Storm Clouds on Vista's Horizons?

Dennis Faas's picture

The launch of Windows Vista earlier this year may have helped fuel Mac sales according to research conducted by Gartner Research. Mac sales were up 35 percent in the first quarter compared to a year ago. Comparatively, PC sales were up by 9 percent. (Source:

A lot of technology companies appear to have expectations that computer sales would get a bigger boost with the release of Vista, which requires a lot more computing power than earlier versions of Windows. That expectation may be leaving tech companies with higher inventories and more production capacity than necessary.

Applied Materials, manufacturers of dynamic random access memory chips (DRAM) warned recently that demand for the DRAM is slowing. Consequently, semiconductor companies are buying fewer chip-making machines.

In April, Micron Technology noted that DRAM prices fell sharply in its first quarter which ended March 1. "We have not seen any benefit in the corporate area from Vista upgrades yet," Micron's vice president of worldwide sales, Michael Sadler, told investors on a conference call.

Seagate Technology, manufacturers of disk-drives said that demand for desktop PCs was lower than expected in their first quarter, and lowered its expectations for the current quarter.

In a recent survey, CDW, who sells PCs directly to companies, found that 71 percent of respondents aren't using or evaluating Vista, although most expect that they will eventually upgrade. Businesses are happy with the computer systems they already have in place.

Many consumers have been forced to buy Vista since most computer makers no longer provide other options. FTN Midwest Research analyst Bill Fearnley Jr. reported that a lot of computer sellers are now selling consumers business PCs that run XP.

Wall Street and the Silicon Valley are hoping that later this year Vista will start pumping out better sales. "Given companies' slow and steady purchase plans and consumers' apparent lack of enthusiasm, that's a pipe dream" says Pip Coburn of Coburn Ventures. "There are people who are disappointed now, and there are people who are going to be more disappointed," he says.

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