Monday, February 26th, 2007 at 11:07 am under Vista.  Print This Post

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