Microsoft layoffs: Is Vista to blame?

Fri Jan 23, 2009 1:56PM EST

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In Microsoft's public speeches and press releases, CEO Steve Ballmer has portrayed Windows Vista as nothing short of a wild success, an operating system that has sold millions of copies to adoring fans worldwide.

Alas, reality has finally come into sobering focus: Microsoft's recent earnings report show not just a $900 million revenue shortfall vs. earlier projections, but a serious weakness in one critical part of its business: "Software client revenue" (aka Windows Vista and remnant sales of XP), where sales are down 8 percent vs. last year. In comparison, the company showed growth in some of its other businesses, including the Xbox division (up 3%) and the server business (up a whopping 15%). Also to blame in the poor results: online services (such as Hotmail) and, of course, the Zune, which hemorrhaged $100 million in the last quarter as sales fell off a cliff.

But overall softness aside, all eyes are on Vista, traditionally the source of a massive portion of the company's revenues and profits. The main problem of course is that the sale of Windows is closely tied to the sale of PCs, and with PC sales on the decline due to general economic conditions, sales of Vista have fallen as well. 

That begs the question, though, of what degree the poor reception of Vista has been a driver for said decline in PC sales. Gartner has compared Vista to the embarassment of New Coke, noting that many businesses and individuals -- and probably many of you out there -- are skipping Vista and sticking with Windows XP until Windows 7 comes out. With just a year to go until the new OS, there's really no reason to upgrade now, and that bodes poorly for sales in the year ahead.

Of course, none of this is likely to be comforting to the 5,000 Microsoft employees losing their jobs in what is the company's first major layoff in history.

What will Microsoft do? Soldier on, and finish up the glowingly-previewed Windows 7 as quickly as possible, I'd imagine. What should it do? How about offering free XP downgrades for all Vista users (both new buyers and existing ones) in order to salvage what's shaping up to be a grim 2009.

Comments on Microsoft layoffs: Is Vista to blame?

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  • 46 Posted by davedorfman on Thu Sep 3, 2009 3:37PM EDT Report Abuse

    I think most people are missing the point. MS receives license revenue if users want to run VISTA or XP. It's the same revenue. What these financial results point out is that the number of new systems with OEM versions of Windows Desktop operating systems are declining and that shipments of OEM versions of Windows Desktop operating systems still compose a great portion of Microsoft revenue and profit. Growth by Microsoft in other areas such as Server Operating systems and business applications software are dwarfed by the general decline in PC shipments.

  • 47 Posted by erhirsch@sbcglobal.net on Thu Sep 3, 2009 3:55PM EDT Report Abuse

    Last I heard, Microsoft was going to stop supporting Windows XP soon. Have they given up on that heavy handed attempt to force sales of Vista? And those horrible commercials they run in response to Mac's brilliant ad campaign... Who do they think they're fooling???? We will probably switch to Mac.

  • 48 Posted by dadsanidiot on Thu Sep 3, 2009 3:34PM EDT Report Abuse

    Nobody at my workplace will touch the laptop loaded with Vista because its so slow and time is money. I use a Thinkpad T60 with XP and an Asus eee pc 901 with a linux system, both function well and both use Open Office/Star Office software. So its bye bye to Vista and the next OS from Windows until the day I can press a button and ten seconds later everything is running. The real shame is that there is all this gorgeous hardware out there being wasted.

  • 49 Posted by wallysider on Thu Sep 3, 2009 10:40PM EDT Report Abuse

    I do get the impression that Vista hasn't caught on. Even Microsoft seems to be saying that Vista is a flop, Windows 7 already? It's like they are giving up on Vista, sorta like Windows ME. Generally though the world economy is not good. Look at all the big names going belly up. I figure there isn't a company out there that isn't going to take a hit right now.

  • 50 Posted by riddler5 on Thu Sep 3, 2009 8:40PM EDT Report Abuse

    windows vista is awsome i just think that people dont like it because its new and they are not used to it yet heck im using it right now on my labtop and its awsome i think people put vista down to hard

  • 51 Posted by aajrylander on Thu Sep 3, 2009 2:43PM EDT Report Abuse

    I am realy piss I was force to buy a pc with vista instaled on it. I have had nothing but poblems with the porgram on my lap top. It would jump ahead when I am trying to read my e-mail and delete things with out me clicking on them. I would think that they ought to give everybody that has vista on their pc's free soft ware package of word doc and other porgrams they are charging on the vista software

  • 52 Posted by eawoodw on Thu Sep 3, 2009 3:51PM EDT Report Abuse

    I had to purchase a new computer due to the crash of my Sony Vaio. The HP I purchase came with vista and I could not run a lot of my previous programs. I took the computer back to Best Buy trying to get them to load XP. They said the computer was designed for vista and that was all I could use. I will never have another computer with a microsoft operating system. When I get so frustrated I can't take it any more, I will junk this computer and go with Apple.

  • 53 Posted by deuxver9 on Thu Sep 3, 2009 3:42PM EDT Report Abuse

    PC are in decline because they suck! PC = Piece Crap! Mac's are taking over the world! Thats the REAL reason why sales are in decline. Consumers are starting to take notice.

