Compaq story repeated in Wall Street Journal report. Hopefully the release of Windows 98 will change the situation in May:
Personal-computer sales were hurt by long wait for Windows 98 release
msnbc.com
By Jim Carlton
THE WALL STREET JOURNAL
Retail personal-computer sales swooned in May, apparently because consumers waited for the introduction of Microsoft Corp.'s new operating system, Windows 98. But with the release of the product last week, sales are expected to rebound.
survey showed that hardware sales declined by 8.3% over the same period.
PENT-UP DEMAND
Pent-up demand for Windows 98 appeared to be so great that an estimated 277,000 copies of the system were sold in U.S. stores within the first 24 hours after being launched last Thursday, according to PC Data. That number nearly matched the estimated 300,000 copies of Windows 95 that were sold the first day that system was launched three years ago, amid a marketing blitz by Microsoft that far overshadowed last week's low-key launch.
Microsoft officials said they didn't yet have any specific estimates, but added that anecdotal data indicates the initial sales of Windows 98 are running ahead of their expectations. In addition to the strong sales results reported in stores, the officials say the company received a healthy 120,000 advance orders for the software upgrade.
"In general, the analysts have underestimated how well this product would perform," said Yusuf Mehdi, Microsoft's director of Windows marketing.
Since Windows 95 represented a quantum leap in technological performance from Microsoft's Windows 3.1 system, analysts say there was far greater reason for PC users to upgrade software then. Windows 98, on the other hand, is considered an incremental upgrade that many users could well skip as they wait for Microsoft's next big technological leap, a consumer version of the powerful Windows NT system.
EFFECTS OF PUBLICITY
Analysts speculate that Windows 98 benefited, ironically, from all the publicity surrounding the Justice Department's battle with Microsoft over Internet browser features of the new system.
Few observers expect the Windows 98 sales to remain as strong as for Windows 95, though. In fact, outside of computer superstores such as CompUSA Inc., which hosted "midnight madness" sales of the upgrade, some other stores reported tepid customer reaction. The Babbage's store in Pleasanton, Calif., for instance, reported still having two dozen copies in stock after selling just a half dozen copies of Windows 98 the first day.
Because it is common for PC sales to fall the month before a major technological roll-out, retailers say some manufacturers intentionally de-emphasized the month of May. "In the last month to six weeks, the manufacturers have slowed up the shipments of Windows 95 machines in expectation of Windows 98 machines," said Larry Mondry, CompUSA's executive vice president of merchandising.
But the weak sales prolonged the struggle of some manufacturers to reduce high inventory levels. Compaq Computer Corp.'s inventory of unsold products, for instance, increased in May from the previous month, according to ZD Market. The Houston computer giant has been struggling for months with bloated inventories. "It's not that products weren't on the shelves, but that people weren't buying," said Matt Sargent, a ZD Market analyst. Analysts expect the retail sales to pick up significantly in July, when many manufacturers are releasing their new Windows 98 models in hopes of capturing back-to-school sales.
In the meantime, PC makers are benefiting from a run-up in demand among corporate buyers, who are clamoring to take advantage of recent price cuts in that market, similar to those that swept through the retail market last year. According to ZD Market, the year-to-year growth rate in unit sales of PCs through corporate resellers jumped from 16% in January to 48.5% in May. That market accounts for about three-fourths of all PCs not sold through direct sales in the U.S. |
