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Fri, Mar 24, 2006 - Page 10 News List

Investors, analysts slam Microsoft's delay

AFP , NEW YORK

Microsoft came under attack on Wednesday from the stock market and industry watchers after the world's biggest software company again delayed the launch of its latest operating system, Vista.

Following the company's announcement late on Tuesday, Microsoft's share price closed down 2.13 percent at NT$27.15 on the NASDAQ exchange.

Microsoft said its much-heralded Vista platform will only be launched to the public next January, two months after it is offered to major corporate clients.

The delay means Microsoft and PC makers will miss out on end-of-year holiday sales, their busiest time of the year, as customers who want to upgrade their personal computers from the five-year-old XP system are kept waiting.

Analysts said that for an industry that relies on relentless innovation to power sales and earnings, the delay to a system touted as the best platform for the multimedia age is bad news.

"It's certainly disappointing for the PC manufacturers that had hoped Vista would help holiday sales, and this is a flagship product that already had been plagued by a number of delays," said Matt Rosoff of the independent consultancy Directions on Microsoft.

"It's nothing that's going to harm the company in the long run, but it's definitely a setback," he said.

Major PC makers suffered for much of the day on the back of the Vista postponement, but Dell recovered to close 0.46 percent higher at US$30.41.

Merrill Lynch analyst Richard Farmer said that Apple Computers will benefit from "a less competitive market for another holiday season against an ageing Windows offering."

Microsoft had originally been expected to release its new operating system last year but the company was then forced to push this back to this year.

As recently as last month, Microsoft had said Vista would be available for consumers and corporate clients in the second half of this year.

"Instead of taking the new product with the new operating system into the busiest season, they will face low demand in October and November," Gartner analyst Brian Gammage said.

"Then the risk is that they will have to sell the product at a discount. This industry already faces serious challenges, is under continuous pressure on prices and margins," Gammage said.

Microsofecutive Jim Allchin said the software giant had decided to postpone the consumer launch to allow more time for testing security features.

"Our business partners in the Christmas selling season need time, and confidence, for that season," Allen said in a conference call.

"We have decided to come out with a sure date they can rely on," he said.

"We are trying to do the responsible thing here and step back and ask how we can best help the industry," he said.

A beta version of Vista is on track to be delivered to 2 million computer users for field testing in the second quarter of this year, according to Microsoft.

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