Dell Computer shares surged after the company beat earnings expectations for the second quarter. The next day, chip giant Intel gave the sector another lift by raising its forecast for PC processor sales. Hopes are building among investors that the industry will see a revival in growth as Microsoft unveils its new operating system, Windows 7, on Oct. 22 to replace its troubled Windows Vista. "I think the uplift is going to be significant," said Brian Blair, an analyst with equity research firm Wedge Partners.
The question is how significant. Before Vista, a new Windows release could set off a corporate and consumer buying binge--not only for PCs, but also printers, mice, and software. Some analysts have pointed out that the Windows pop this time could be especially pronounced, since many people never bothered to buy Vista and some 600 million PCs are running the nine-year-old Windows XP.
But, the tech bulls may be disappointed. Given the weak economy, PC unit sales are expected to rise 6.9 percent worldwide in the fourth quarter, according to research firm IDC. That would be the first quarter-over-quarter increase this year, but far short of the boost from releases such as Windows 95.
"A lot of people are going to have to rethink their assumptions," said IDC analyst David Daoud. The firm expects PC sales to rise 6.1 percent in 2010.
Microsoft declined to comment for this story. But, even the software giant has tried to tamp down expectations for the new operating system. "[The impact is] likely to be elongated over a couple of years, to be honest," Bill Koefoed, the company's investor relations chief, told shareholders in August.
That is not a reflection on Windows 7 itself. In preliminary testing the software has earned largely positive reviews, despite a few complications with installation. Besides delivering bootup speeds and reliability that Vista did not, Windows 7 will help PCs work better with high-speed networks, a key step as companies use more software programs online. Consumers will also be able to more easily view and share even high-definition content, whether it os a TV show on Hulu.com or a home video.
"Windows 7 will put the pizzazz back into PCs," said Jen-Hsun Huang, CEO of graphics chipmaker Nvidia.
The economy is the primary reason for the holdup in near-term PC sales. While some companies are boosting their capital spending, most will make do with their existing computers for now. Kris Kutchera, vice-president for information technology at Alaska Airlines, said she will wait as long as possible to upgrade, maybe until 2012. "There's not a huge value for us to move [to Windows 7]," she said .
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