Windows 7 tops Vista software sales, lags behind in hardware

Microsoft's heavily hyped Windows 7 debut was a success for the Redmond, Wash., company in terms of boxed software, which saw a 234 percent increase over Vista, though PC hardware sales slowed.

According to the NPD Group, the first few days of Windows 7 sales far exceeded that of Windows Vista. Revenue came in 82 percent higher as well, a number lower than the sales increase due to early discounts and a lack of promotional activity for the operating system's 'Ultimate' version.

One promotion run by Microsoft pushed copies of Windows 7 for $29.99 for a valid .edu e-mail address, making the OS essentially the same price for students as Apple's Mac OS X 10.6 upgrade. That deal runs through Jan 3, 2010.

The top-selling upgrade was Windows 7 Home Premium, with an average selling price of $76. It was followed by Windows 7 Pro at $147, and then the Home Premium Family Pack 3 User Upgrade, which costs $149.

"Microsoft's program of early low-cost pre-sales, high visibility marketing and aggressive deals helped to make the Windows 7 software launch successful," said Stephen Baker, vice president of industry analysis at NPD. "In a slow environment for packaged software, Windows 7 brought a large number of customers into the software aisles."

Total Windows PC sales were up 49 percent year-over-year, and 95 percent from the week prior to its debut. But compared to the launch of Windows Vista, those numbers lagged behind by a total of 6 percent. Vista also managed to create a 68 percent year-over-year increase, and a 170 percent boost over the week before its launch.

"A combination of factors impacted Windows 7 PC sales at the outset, but the trajectory of overall PC sales is very strong leading into the holiday season," Baker said. "Vista had a slight advantage at launch, as January traditionally has a bigger sales footprint than October. The other hurdle Windows 7 faced was sales of PCs with older operating systems (XP and Vista) were high, making up 20 percent of sales during the Windows 7 launch, compared to just 6 percent of older operating systems during Vista's launch week."

Microsoft had a marketing blitz surrounding the debut of Windows 7, opening its first retail store in Scottsdale, Ariz., selling giant seven-pattied Whoppers in Japan, and encouraging users to throw home parties to demonstrate the new OS. Apple fired back with its own marketing blitz, criticizing the difficult process of upgrading a Windows XP machine to Windows 7. Phil Schiller, Apple's senior vice president for Worldwide Product Marketing, said the debut of Microsoft's new operating system gave many people good reason to switch to a Mac.

"Any user that reads all those steps is probably going to freak out," he said. "If you have to go through all that, why not just buy a Mac?"

In August, Apple debuted its own operating system upgrade, Snow Leopard. Priced at $29, Mac OS X 10.6 had sales twice as high as its predecessor, Leopard, in its first week, and four times better than Tiger. In addition, the new OS showed sales strength beyond its initial week, with sales dipping only 25 percent.

Apple Chief Operations Officer Tim Cook noted during his company's fourth-quarter earnings conference call that the sales of Snow Leopard exceeded their expectations. Upgrade sales of Snow Leopard were said to be more than double that of Leopard over its first five weeks of sale.

"That was much more than we planned," Cook said, "very pleasantly surprised."