System builders eXPerience gain, as large vendors feel Vista pain

Computerworld - While the evidence is mixed as to whether or not Windows Vista is driving sales for large PC vendors, it may be jump-starting profits for their small U.S. counterparts.

Some system builders say their sales are up this year, as consumers and small-to-medium-sized businesses (SMBs) come to them for "white box" PCs installed with XP and eschew brand-name PCs preloaded with Vista.

"My business has actually gone up since Vista's launch," said Paul Ghysels, owner of the Neighborhood Computer Store in Moraga, Calif. Ghysels estimates that only two out of the almost 400 PCs he's sold so far this year had Vista on them.

Small assemblers say that demand for XP has risen steadily this year, as the initial excitement around Vista's January launch wore off and complaints about Vista's hefty system requirements, unsupported devices and software, and bugs became widely known.

"About 95% of my customers come in and say 'I don't want Vista,'" said E.G. Yang, owner of General Computer Systems in Oakland, Calif. "We even help people who bought brand name laptops downgrade to XP."

Some white box makers say that demand for XP was already there. Others say they are advising customers to avoid Vista for their own self-protection.

"I have a real hard time charging customers for fixing the same thing in Vista I did three weeks ago. So in that sense, Vista is really costing me money," said Ghysels, who doesn't expect to recommend Vista to customers until September next year at the earliest.

Viva la resistance?

The resistance to Vista was expected among big enterprises, who need to test hundreds or even thousands of applications for compatibility before moving to a new operating system.

That has proven true. Only 20% of the PCs sold via U.S. commercial channels -- think big corporate resellers such as Softmart or CDW -- in the first half of this year had Vista installed on them, according to the NPD Group Inc.

Meanwhile, less than 1% of the PCs sold from January to July in the U.S. retail channel had Windows XP on them, according to NPD. But scratch below the surface, and those numbers appear to obscure the growing resistance among consumers and SMBs to Vista.

For one, the traditional retail channel is much smaller today, as Dell pushed competitors to a direct sales model. According to IDC, retail sales comprised 30% of U.S. PC shipments in 1995. By 2005, that had fallen to 21%. Meanwhile, direct sales, including telephone and Web sales to consumers and SMEs, made up 55% of the U.S. PC market in 2005, up from 24% in 1995.