Ballmer to Wall Street: Temper your Windows Vista projections

Ballmer to Wall Street: Temper your Windows Vista projections

Summary: Microsoft CEO Steve Ballmer told Wall Street analysts and shareholders that many of their projections for Windows Vista were "overly aggressive."

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TOPICS: Windows
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Microsoft CEO Steve Ballmer told a group of Wall Street analysts and shareholders that many of their projections for Windows Vista were "overly aggressive."

Ballmer made his remarks during a forecast-update meeting with Wall Street analysts on February 15, Ballmer wasn't sounding a sales-warning alarm so much as he was trying to talk Wall Street down, in terms of their expectations for growth from Microsoft's Windows client business.

Windows client still remains the biggest component of Microsoft's revenues, and will likely be so through Microsoft's fiscal 2010 Ballmer said. (Microsoft's fiscal year commences on July 1.)

Microsoft had projected its client division to postgrowth of 54 percent to 56 percent in the current quarter, but some analysts called that projection conservative and raised the revenue growth bar.

"There's a disconnect between what people think is the growth of the PC market and Vista growth," Ballmer told analysts. Analysts either need to increase their projections for both the PC market and Vista sales, or realize that "the two things (PC growth and Vista sales) are out of whack.

Ballmer said he was glad there was so much enthusiasm about Vista, but cautioned that Vista's primary purpose will be to "sustain the Windows growth that Microsoft already had."

"PC growth will be buoyed by Vista," Ballmer elaborated, but it won't lead to anything even approximating double year-over-year PC growth.

Ballmer told analysts that Microsoft is expecting priacy reduction to contribute to the growth of its Windows business, but that's "not a huge thing in this scale of the business." He also reminded analysts that Microsoft already has sold a lot of corporate volume-licensing upgrades, so analysts shouldn't be counting on huge untapped demand from larger corporations when calculating Vista sales projections.

Some analysts had already begun tempering their projections yesterday.

On February 14, Stanford Financial Group analyst Neil J. Herman said in a research note that "While Windows Vista had a fairly strong showing in the first week of its release, we would not be surprised if the surge in sales was a blip upward related to near-term pent-up demand of early adopters that may well have already been satisfied to a significant degree."

"Feedback we have received indicates that businesses and many consumers continue to request XP instead of Vista on machines that are widely advertised as being shipped with Vista. This may be a blowback from bugs in XP at the time of its release," the Stanford Financial research note added.

Topic: Windows

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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28 comments
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  • Wal-street to Balmer: "We saw your Windows advert on YouTube and think you

    are an ape on prozac."

    Of course, that was from 22 years ago but what has changed? :evilgrin:
    HypnoToad72
  • Chromium Turd...as one pundit put it

    XP SP1.75

    "You can fool all of the people, some of the time..."

    Corporate arrogance at its best.

    The first time EVER that middle Americans...casual users...are staying away in droves.

    Piggy banks being renamed "Mac Banks" all across America.

    Tipping Point is...NOW!
    rayted32
    • THIS is the year MS dies!!

      Honest! I know I've said it every year for the last 20 but if I keep saying it every year from now until eternity, I'm bound to eventually be proven right!
      NonZealot
      • And who said...

        ...MS is dying? Certainly not the poster to whom you responded.
        John L. Ries
      • You do mean you said Apple is dying...

        and have said it for 20+ years. I don't recall you ONCE saying MS was dying.

        I do know there is a plethora of people hoping that Microsoft will actually compete instead of having their warez installed by default on all new OEM computers purchased...but that is not what you wrote so I would have to say you are on drugs. :-)
        nomorems
    • You been smoking the wacky weed again?

      Nothing else can account for your cluelessness.
      No_Ax_to_Grind
  • Whistling in the Dark

    nt
    D T Schmitz
  • The man spins like a gyroscope! (nt)

    nt
    Henrik Moller
  • Ballmers Statements Are Like A Fart In The Wind

    You notice it, and then after a few minutes you forgot it was ever there ;).
    itanalyst
    • Only a fool forgets...

      I guess that explains your lack of memory. ;-)
      No_Ax_to_Grind
      • The Only Thing Ballmer EVER Said I Remember

        DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS DEVELOPERS

        AAAAAAAAAAAAAAAGH!!!
        itanalyst
  • Wow...

    Now that's some serious back-peddling.
    BitTwiddler
    • Where?

      Where is this back pedlling? MS quoted what they thought sales would look like, Wall Street took it upon themselves to up the numbers, Ballmer said no, these are our projections.