  • 54 Posted by mayb66 on Thu Sep 3, 2009 7:12PM EDT Report Abuse

    I bought a Hewlett packard laptop in Dec.07 & it came with Windows Vista. I've had several problems with it now here I am in Jan. 09 and the warranty has run out and its telling me that it has detected a problem in the hardware. So, it could crash anytime and I will either have to get it fixed or be without a computer. I gave a pretty good price for this 1200.00 for it to only last a year! I wont buy another one with Vista on it!

  • 55 Posted by charliewb77656 on Thu Sep 3, 2009 3:22PM EDT Report Abuse

    It makes me feel good that I am not alone in my dislike for Vista. I bought a laptop and of course it has Vista and when I was ready to do something I found there is almost no way to replace Vista on my laptop with WinXP short of replacing the hard drive. I am not a finger pointer, but I sure wish they had stayed with XP or at least made it an option when I needed another computer.

  • 56 Posted by wvision on Thu Sep 3, 2009 10:51PM EDT Report Abuse

    I work in IT at a small company (one of two IT guys). I am just finishing rolling our laptops back to XP. I don't have the time to support Vista's problems. The last straw was trying to get the Cisco VPN client reliably working on it. All of our new laptops come with XP (fortunately HP still allows this). We spend less on memory and support and software just works. By the way Office 2007 is another bloated piece of crap.

  • 57 Posted by santosh.shrestha@ymail.com on Thu Sep 3, 2009 9:04PM EDT Report Abuse

    I love Vista, hasn't crashed yet. I do lots of programming in .NET and it is the most stable OS I have ever seen. Needs high configuration hardware though, but most important thing is, it works great with VS.NET 2005 and MS SQL server.

  • 58 Posted by g_slieker@prodigy.net on Thu Sep 3, 2009 4:15PM EDT Report Abuse

    I bought a PC with VISTA because it was all I could get. It was such a pig and so difficult to get past the security crap to get even simple things to run I gave up and just blew the disk away and loaded REDHAT and Star Office. It's free, it's an open system and you DON'T have to deal with DRM anymore. 30 years with MicroSoft for me and I'm done thanks to VISTA.. Hasta La Vista Baby..

  • 59 Posted by nfaq on Thu Sep 3, 2009 7:36PM EDT Report Abuse

    Someone posted about not being able to buy computers with XP... Just opened a box with a new ThinkPAD with XP-PRO reinstalled. Business-VISTA installer disc is included. Its an SL 500 series, it starts at $600 online. Very nice. Almost all Lenovo computers have XP option. Vista isn't worth it to many people.

  • 60 Posted by joesenso on Thu Sep 3, 2009 4:38PM EDT Report Abuse

    I have Vista Ultimate SP1, Dual Core, and 4GB of RAM on my laptop (I got it a month ago). I can dual-boot to XP, and I also have several XPs running under Virtual PC 2007 on Vista. For personal use, Vista has been a joy, and I sort of cringe every time I go back to use XP (the UI seems archaic now). I imagine if I had to get lots of business software running on Vista (VPN, Oracle Client, etc.) I would be hating life. But I do like the Vista UAC a lot - it beats cleaning up after Trojan-Horse attacks on XP, and I can give an adminstrator password from a limited access Vista user account for any administrative function that is requested (XP doesn't do that). I'm a UNIX guy and I hate programming Microsoft - but I like using Vista as a Desktop better than XP. (It takes about two weeks to get used to)

  • 61 Posted by evilben99 on Thu Sep 3, 2009 3:56PM EDT Report Abuse

    I will buy a new computer if Christopher Null quits blogging. Willing to help the economy Chris?

  • 62 Posted by dreamhonda on Thu Sep 3, 2009 3:48PM EDT Report Abuse

    I also put off buying a new PC to try to get as much mileage out of my XP without going to Vista. Give me an XP option Microsoft and another PC may get sold.

  • 63 Posted by sam41_us on Thu Sep 3, 2009 9:01PM EDT Report Abuse

    I got two laptops for my wife and myself two years ago. I payed extra to put Windows XP on them insstead of Vista. I still will not buy or use Vista. If XP is not supported continuously, I will get MAC and make a small partition for the needed programs that use only windows. Even now, service pack 3 will not load on my two laptops or my pc. It says something is missing. One more microsoft screw up. Give it up, Bill. Your crap is really stinking now. It is going down the tubes the way Mario Brothers continuation did. Find a new direction.

  • 64 Posted by harrisvt on Thu Sep 3, 2009 4:16PM EDT Report Abuse

    Vista can be a viable option if you have decent hardware......If you read the box they outline pretty stringent hardware requirments. But if you follow those it actually works fairly well. I use the home premium 64bit version and havent had anymore problems than I did with xp. I think vista was not meant for budget machines and thats were most of your problems come in. Especially business where they only use minimum memory and slow processors. I run a quad-core processor with 8 gigs of memory and vista performs at least as well and looks better than xp

  • 65 Posted by poohntao on Thu Sep 3, 2009 8:16PM EDT Report Abuse

    "Right blame window vista because people are getting laid off it wouldn't be because our economy is bad right now and people aren't spending as much." Clearly you have no experience working on vista. Its a garbage OS and a step backwards form XP as far as I am concerned. I finally threw the towel in and purchased a shiny new MacBook Pro. Guess what? Haven't had a virus or a headache in the 8 months I've owned this baby :)

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