ACER chief Gianfranco Lanci has blasted the = arrival of=20 Microsoft's Windows Vista as a huge disappointment to the whole = industry, but=20 locals say his tirade is out of tune with what's happening in=20 Australia.

'Stability is certainly a problem,' Acer boss = Gianfranco Lanci=20 says

The chief of the computer maker lamented that Vista had failed to = ignite PC=20 sales, but local PC market players said the arrival of Vista coincided = with a=20 healthy start to the year for sales in Australia, spurred along by = consumers=20 buying laptops.

"The entire industry is disappointed by Windows Vista," Mr Lanci said = in=20 comments reported by the Financial Times Deutschland.

Things wouldn't improve in the second half of the year, he said, = because the=20 software had not been ready for launch.

"Stability is certainly a problem," he said.

Microsoft launched the consumer versions of Vista in January, two = months=20 after the first versions were offered to enterprise customers. Vista was = the=20 first new version of Windows since Windows XP in 2001.

Microsoft Windows client director Jeff Putt said the Vista launch had = exceeded Microsoft's expectations worldwide.

"We sold 40 million units in the first 100 days of it being = available," Mr=20 Putt said. "We went past Apple's entire installed base in five weeks." =

Microsoft has sold 60 million licences for Vista since January, and = is on=20 pace to beat the initial estimate of analyst Roger Kay, from US = researcher=20 Endpoint Technologies Associates.

Mr Kay estimates 82 million licences will be sold for the year.

Microsoft chief operating officer Kevin Turner announced the licence = sales=20 figures at the company's financial analyst meeting last week. But fiscal = fourth-quarter sales of Windows for personal computers only met the low = end of=20 the company's forecast, prompting concern among investors that demand = for Vista=20 had fallen short of expectations.

Microsoft chief executive Steve Ballmer needed to develop businesses = other=20 than Vista to bolster the company's share price, analysts said.

"They need to sell a vision of where this company goes beyond Vista = and to=20 show there is growth beyond the Windows-oriented product cycle," New = York-based=20 Sanford C. Bernstein and Co analyst Charles Di Bona said.

Nevertheless, analyst Gartner predicted Australian PC shipments would = reach=20 4.25 million units this year, an 8.9 per cent increase on 2006.

The prediction was made after a surprise jump in first quarter sales, = which=20 saw actual shipments exceed Gartner's original forecast by 49,000 units. =

Gartner client computing research director Martin Gilliland predicted = notebook shipments would exceed desktops by 2009.

Growth in the desktop market had all but stopped, he said.

In contrast, Gartner predicts notebooks shipments in Australia will = continue=20 growing until at least 2011.

Microsoft's enterprise agreement renewals had been at "historic = highs" here=20 and overseas, Mr Putt said.

In addition, Vista had had only five security issues in the first 90 = days,=20 compared to 18 for XP.

Mr Lanci's charge of instability may have arisen from the fact that = the=20 launch of Vista had been accompanied by widespread reports of peripheral = hardware incompatibility, but Microsoft blames hardware suppliers.

"If you look at some of the peripherals manufacturers, some of them = have=20 decided to launch Vista as a way of compelling users to upgrade," Mr = Putt said.=20 Some manufacturers had declined to release Vista drivers for older = equipment,=20 forcing to people to buy an updated version, he said. Locally, Acer = lacked the=20 bravado of its chief, and declined to further discuss any of his = comments on=20 Vista or its effect on the PC market.

Mr Gilliland suggested Mr Lanci may have been looking for a way to = explain=20 the end of a spectacular six or seven month growth run for Acer, which = had=20 helped it move from a mid-tier, Asia-centric supplier into the global = premier=20 league.

Acer was still strongest in the consumer market, even though it was = growing=20 into the enterprise space, Mr Gilliland said.

Vista was really Acer's first Windows launch as an enterprise systems = supplier, and it might not have known what to expect, he said. "When XP = came=20 out, they were still a consumer and small and medium business player." =

Mr Putt indicated that any issues Acer was having were of its own = making.=20 "Vista does represent a big change for all the manufacturers. Some will = regard=20 it as a positive, and an opportunity, and other will regard more as a = threat,"=20 he said, saying the different variations of Vista meant there was = greater=20 opportunity for differentiation of PC products.

