Wait to Cash Vista's Reality Check

When I praised Microsoft's (Nasdaq: MSFT  ) marketing scheme for its new Vista operating system last February, I wrote that it was perhaps the only time that Mr. Softy had given equal esteem to consumers and developers.

That still rings true. Last week, Microsoft, a market-beating pick for Inside Value, reported more than $1.6 billion worth of pre-orders for Vista. Consumers are obviously excited by what they've seen.

Why shouldn't they be? Vista's Mac-like interface shines compared to Windows' previous incarnations. As one CompUSA shopper interviewed by the Associated Press put it, "Apple (Nasdaq: AAPL  ) computers have had nice graphical interfaces for some time. But it's the first time Windows has even approached that level."

Yet problems remain. Research from trade magazines CIO and ComputerWorld says that, on the whole, business users won't upgrade to Vista before next year.

CIO was first among the party poopers. In a press release issued in late December, the magazine's research team said that roughly 64% of those who control technology spending weren't planning to upgrade or install the new Office suite this year.

ComputerWorld piled on yesterday. Its poll of 40 IT managers showed that only 8% of respondents planned to have Vista up and running on more than half of their PCs before the end of the year. Same with Office 2007.

Many interviewed by ComputerWorld said the suite is too complex. "I'm a geek -- I figure things out easily. Office 2007 is going to be a big problem for normal people unless we give them some training before they touch it," Green Mountain Coffee Roasters (Nasdaq: GMCR  ) CIO Jim Prevo complained.

Should investors be worried? Not yet. Trading for 21 times its fiscal 2007 earnings, Microsoft is priced as though outsized growth from Vista isn't forthcoming. But the Q2 numbers suggest otherwise. 30% growth for Q3 seems all but assured. I wouldn't bet on similar growth in Q4, but 20% hardly seems like a stretch.

Yet the situation bears watching. After all, the stock market is often reduced to a bazaar of the bizarre. Traders could get unreasonably excited over consumer excitement for Vista. That, in turn, could send the shares to new highs in a matter of weeks.

Don't fall for it. Remember instead that, when it comes to Windows, business users sign Mr. Softy's reality check. And they have yet to reach for a pen.

Boot up your brain with related Foolishness:

Do you prefer cheap stocks? So does Philip Durell. Take his market-beating Motley Fool Inside Value service for a test drive free for 30 days and you'll get unfettered access to valuable lessons on valuation and company analysis, as well as all of his buy reports. There's no obligation to subscribe.

Fool contributor Tim Beyers, ranked 519th out of more than 21,000 in Motley Fool CAPS, prefers to run Mac OS X on his MacBook Pro, though he also runs Windows from time to time. Tim didn't own shares in any of the stocks mentioned in this story at the time of publication. Get the skinny on all of the stocks in his portfolio by checking Tim's Fool profile. Motley Fool's disclosure policy looks as good as ever.


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 520898, ~/Articles/ArticleHandler.aspx, 9/16/2014 1:57:48 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement