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Microsoft says 140M Vista licenses sold

Vendor cites strong PC sales, defends uptake of OS despite big drop in client revenue

By Eric Lai
April 24, 2008 12:00 PM ET

Computerworld - Microsoft Corp. said Thursday that it has sold 140 million licenses of Windows Vista.

Colleen Healy, general manager of investor relations, made the statement during a conference call with Wall Street analysts after Microsoft posted its third-quarter earnings. The company pointed to strong PC sales for helping the much-maligned operating system achieve that number.

However, revenue from Microsoft's client division, which overwhelmingly comes from sales of Windows Vista or XP licenses, was down 24% from last year's third quarter to $4.03 billion. Chris Liddell, Microsoft's chief financial officer, attributed the decrease to strong sales a year ago immediately after Vista's launch, plus increased software piracy in developing countries and other reasons.

It's not that Microsoft is having trouble selling Vista, Liddell said. "Unlicensed PCs is not a Vista issue," he said. "Emerging markets is not a Vista issue. The channel shift to larger OEMs is not a Vista issue."

Healy added that the percentage of Windows licenses sold in the quarter ended March 31 that were for Vista was "up a bit" from the level in this year's second quarter. "I think things are tracking well and as expected," she said.

In its last update in January, Microsoft said it had sold 100 million licenses for Vista since the operating system's launch in November 2006.

Healy did not offer details. But if she was being consistent with past Microsoft statements, the 140 million license figure excludes volume licenses sold to corporations. Volume licenses give corporations the right to use whatever version of Windows they want.

Most reports indicate that corporations have been slower to switch to Vista from Windows XP or 2000 than consumers and small businesses, who get Vista installed on new PCs.

There has been some speculation that Microsoft will cut its losses and deliver Windows 7, Vista's successor, sometime next year.

There have also been calls for Microsoft to keep XP around past June 30 this year, though CEO Steve Ballmer said today that an extension would require more demand from customers.

Later during the conference call, Microsoft said it has no plans to raise its $44.6 billion bid for Yahoo Inc., and reiterated that it may completely walk away from the effort.

Yahoo continues to "have unrealistic expectations of value," Liddell said. "I've yet to see any evidence that our bid undervalues [Yahoo]."

Yahoo's earnings results earlier this week were "in line with their guidance," Liddell said. "The best argument that I've heard for raising our bid — that we can afford to — is not one that I favor."

Even if Microsoft withdraws its bid, the software vendor remains focused on the fast-growing online advertising market, Liddell said. He added that the company would provide an update next week.

Read more about Windows in Computerworld's Windows Topic Center.

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