Windows Vista Pushing System Builders' XP Sales

While the debate over whether or not Windows Vista is driving sales for large PC vendors rages on, Vista reportedly appears to be helping push sales of 'white box' PCs with Windows XP for smaller system builders.

Some system builders have seen sales increase this year as consumers and small-to-medium-sized businesses (SMBs) come to them for 'white-box' PCs with Windows XP installed instead of buying brand name PCs preloaded with Windows Vista. Small system builders say the demand for Windows XP has risen steadily this year as the hype after Vista's January launch wore off and complaints about its extremely hefty system requirements, bugs, as well as poor hardware and software support have become more widely known.

Paul Ghysels, owner of the Neighborhood Computer Store in Moraga, CA estimates that only two out of the almost 400 PCs sold so far this year had Vista on them. "My business has actually gone up since Vista's launch" he said. E.G. Yang, owner of General Computer Systems in Oakland, CA says "about 95% of my customers come in and say 'I don't want Vista.' We even help people who bought brand name laptops downgrade to XP." Ted Paull, general manager of Computerstop.com says almost 40% of its customers choose Windows XP over Vista. "We're definitely seeing some pretty big demand for XP, more than I remember seeing for Windows ME when XP came out. Vista is not everything everyone thought it would be" he said.

Large PC vendors lobby for more time to extend XP sales

System builders are allowed by Microsoft to pre-install Windows XP on their systems until January 31, 2009. Large PC manufacturers have been cut off from pre-installing Windows XP one year earlier, on January 31, 2008.

One PC executive told CNET News that 'all' the large vendors were 'lobbying' Microsoft to extend the time they're allowed to pre-install Windows XP, hoping to buy time until after the release of Windows Vista Service Pack 1 (SP1), though as I've said a few times in the past, I wouldn't count on it to help improve the public reception of Windows Vista much.

Stephen Baker, an analyst with NPD, isn't surprised that PC vendors want more time to sell Windows XP. Large vendors "are only making 12% profit, not the same margin that Microsoft does. They want to satisfy customers any way then can," he says.

The future of Windows XP

"Microsoft continues to listen to feedback from its customers and partners, but we have nothing new to say at this time about the sales lifecycle for Windows XP," wrote a Microsoft spokeswoman in an email.

System builders are anticipating strong demand for Windows XP, even next year, and say that extending the XP cut-off date for large vendors without also extending theirs would remove one of the few advantages they still hold.

Computerstop.com's Paull said "We're in a catch-22. We sell Fujitsu and Toshiba notebooks, so we would like to be able to meet customers' needs for XP there. At the same time, we'd like to be able to keep at least some business customers in our back pocket."

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