Window of opportunity: Does Microsoft earnings report signal a PC upgrade cycle?
Sidney Hill, Jr., executive editor -- Manufacturing Business Technology, 10/29/2007 12:52:00 PM
Are corporations heading into a technology upgrade cycle? The latest earnings report from Microsoft points to the possibility.
Last week, Microsoft announced it had taken in revenue of $13.76 billion for the quarter ended September 30, 2007. This represents a 27-percent increase over the same period last year. It also is the biggest growth spurt Microsoft has experienced in any quarter since 1999, which was the height of the tech industry boom.
In the press release trumpeting these results, Kevin Johnson, president of the Platform and Services Division at Microsoft, said, “Customer demand for Windows Vista this quarter continued to build with double-digit growth in multiyear agreements by businesses.”
This is significant because when Vista was made available to businesses late last year, many industry observers said there was no business reason for companies to purchase the latest version of Microsoft’s industry-leading operating system.
For its part, Microsoft said Vista would be a valuable purchase because its new features would make workers more productive while also adding extra layers of security to their desktops.
Further evidence that the industry could be on the verge of an upgrade cycle are recent strong earnings reports from Intel and Advanced Micro Devices—the primary supplier of chips that power PCs.
The PC industry as whole grew more than 14 percent in the quarter ended September 30, according to research firms Gartner and IDC. Consumers are believed to responsible for much of that growth, particularly in markets where technology purchases are still a relatively new phenomenon such as India and China.
Still Microsoft officials pointed to strong demand for both Vista and Office among corporate users, and they expect that trend to continue through this year. It undoubtedly will continue if corporations start upgrading PCs because almost all new models will come with Vista pre-installed.
