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Analysts: Vista's bad rep will hurt adoption

Analysts at Sanford C. Bernstein & Co. today issued the results of a second annual survey on corporate attitudes toward Microsoft's Windows Vista. Bottom line: Based on the findings, the Bernstein analysts are dropping their estimate for Microsoft's earnings in the 2009 fiscal year from $2.20 per share to $2.17 per share. (Microsoft's preliminary guidance for the fiscal year, which starts next month, was $2.13 to $2.19.)

The survey, conducted with Ziff Davis Media and Peerstone Research Inc., took into account the opinions of 372 IT decision-makers at companies of various sizes. Excerpts from the 19-page Bernstein report:

The inescapable conclusion of our 2008 survey is that support for Vista has been battered across all enterprise sizes and corporate constituencies. As a consequence, the Vista cycle looks likely to be materially less robust than indicated in our prior survey. ...

A year of overwhelmingly bad publicity, coupled with opportunities for continued XP "downgrades" or potentially skipping over Vista for Windows 7, look to have meaningfully eroded support for Vista and are likely to impair the product's overall adoption. The Vista cycle looks more likely to track in line with the experience of XP than to fall somewhere between an XP-like and a larger Windows 95-like cycle as we previously expected, and which had been indicated by last year's survey results. ...

Concerns about the costs of a Vista rollout appear to be weighing most heavily on the enterprise cycle. In particular, respondents reported a substantial drop in their expectations of in-place upgrades, indicating a rise in their expectation of hardware-related costs associated with Vista deployments. These hardware requirements were the single largest negative factor affecting Vista adoption. Concerns about driver and application compatibilities, and implicitly the related costs in a rollout, were the second and third biggest negative factors, followed closely by Vista pricing itself as the fifth largest factor (behind performance). ...

Despite the erosion in perceptions of Vista over the last year, it remains possible that MSFT could restore some of the luster to the Vista enterprise cycle. In particular, especially with the release of SP1 for Vista, the company has addressed a number of the performance and compatibility issues that were cited as among the biggest concerns restraining adoption. It is now critical for MSFT to inform and educate IT professionals involved in the Vista decision in order to reinvigorate enterprise interest in the OS. We believe that proactive, open and frank messaging and education on the part of MSFT could very well ameliorate some of the harm caused by negative publicity and performance to date. On the other hand, amid mounting evidence that the product's reputation has been badly tarnished and that there are looming usability and satisfaction issues, we believe that continued assertions that everything is fine with Vista will not only fail to bolster the upgrade cycle but also could serve to damage management's credibility and the interests of MSFT's shareholders. ...

We are lowering our FY-09 EPS estimate from $2.20 to $2.17 on the back of our survey results, which suggest that the Vista cycle is set to mirror a slower product cycle than we had anticipated. However, we continue to believe that MSFT is well-positioned strategically versus its traditional competitors and in a reasonably solid position to fight off its newer rivals. Operationally, we expect continued execution against solid and boosted FY-08 guidance will be positively received by investors. In addition, we believe that there are numerous smaller, albeit in aggregate meaningful, drivers of incremental potential upside in areas such as IPTV, Xbox 360 title and Xbox Live attach rates, server tie-ins, share repurchases and perhaps even the Online Services Business. Financially, we would expect MSFT's solid operational performance to be accentuated by sustained share repurchases, which may accelerate should MSFT ultimately not acquire YHOO. Nonetheless, uncertainties around MSFT's plans for its OSB are likely to hamstring the stock in the very near-term.

Posted by at June 10, 2008 6:20 p.m.
Categories: Financial & Corporate, Windows, Windows Vista at 1 Year

Comments

#137709

Posted by unregistered user at 6/10/08 7:10 p.m.

Jim Allchin has a wonderful legacy in Vista.

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#137710

Posted by unregistered user at 6/10/08 7:23 p.m.

"we believe that continued assertions that everything is fine with Vista will not only fail to bolster the upgrade cycle but also could serve to damage management's credibility and the interests of MSFT's shareholders. ..."

He means "further damage" doesn't he?

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#137714

Posted by unregistered user at 6/10/08 7:37 p.m.

Agreed - they told us all we were idiots when we tried to inform them that Vista's performance sucks! Heaven forbid they just listened and actually fixed the issue during beta when I told them, or when it was first released when I told them it AGAIN and AGAIN along with a million other people - we must be idiots surely MS must be right and we installed it wrong (somehow).

Vista still sucks donkey balls but it doesn't have to. I use Windows 2008 server with all the bells and whistles of aero interface etc and it is quite snappy - compares well with Windows XP on the same hardware. What is difference since they are based on the same code - I can't say - my guess is no DRM but maybe it is something else. But do a quick search - lots of people are finding 2008 server as a workstation is SIGNIFICANTLY faster than Vista on the same equipment. So for some reason MS purposely made vista slower than molasses but neglected to sabotage Windows 2008.

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#137749

Posted by unregistered user at 6/10/08 10:12 p.m.

I spoke to a Sony rep about getting some drivers for a laptop and they asked me if I downgraded to XP. I said no, it came with Vista so I upgraded to XP. They said then you downgraded. I said you've obviously never tried Vista.

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#137751

Posted by unregistered user at 6/10/08 10:26 p.m.

