By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Microsoft's decision to delay launching its Vista operating system was widely met in the industry with a shrug, with vendors stating the holdup was not a major issue. And whatever profits that are to be made on Vista's coattails would now take place after the holiday selling season.
The general consensus both prior to and after Microsoft's announcement is that the forthcoming release of Vista should spur a sales boom in after-market computer products not seen since the mid-1990s, and vendors are not backing off that claim.
In much the same manner that Microsoft drove after-market component sales with the introduction of Windows 95 and 98, Vista is expected to push computer owners to enhance their computer's capabilities. Memory, graphic card and display manufacturers said Vista will help create an upgrade market that mirrors what existed 10 years ago when consumers had to boost their computer's capabilities so it could run Microsoft's software, because Vista minimum requirements are far above what is found in many older computers.
“This is the biggest thing that has happened in several years,” said Larry Mondry, CompUSA's CEO. “While nothing will ever be the same as Windows 95, Vista could be, next to 95, the next most important.”
Vista's impact on CompUSA is expected to be quite broad. The chain will not only directly benefit from sales of the operating systems, but more computers, memory, graphic cards and other extras will sell, Mondry said.
“Whenever a new operating system is released it creates a certain level of buzz, and people sit back and analyze what they have and whether they should upgrade or buy a new PC,” he said.
Mondry tempered his enthusiasm somewhat after the news of Vista's delay broke, saying the normal pre-operating system lag in sales that retailers suffer would be harsher because it will strike during the holiday season and that retailers will have to come up with innovative methods to drive store traffic without the Vista customer magnet.
However, Mondry expects PC and after-market product sales to equally benefit from Vista. There will be those who would rather buy a new system than take the chance on upgrading their computer and others who are not afraid of cracking open the case and replacing parts.
It is the latter group that the memory and graphic card vendors are banking on.
“I think people would rather spend $200 improving their current PC than going out and buying a new one,” said Don Barnetson, Samsung Semiconductor's flash marketing director.
Mark Tekunoff, Kingston Technology's senior technology manager, believes Vista offers enough extra benefits to entice consumers to upgrade their system. Exactly what percentage of PC owners will look to make this move cannot be known yet, he said; however, one method of roughly figuring out the market size is to consider that a person who bought a high-end system during the past three years with an above-average graphics card is probably set to run Vista. All others will have to put a few dollars into their PC to bring it up to speed.
“We are excited because it [Vista] is an opportunity to bring memory to the forefront. Usually people don't worry about it until they have a problem running an application,” said Dan Altana, PNY's memory product manager.
So far Microsoft has only revealed a few of the system requirements needed to run Vista, with the remainder to be released this summer. Microsoft has stated that a PC must be “modern, running an Intel Pentium or AMD Athlon processor, have a minimum of 512MB memory and a dedicated graphics card with DirectX 9.0 support.” Barneston's position is a PC will need at least double the memory as a minimum, with 2GB preferred to properly run Vista.
Tekunoff and Altana said the bare-bones version of Vista will run on 512MB, but to take full advantage of what Vista offers 1GB would be better, with 2GB the least amount of memory needed for Vista Premium. The latter application is geared toward heavy multimedia and business users.
Altana said the best reason to increase a PC's memory capacity is Vista's scalability. The software adjusts itself to the computer's capabilities, so those who buy more memory or a better graphics card will be rewarded with a better Vista experience, he said.
The graphic card community is also looking forward to a Vista-related bump in sales, although it might not be as dramatic as what the memory vendors can expect.
Alexis Mathers, ATI Technology's technical marketing manager, said most of the company's products that are now shipping into the OEM and aftermarket support DirectX 9.0, and so are Vista ready. There remain only a few details to cover to ensure compatibility, such as putting device drivers in place.
“It is difficult to say if there will be an uptick in sales, but since Vista is so graphically rich, people who wish to use it will need an above-average GPU [graphic processor unit],” Mathers said, “multimedia playback will require an above-average GPU.”
Samsung is planning a Vista after-market upgrade kit. Consumers unsure if their PC needs improving will be able to go to a Samsung Web site where they will input their computer's specs. They will then be told what kit they need to buy to make their PC Vista ready, Barnetson said.
Kingston will also offer a configuration tool and is developing other consumer educational tools that will be available when Vista launches.
Vendors whose products are not intrinsic to Vista's operation are also looking forward to the launch. Gateway is hyping its 21W-inch LCD monitor that will take advantage of several of Vista's features, said Ken Walker, the company's engineering senior director.
“The display has high-bandwidth digital content protection [HDCP], which is important for Vista because it will protect programming imported through Vista and play it at its proper resolution,” he said. “Without HDCP it will be 'down-rezed' to 640 by 480.”
A widescreen display also will be helpful for viewing Vista's Sidebar feature. Sidebar uses some screen area to give users visual access to applications that are running. The additional real estate available will allow consumers to utilize this function without losing too much of their screen, Gateway said.
While a widescreen display is not necessary to run Vista, Walker said the OS does create upgrade possibilities. Once you get a better GPU, why not get a better monitor?” Walker said, adding that while Vista offer consumers something much better than Windows XP the change is not on the same level as what took place when Windows 95 was released. Windows 95 offered a completely new look, whereas most of Vista's important changes take place deep inside the code.
“They really rebuilt the house from within with Vista,” Walker said.
Microsoft will support the vendors marketing efforts with its own $500 million campaign. Microsoft CEO Steve Ballmer kicked off part of the company's effort on March 16 when he met with hundreds of business owners in New York to personally explain the benefits of Vista and the firm's next-generation business Office 2007.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.