March 22, 2006
It's looking like a challenging holiday selling season for computer makers this year, now that Microsoft (Nasdaq: MSFT ) is delaying the release of its Vista operating system. Even though the world's largest software company is still expected to release the business version of Vista in November, it's pushing the consumer version back to January 2007. That could hurt PC makers like Dell (Nasdaq: DELL ) , Gateway (NYSE: GTW ) , and Hewlett-Packard (NYSE: HPQ ) if consumers hold off on buying new computers a month before a new operating system hits the market.
The delay will likely pummel Gateway the hardest. After acquiring eMachines, the company has been a force in entry-level systems for consumers, a market that usually spikes when a new version of Windows is rolled out. Some folks decide to simply upgrade their operating system and computer in one small purchase, so Microsoft's delay should hit Gateway like the Grinch hit Whoville.
Delays are expected in software development. Bugs need to get worked out. New features need to get added. This isn't the first delay for the eagerly anticipated upgrade to Windows XP, and who knows whether it will be the last?
It's ironic. Just as Microsoft is capitalizing on delays at Sony (NYSE: SNE ) to ramp up its Xbox 360 production, delaying Vista opens the door for players like Apple Computer (Nasdaq: AAPL ) and Google (Nasdaq: GOOG ) to inch closer to its software stronghold.
As a Motley Fool Inside Value pick last year, Microsoft was recommended as a turnaround play. (Sign up for a free 30-day guest pass to see why value guru Philip Durell singled out the House of Gates.) Those kinds of stock situations are made for patient investors. In that sense, delaying Vista's release is just another snooze bar to tap. For Mr. Softy's sake, let's hope the world doesn't change too much over the 2006 holiday season.
Longtime Fool contributor Rick Munarriz does have a pair of Gateways in his house, though he favors working on his HP computer and Dell monitor. He does not own shares in any of the companies mentioned in this story. Dell has been selected by both Inside Value andMotley Fool Stock Advisor. The Fool has adisclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.