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Financial Research Firm: Longhorn Could Slow PC Buying

Hefty system requirements for Windows "Longhorn" could create a drag on PC buying in 2006, a financial research firm warned.

"We are now assuming 7.7 percent PC unit growth in fiscal 2005 and 6.8 percent in fiscal 2006. We believe there is some risk that PC sales will slow down materially in calendar 2006 in front of Longhorn that we are now modeling as a 2007 event," according to an outlook from Credit Suisse First Boston quoted on Forbes.com Wednesday. "We fear that heavy hardware requirements for Longhorn will discourage buying."

CSFB predicts that PC unit growth will slow to the high single digits beginning in the current quarter due to the slowdown of the current replacement cycle.

Microsoft has not talked much about hardware requirements for Longhorn. The company has said that Longhorn’s major themes are strengthening operating system fundamentals, overhauling the presentation layer, building in enhancements to the file system and embracing Web services in internal and external communications.

With so little market share left to grab in the PC market, Microsoft is heavily dependent on PC growth rates to sustain its revenue and earnings growth. CSFB maintains a "neutral" rating on Microsoft's stock.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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