Windows Media laptop sales spike as prices drop

Windows Media Center laptop sales spiked in January as prices for the notebooks dropped, an analyst firm said.

The sales of Windows Media Center Edition notebook computers in the U.S. retail market had their biggest surge yet between the end of December and the end of January, as prices for the laptops dropped drastically, according to new research by Current Analysis Inc.

Computers running Microsoft Corp.'s Windows Media Center OS comprised 16.5 percent of notebook sales in retail chains such as Circuit City Stores Inc., Best Buy Co. Inc. and CompUSA Management Co. in January, rising from 4 percent share of the sales of laptops at those outlets in December, said Nicole D'Onofrio, mobile computing analyst with the research firm in Sterling, Virginia.

The primary reason for the rise in sales is the drop in price, from an average retail price of US$1,735 in December 2005 to $1,251 in January, she said.

Hardware companies selling Windows Media Center notebooks in these stores include Hewlett-Packard Co., Gateway Inc., Toshiba Corp. and Sony Electronics Inc. Wal-Mart Stores Inc. was not included as part of the research, nor were notebook computers sold by Dell Inc., which does not sell its laptops in mainstream electronics stores, D'Onofrio said. However, Dell offers one of the most aggressively priced Windows Media Center notebooks for less than $1,000 online, she added.

While a spike in Windows Media Center sales is good news for Microsoft, one of the reasons for the drop in price is the removal of the TV tuner from the system, D'Onofrio said. This means that consumers still are hesitant to embrace Microsoft's ultimate goal for Windows Media Center, which is to be the console that drives the digital home, she said.

"People are not ready to marry their PC and TV together at this point," D'Onofrio said. "There is still some work to be done. What people are using Media Center for now is to organize, store and share their digital libraries."

Customers can purchase a TV tuner for a Windows Media Center computer as an add-on for about $100 to $200, she added.

Still, the strength of Media Center notebooks and PCs -- the latter currently comprise about 60 percent of desktops sold in the U.S. retail channel -- should bode well for the release of Windows Vista later this year, D'Onofrio said. Windows Vista is expected to have some of the premium functionality now found in Windows Media Center Edition built into some of its more standard editions.

Another reason for the notebook price reduction is that January was the first month Media Center laptops using processors from Advanced Micro Devices Inc. (AMD) entered the retail channel, D'Onofrio said. Because AMD is struggling against the brand recognition of Intel Corp. in the retail channel, laptops with its chips are less expensive. The average selling price for an AMD Windows Media Center notebook in January was $1,140, while the average price for an Intel-based laptop was $1,600.

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