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Analyst: Vista To Boost PC Makers' Bottom Lines

Wednesday, 17 Jan 2007 | 11:07 AM ET

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.

The Vista Effect
Discussing what Vista will mean for Microsoft as well as other hardware companies, with Brent Bracelin, Pacific Crest Securities Analyst, and CNBC's Erin Burnett

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

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