You could hear the crickets chirp when Microsoft Corp. rolled out Vista, its latest operating system, in January. Consumers and businesses were distinctly underwhelmed with the programme.
Improvements such as stronger security and easier searching were nice to have, but they weren’t enough to spur users to toss out their existing computers. Paradoxically, Microsoft is now reaping the fruits of its past problems—sales in the most recent quarter expanded at their fastest pace since 1999.
The initial slow demand for Vista may have hurt Microsoft, but it wounded personal computer (PC) makers and grievously hurt computer component makers.
They invested heavily, figuring there would be massive demand for new PCs.
The subsequent glut caused prices of things such as memory chips to fall through the floor.
But these price declines, coupled with the tailwind of a falling dollar, have finally kicked PC sales into life.
And not only are PCs cheaper, they are also carrying far more memory due to falling chip prices, which makes it easier to run a bloated programme such as Vista. Worldwide shipments rose 15% in the third quarter, according to research outfit IDC. And most new computers are loaded with Vista.
With computer component prices still weak and the dollar still falling, expect some more upgrades to the stock of Microsoft.
Microsoft reported a revenue of $13.8 billion for the quarter ending 30 September, an increase of 27% from the same period last year. Earnings for the world’s largest software group increased 23% to $4.2 billion.