"Manufacturers have an opportunity to contemplate different = configurations=20 and different line-ups. Some want to take advantage of that, others say = the=20 status quo is good."

Regardless, the Australian PC market showed good growth during the = first=20 quarter of 2007.

Analyst IDC reported 11.3 per cent growth, year-on-year, for the = total=20 Australian PC market during the first quarter, with 1 million unit = sales,=20 including x86 servers.

Yet while sales were up, they may not have necessarily been directly=20 attributable to the arrival of Vista, IDC senior hardware analyst Liam = Gunson=20 said.

"We saw very strong shipments in the first quarter of 2007, = particularly in=20 the consumer space," Mr Gunson said. "But we did see and hear in the = market that=20 Vista itself wasn't pulling people in the door.

"A lot of retailers had a lot of promotions running.

"People weren't running out and saying they wanted Vista, so they = could go=20 and buy a new PC'. They were saying look at all these great deals in the = market."

Rutland Smith, general manager for computers and communications for = retailer=20 Harvey Norman, said, however, the response to Vista had been good. "I = can't=20 comment for the industry, but from our perspective we have been very = pleased=20 with the response to Vista," Mr Smith said.

"Our sales of the packaged product have been very strong, and we have = seen a=20 corresponding improvement in hardware and associated products."

PC sales were up overall, with notebooks leading the way, he said. =

Mr Smith said Vista had done better at launch than XP, in total = volume sales,=20 but the way a major Windows release hit the market had changed.

"There is definitely a change in the dynamic of the launches," he = said.=20 "There are not as many people buying at midnight, but there is a more = consistent=20 flow of business after. That reflects the maturity of the technology." =

IDC figures confirmed the continuing drift to notebooks, laptops and = other=20 portables.

During the first quarter laptop sales hit 445,471 units, up 16.1 per = cent=20 over the previous quarter and 32.4 per cent year-on-year.

According to IDC, laptops held 44.1 per cent of overall PC market = (including=20 x86 servers) in the quarter, while desktops held 53.1 per cent. In the = first=20 quarter of 2006, desktops held 595.9 per cent, while notebooks held = 37.1.

On both Gartner and IDC's assessment, Acer ranked No3 in the = Australian PC=20 market in Q1, following Dell and runaway leader HP.

But Acer lost desktop share in Q1, Gartner's Mr Gillilam said. The = total=20 desktop market shrank 7.4 per cent year-on-year, but Acer dropped 11.4 = per cent,=20 he said.

On Gartner's figures, the mobile PC market grew 38 per cent during Q1 = and=20 Acer grew 21 per cent, which would normally be considered a healthy = result, he=20 said. But Acer's sales paled when compared with HP's 47 per cent growth = in=20 laptops in the same period.

Despite Microsoft's assertion that enterprise licensing of Windows = has never=20 been better, analysts said adoption of Vista in the enterprise space = would be=20 much slower, as everyone had always predicted.

Mr Gillilam said it would take a minimum of six months for an = enterprise=20 deployment of Vista.

The only exception, he said, would be organisations deploying Vista, = but=20 continuing to run applications in a virtualised XP environment, and = gradually=20 migrating them over when they were happy they would work.

"We see it (a virtualised operating system) as a big driver for = change in the=20 enterprise space, but not yet," he said.

That would change with the next version of Windows, with = organisations able=20 to get the hang of virtualisation in the meantime, he said.

Vista rollouts in enterprise wouldn't start getting under way until = Q1 next=20 year. In the meantime, even though enterprises may be purchasing new PCs = running=20 Vista, those machines would more than likely be downgraded to XP, he = said.

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THE Polaris centre in Brisbane is chasing business throughout the=20 Asia-Pacific based on its mix of technology and political = stability.

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WESFARMERS is set to re-engineer its Cloes bid after the bidder's = plummeting=20 share price wiped almost $4 billion off the deal's value.

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