Computer makers Hewlett-Packard (NYSE: HPQ) and Dell (NASDAQ: DELL) are likely to benefit as Microsoft (NASDAQ: MSFT) rolls out its next-generation Windows operating system, one research firm says.
After an IT sector slowdown during the fourth quarter, analysts expect Microsoft's Windows Vista will likely cause acceleration in PC revenue growth over the next two years, however, as higher average hardware costs are required to run the new software.
While both companies are likely to see better sales, HP should do slightly better results from the initial round of consumer Vista upgrades next year, said research analyst Richard Farmer of Merrill Lynch.
The first wave of improved demand in 2007, however, should hit consumers, where we estimate HPâ€™s exposure is similar at 10 percent versus an estimated 9 percent at Dell, said Farmer said.
He added that HPs retail exposure versus Dellâ€™s mail order model will help it sell more computers since consumers prefer to â€œexperience the PC firsthand.â€ In the long term, however, Dell has twice the total PC exposure of HP, the analyst said, given that 60 percent of its revenues are PCs versus just 29 percent at HP.
Farmer notes that the introduction of Microsoft's previous OS, Windows XP, was associated with PC growth, however a direct comparison could not be made.
If Vista trends are even directionally similar to industry growth following the previous Windows XP introduction, then there could be some acceleration in demand, he concluded.