Microsoft Corp's new Windows XP software hasn't yet boosted personal computer sales, and demand may continue to lag for several months after the terrorist attacks in the US, executives said.
"It certainly hasn't had a huge pop in PC sales," Carly Fiorina, chief executive of Hewlett-Packard Co, said in an interview this week. "Before Sept. 11, we had been talking about a more subdued back-to-school season and I think that's clearly the case now."
Earlier this year, investors had said Windows XP, which Microsoft has called its most important operating system since Windows 95, probably would bolster PC sales. Analysts have been steadily reducing sales estimates, particularly after the Sept. 11 attacks on the World Trade Center and the Pentagon.
Microsoft is officially introducing the program on Oct. 25, when it will be available in stores. PC makers began shipping computers with the new system as early as Sept. 24.
With H-P and many PC makers just finishing up their first week of sales for XP-based machines, it's too soon to tell how demand will play out in coming months. Still, investors said they aren't expecting Windows XP to increase sales this quarter.
"Unlike previous versions, the uptick will be a little bit slower but it will be very steady," said Sunil Reddy, a fund manager at Fifth Third Bancorp, which owns 155,000 Dell shares. "I expect momentum to pick up in the next few quarters. In the next two or three years, the majority of PCs will be upgraded to XP."
When Microsoft introduced Windows 95 in August 1995, it created a sensation and PC makers saw their unit shipments increase 26 percent from the previous quarter, according to IDC.
Windows XP crashes less, adds digital photography and music features and is easier to use, representatives from Microsoft have said recently.
Before the attacks, XP was expected to boost PC sales in the fourth quarter, said Bruce Raabe, chief investment officer at Collins & Co, which owns shares of Hewlett-Packard, Microsoft, Intel Corp and International Business Machines Corp.
"Now we might have to push that back a quarter or two," he said. "There's a big question mark as far as demand. This disaster caught everybody off guard. It's not just PC sales, but all consumer products." PC sales fell in the second quarter from a year earlier, the first such decline since 1986. Analysts expect sales to fall further because consumers and corporations aren't buying as much because of the attacks.
Since Sept. 11, Intel, the largest provider of microprocessors, has fallen 19 percent.
Microsoft has declined 2.3 percent and Dell Computer Corp has slipped 8.5 percent. Yesterday, Microsoft rose US$3.18, or 6 percent, to US$56.23, while Dell increased US$2.10, or 11 percent, to US$20.64 and Intel was up US$1.69, or 8.7 percent to US$21.23.
Michael Dell, chief executive of Dell, has said in May that he expects a rebound in PC sales in the second quarter next year, helped by Windows XP and corporations upgrading their PCs. He hasn't changed that forecast, said Dell spokesman Mike Maher.
"The general sense is that we still believe XP in addition or coupled with P4 [Intel's Pentium 4 microprocessors] replacement cycles will be a catalyst for demand," Maher said.
Fiorina said XP will have an impact on PC sales in the holiday shopping season.
"It gets innovation, new applications and excitement back into the category and that's important," Fiorina said during an interview.
Redmond, Washington-based Microsoft declined to comment on Window XP sales, said Katy Fonner, of the software maker's public-relations agency, Waggener Edstrom. She said Microsoft will discuss Windows XP revenue when the company reports fiscal first-quarter earnings on Oct. 18.
Spokespeople for Compaq Computer Corp and Gateway Inc said they couldn't talk about Windows XP because their quarters closed Sept. 30 and they are in a self-imposed "quiet period."
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