Microsoft shares have been on a run in the last six months – moving up almost 58 percent. That, of course, is due in part to the impending release of the company’s most important product in years – Vista. Could innovations in software actually boost hardware makers like Dell , Hewlett-Packard and Apple ? Brent Bracelin, an analyst at Pacific Crest Securities, was on “Squawk on the Street” to discuss.
2006 was a brutal year for PC makers – companies saw a market saturation and the beginning of a sea change where consumers turned to other products - like mobile devices - to get information they normally would have gotten from their computers. This created a sharp decline in PC prices, but Bracelin is betting on a rebound for the big PC makers this year – mostly thanks to Vista. He says he doesn’t expect actual PC units to increase, but Vista-configured hardware will be sold at a higher price point and will likely make up for the bottom in unit sales.
Bracelin expects Hewlett-Packard to get the initial bump from the Vista release, as it deals most directly with consumers. But Dell is another story – it does most of its business with large companies. And companies don’t tend to purchase new software-configured computers until the 1.1 release of the software--when all the bugs and kinks are theoretically worked out. That means that Dell should benefit from the Vista launch – just probably not until next year.
Vista is scheduled for a wide release on January 30. It became available for businesses last November and a report from NPD Group says Vista’s first month sales to businesses were stronger than expected – eclipsing the first month sales for Windows 2000 and only slightly behind those for Windows XP.
Analyst Disclosure: Pacific Crest Securities makes a market in shares of AAPL, BRCD, DELL, FFIV, QLGC