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November 4, 2009

Microsoft reports positive start for Windows 7

Uptake of the new OS quick among consumers

Dan Nystedt

Microsoft's Windows 7 operating system has been doing well in the market since it launched nearly two weeks ago, Microsoft executives said today.

"We've heard positive things from our partners," said Steve Guggenheimer, vice president for OEM sales at Microsoft, on the sidelines of a news conference in Taipei. He said it's too early to say what Windows 7 sales look like.

The much anticipated OS was officially released on October 22, installed in a range of desktop and laptop PCs. Manufacturers around the world had been working overtime to ready devices for the launch.

But the global recession has caused people to question how Windows 7 sales have been since the launch. Growth has returned to many countries, including a 3.5 percent increase in third quarter GDP (Gross Domestic Product) in the US, but many economists say a full recovery will take time.

Microsoft CEO Steve Ballmer said the new OS will take over quickly among consumers, while in businesses he expects steady growth. "The overall response to Windows 7 has been positive," he said during a news conference.

Microsoft's Windows OSs have lost market share over the past several months to Apple, according to data tracker Net Applications. Microsoft's share of the OS market dropped to 92.55 percent at the end of October, compared to 93.66 percent in January. Apple's share has increased to 5.27 percent from 4.71 percent. Linux and other OSs make up the remainder of the market.

There have also been signs the PC industry is slowing down, which could hurt Windows 7.

Acer, the world's second largest PC vendor, complained of component shortages in the third quarter that hampered its ability to bring products to market. Executives at the company said their third quarter shipments would have been better had they had the right materials.

Most of the world's major PC contract manufacturers revised their shipment targets for the fourth quarter down compared to previous estimates, notes Jenny Lai, research analyst at CLSA Asia Pacific Markets, in a report from Monday. Guidance was cut by around 5 percent for the fourth quarter, she wrote. Shipments in the first quarter of next year could drop 10 percent to 15 percent, worse than expected, she noted.

"Most of the companies blame the target revision to component shortages, especially those in DDR2 (double data rate, second generation) memory, optical disk drive pick up heads and high-end MLCC capacitors," she wrote, adding that the "component shortage is real but in our view is not the only reason."

One additional reason is the expected launch of new Intel microprocessors in the first quarter, she said, noting that people might put off new PC purchases until the new chips are inside.