      How is correct others mistakes "back peddling"???

      Answer Please...
      No_Ax_to_Grind
  • Maybe MS will finally understand

    the disconnect between Vista's value proposition and the prices that they set for it.

    Vista, despite its manifest flaws, would be a good seller if MS had priced it for what it's worth. That would be about half of its current retail price, ESPECIALLY for upgrade pricing.

    Add to that the completely disparate pricing for Europe that is even higher by another factor of two.

    Add to that the buyer must choose between a daunting array of very similar products. Why are there not three versions at the most?

    Add to that the really bad licensing terms that limit the home enthusiasts ability upgrade PCs without buying a new license.

    Add to that the really stupid upgrade capabilities of the upgrade versions like 11 GB of free hard drive space (from Ed's HAnds On #3).

    Add to that the draconian DRM and WGA features of the OS.

    Add to that the extreme requirements for computer resources just to see the "eye" candy in Vista which adds to the confusion and represents increased costs.

    And add to that the final straw, it isn't that much more in features and capabilities than XP, so a lot of people think "why bother?"

    All of this adds up to a very poor product design, poor marketing research and especially bad pricing philosophy. What were hey thinking? Price it high so people will think it's better?

    MS has had the a$$ handed to them by the market place. It's about time too. Maybe now they will begin to embrace instead of abuse their customers.
    msolgeek
    • Do you rant just hear yourself?

      Or do you realy think anyone is listening to you?
      No_Ax_to_Grind
      • Message has been deleted.

        B.O.F.H.
      • What?

        He's absolutely right, ya know. It is high time, and I, for one, am glad to see it. :)
        Techboy_z
      • Hi Bitty, still being a horse's patootie?

        I didn't rant or flame. I did not say "Vista sucks" or anything of the like.

        I merely pointed that Vista is a disappointing product given the hype laid upon it and that it was priced way too high for what it's worth or for what the market will bear. This gives a fairly general review of Vista's reception by everyone that has reviewed or posted about it.

        It was the most gentle criticism of MS possible, considering their history, yet you claim its a rant.

        Too bad that you're not making a cogent point or saying anything that anyone else cares about.

        In a year from now, MS will probably have lowered the price or made the license more generous to stimulate its lagging sales.

        Oh and by the way - Vista does suck but nobody needs to be told that. Just about everyone recognizes this but the MS apologists like you.
        msolgeek
        • Ok, then lets disprove your points.

          "I merely pointed that Vista is a disappointing product given the hype laid upon it and that it was priced way too high for what it's worth or for what the market will bear."

          Obviously this statement is completely false given that ALL sales evaluations/articles put it well ahead of XP sales during it's roll out. Why are you lying and trying to make up bogus facts?

          As to pricing in Europe, blame the retailers and that wonderful thing called VAT. By the way, most in Europe have figured out it is MUCH cheaper to download it from MS servers than go through their local retailer.

          "In a year from now, MS will probably have lowered the price or made the license more generous to stimulate its lagging sales."

          See my first reply, sales are OUTSTANDING. Again, why try to make things up when the truth is readily available?

          "Oh and by the way - Vista does suck but nobody needs to be told that. Just about everyone recognizes this but the MS apologists like you."

          Three swings, three strikes yer out. No, not just about everyone, in fact only the MS bashers seem to share your opinion. Users do not (see sales), OEMs do not (see sales), corporations do not (see sales).

          Sorry, but all I see is someone RANTING over things they have made up.
          No_Ax_to_Grind
          • Sales are outstanding?

            No, sales are not.

            Why do you think the Monkey boy is trying to do damage control?

            Why do you think MS stock is down?

            Boxed versions are lagging even XPs release.

            From the Register.com at http://www.channelregister.co.uk/2007/02/16/vista_sales_not_that_high/

            "However, boxed copies of Vista did less well. Vista sold 59 per cent less copies in its first week in the US than XP did on its debut.

            Analysts NPD also noted a jump in PC sales, up 67* per cent, but warned that some of this figure would be made of deferred purchases - machines that people would have bought earlier, but they were waiting for Vista's arrival.

            Microsoft shares fell almost 2.5 per cent on the news."

            Things will only get worse for MS as the early adopter wave fades, the sales blip of the new release passes, and people find out what Vista really is.

            I would say that you're in major denial, Bitty.

            But try to keep that veil over your eyes. No need to bother with reality when you're so happy ranting in your own little world.
            msolgeek