Why Is Ballmer trying to sell Vista down the river?

Has he decided to lay off the bong, changed his meds or what?

It might look like it from reactions such as the Mini-Microsoft blog, which complained in its headline: "Stop Him Before He Speaks Again!" What Ballmer was actually trying to do was lower the financial expectations of some Wall Street analysts, who were being "overly aggressive" about Vista's impact on Microsoft's profits. "We're driving it hard, but I think some people have gotten a little overexcited," he said.

Ballmer was speaking to a group of financial analysts in a hotel in New York, but an undeniable side-effect was that Microsoft's shares took a beating, falling by 2.4% in a day. That was never going to please the folks back home in Redmond, especially employees with stock options.

Expectations have been buoyed by market research group Current Analysis, which reported that PC sales by US retailers for the week ending February 3 were 67% up on last year, and 173% higher than the previous week. Also, Current Analysis reckoned that Windows Vista Home Premium had 70% of sales, compared with 22% for Vista Home Basic. (On notebook PCs, it was 76% to 59%.)

Since it is a very long time since Windows XP appeared (2001), and since the wait for Vista probably depressed PC sales before and after Christmas, this isn't exactly earth-shattering news.

Ballmer pointed out that if analysts were bullish about Microsoft then they should also be bullish about PC manufacturers, because almost all copies of Vista are sold pre-installed. "So, either you have to increase your forecast for the total PC market, and then Vista will do just fine, or those two things are out of whack," said Ballmer.

True, but Microsoft can make more money out of Vista in two ways, without PC sales increasing. That happens if users buy more expensive versions of Vista, and if they buy Vista instead of pirating a copy. The former looks a good bet: Microsoft seems to have made Home Basic unattractive enough for people to pay the much higher price for Home Premium. The latter remains an unknown. But Vista's version of Windows Genuine Advantage piracy-checking and the lack of security updates may prove unpleasant enough to prompt more people to pay up.

Reducing expectations is also good for Ballmer, in the sense that it gives him easier numbers to beat. Analysts and share buyers hate you if you promise an 80% rise in profits and only deliver 75%. They love you if you promise 5% and deliver 10%.

http://technology.guardian.co.uk/weekly/story/0,,2017954,00.html