Windows XP fails to spark demand for PCs
By Edward Iwata, USA TODAY
SAN FRANCISCO — Even Microsoft's ballyhooed new operating system isn't thrilling personal computer shoppers or firing up the high-tech economy.
Sales of PCs loaded with Microsoft's Windows XP have been largely flat since it was launched last month, says market researcher NPD Intelect.
The tech industry had hoped that XP, boosted with $1 billion in advertising, would drive up PC sales, thus sales of computer chips and related products.
"Everyone thought XP would be a megalaunch that would get people ... into stores," says analyst Steve Baker at NPD Intelect. "It gave the market a quick boost after its release, but it hasn't goosed sales since then."
PC sales rose only 1% in the week after XP's launch Oct. 25 and climbed 2% the second week, says NPD, which surveys retailers. Sales have lagged since.
When the economy was roaring, PC sales leaped 10% to 20% after new Microsoft software hit the market, says analyst Richard Gardner of Salomon Smith Barney. Nor are analysts optimistic about XP-based PC sales during the holidays, typically the industry's busiest period. "We're looking at a pretty lackluster holiday," says analyst Toni Duboise of ARS.
Consumers and businesses are spooked by the bleak economy and the war against terrorism. Until the economy heats up, they see no reason to buy computers or upgrade software, analysts say. Research firm Gartner predicts 16% of PCs used by businesses next year will run Windows XP, with most sticking with Windows 2000.
"There are some good deals out there, but I'll wait ... (for) when the economy comes back," says Lance Mayfield, 30, who breezed through a Gateway Country store Friday in Cupertino, Calif. Mayfield, who runs a Web-development firm called Flavore.com, is happy for now with Windows 2000 on his home and work computers.
Even PC makers say the economy must bounce back for PC sales to rise. "If we get a lift from XP, that's great," says Gateway spokesman Brad Williams. "But we don't think it's going to single-handedly change demand."
Meanwhile, retailers and PC makers hope to tempt shoppers with a flurry of XP-related marketing promotions:
• Dell Computer, in a promotion starting Tuesday, will give consumers a free DVD drive, CD-RW drive for recording digital music or a $150 Lexmark printer/scanner/copy machine if they buy a Dell Inspiron laptop.
• Circuit City stores are offering a $699 deal — after $300 in rebates — for Hewlett-Packard PCs and printers.
• For $99 in monthly payments, Gateway is offering a "family package" that includes two PCs, a digital camera, an MP3 player and a color printer.
"It's definitely a good time to buy," Duboise says.
Dell, the top PC maker, is looking for an upturn in PC sales in the late spring, while many on Wall Street expect a rebound by the middle of or late next year.
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