Maybe the reason Vista isn't wanted isn't just - review after review by technical journals, endless bashing by IT departments, horrible experiences posted by end users but also computer people smart enough to test it, evaluate it and compare it to XP. Those people might have stumbled across a fact that eludes Ballmer - Vista is a turd. Fortunately they released SP1 - now it is a steaming pile of turd with frosting and sprinkles on top. Unfortunatley once you get past the sprinkles and frosting you are still left with the steaming pile o' turd.

If only 200,000 people had requested that MS keep XP - Ballmer might pay attention. If only there was a class action lawsuit because Vista sucks on anything but supercomputers. If only IT journalists had reported how slow Vista is compared to XP. If only XP was required to be sold just to keep low end hardware selling. If only computer vendors had requested that MS stop forcing them to sell Vista since their customers wanted XP and it was hurting sales. If only someone had mentioned in a press conference to Ballmer that Vista sucked. Oh wait all those things have happened. Hmmmm - what sort of 2x4 to Ballmers Ginormous melon does it take before he takes notice?

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#137797

Posted by unregistered user at 6/11/08 6:19 a.m.

when will you monkeys look even half an inch deeper into the news. you folks are real chumps.

---------------

DiBona is simply playing CYA because his revenue estimates were too high. Found this note from April 8, 2008...

DiBona "also repeated his above-consensus Q1 revenue estimate of $24.3 billion; the Street sees $23.6 billion."

ABOVE-CONSENSUS!!!

So, now rather than admit any error... he blames Microsoft. Real classy Charles.

Note that he trimmed his estimate by 49million, while his estimate was a 700million above consensus.

He moves his estimate down (49/700 = 7%) but still 93% above the average analyst following MSFT.

Hillarious, especially in light of the first few hater comments on this board.

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#137798

Posted by unregistered user at 6/11/08 6:22 a.m.

So, while still 93% above consensus estimates: Charles is opening up a great follow-up note that "Vista rep hurts revenue even more than originally feared" when he takes his ABOVE-CONSENSUS estimate down another 2%.

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#137969

Posted by unregistered user at 6/11/08 1:53 p.m.

Why is it that the reason this OS shipped way to early was that of the customers and upgrade protection?

If I remember correctly,upgrades from one M$ product to the next were going to be much more expensive if you didn't buy upgrade protection.

So a lot of business and corporate types bought in to a 3 year protection plan that said if a new product ships within 3 years,you get the upgrade for free.

Well,as I see it,that upgrade protection was due to expire very soon ,and if M$ didn't ship an upgrade,a lot of companies would have felt ripped off.

Even if the new product sucked(and it does),M$ could at least say they shipped a new version,so that companies would buy into the next upgrade protection plan cycle.

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#137971

Posted by unregistered user at 6/11/08 1:57 p.m.

Why is it that the reason this OS shipped way to early, was that of the customers upgrade protection plan that M$ pushed about 3 or 4 years ago?

If I remember correctly,upgrades from one M$ product to the next were going to be much more expensive if you didn't buy upgrade protection.

So a lot of business and corporate types bought in to a 3 year protection plan that said if a new product ships within 3 years,you get the upgrade for free.

Well,as I see it,that upgrade protection was due to expire very soon ,and if M$ didn't ship an upgrade,a lot of companies would have felt ripped off.

Even if the new product sucked(and it does),M$ could at least say they shipped a new version,so that companies would buy into the next upgrade protection plan cycle.

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#138055

Posted by unregistered user at 6/11/08 4:28 p.m.

I'm seeing my desktop trash can disappear (pretty sure I didn't delete it and it's set to show on desktop) on a semi-regular basis. No idea why. The other day I tried to copy a 100MB or so file from a desktop folder to another desktop folder, which proceeded to go into a parallel universe on another computer and never finished in this one. A reboot cleared it up, for whatever reason. Little things, yes. But it's the little things that ultimately drive you mad.

I've been running Windows Vista x64 with SP1 on a Dell 1520, of late. Seems to work all right as long as you can find 64-bit drivers for your hardware, since 32-bit drivers are a no-go on that OS. Anyway, SP1 was sorely needed and long overdue, and another year of updates will improve the OS even more. Maybe by then some of the bad publicity will fade away.

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#138156

Posted by seandr at 6/11/08 11:33 p.m.

If the only problems with Vista were performance and stability, Microsoft would be in good shape. These issues affect all new OS releases, and they can be fixed with service packs and bigger hardware.

Unfortunately, Vista has a more serious problem - it lacks a compelling set of new features that might make the pain of upgrading worthwhile. I regularly switch betweeen XP and Vista machines, and the only Vista features that stand out are Aero and User Account Control, the latter of which is the biggest UI blunder in the history of computing.

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#138179

Posted by Deane at 6/12/08 6:52 a.m.

So many of the articles written about Vista are negative, this doesn't work, that doesn't work, glitch here, glitch there. I recently purchased a new Toshiba laptop with Vista Home Premium and immediately upgraded to Vista Ultimate. And I am here to report, since day one, I have not had one single problem related to Vista. The laptop operates wonderfully well, it has plenty of resources which is a huge benefit and all of my programs work very well. So count me as one of the satisfied users of Vista.

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#207000

Posted by unregistered user at 10/30/08 7:31 a.m.

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