Microsoft Offers “Express Upgrade” for Vista on New PCs
 November 1, 2006 - Microsoft announced that qualifying Vista-capable desktop and notebook computers purchased between October 26, 2006, and March 15, 2007, will be eligible for an “Express Upgrade” to Microsoft’s Windows Vista operating system (OS) when it becomes available early next year.
Current Analysis Perspective
► Current Analysis takes a highly positive stance on Microsoft’s Express Upgrade to Windows Vista initiative. With the retail channel moving toward its largest sales season of the year, the role that desktop and notebook computers play during this period cannot be understated. Microsoft has already missed the opportunity to sell large volumes of PCs during the holiday season through the promotion of a preloaded Windows Vista operating system. In recognition of this lost opportunity, the OS manufacturer is attempting to do the next best thing by offering its Express Upgrade program, in order to lure some of the potential computer buyers that are putting off their purchase until 2007 when Windows Vista is released.
Intel Loses Exclusive Dell Notebook Partnership as AMD Emerges
November 2, 2006 - After years and years of having an exclusive relationship with Intel for supplying notebook processors, Dell has shifted gears and is now offering AMD chips in its mobile systems. The first AMD-based Dell notebooks are now available on the 15-inch widescreen Inspiron 1501 model line.
Current Analysis Perspective
► Current Analysis applauds Dell for finally incorporating an AMD option into its systems. Incorporating the processors in the Inspiron line is a good first step. Current Analysis recommends that Dell move to incorporate an AMD option in its higher-end XPS line in Q1 2007 to satisfy the increasing demand for AMD from XPS customers
► Three notable companies—Lenovo, Sony and Toshiba—all continue to feature an Intel-only strategy in their U.S. notebook lineups.
• Lenovo may consider offering an AMD option in its 3000-series of small business focused notebooks, and as a model, it should look to HP and what the company is s doing with its NX6300 series.
• Toshiba increasingly finds itself up against very price-competitive offerings from Compaq and Gateway. An option to consider is an AMD option in the entry-level and mid-range spectrum of the Satellite series would help enable Toshiba to win share from HP and Gateway.
• Sony’s ASP is currently over $1,300. This compares to $932 for HP-branded notebooks, $794 for Toshiba, and an overall industry average of $845. Current Analysis believes that Sony’s brand name is strong enough that it can offer an AMD option and still maintain a healthy price premium while simultaneously reducing its overall ASP and increasing its share.
Target to Offer Array of Extended Service Plans – Digital TV Perspective
October 26, 2006 - Mass merchandise retailer Target has announced it will offer extended service agreements on most of its consumer electronics. According to Target, this comes in response to customer demand, particularly in regard to large-screen digital televisions.
Current Analysis Perspective
► Current Analysis takes a positive stance on Target’s move to emphasize service. The move is necessary if the retailer wants to sell pricier electronic goods, especially digital televisions. For some time now, critics have attacked the lack of high-quality service and knowledgeable staff in consumer electronics chain stores. They allege that old-fashioned mom-and-pop attributes have been sacrificed in order to lower prices on goods. Now, we are seeing a return to service as a way to differentiate retailers, improve margins, make ancillary sales, and build branding.
► Other retailers, such as Best Buy, Circuit City and Costco, are trying to pad their revenue through service offerings, as well as provide a “full solution” in the consumer electronics world. Costco is piloting a delivery and installation service for digital TVs, and Best Buy and Circuit City both advertised home theater installation this weekend, as shown below. Eventually, Target will need to expand its services to offer installation as well.
 ► According to Current Analysis retail shelf share data, Target has been moving away from smaller, more economical digital TVs and towards the bigger ones – ones for which consumers are more likely to need service and are also more likely to worry about the risk associated with such a big purchase.
► Target has steadily maintained extremely competitive pricing in the LCD TV category. The retailer's LCD TV pricing in October was 2.45% lower than the industry average price for “like” products. Only BJ’s Wholesale Club offered lower pricing for LCD TVs, with prices 3.56% below industry average.
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October 26, 2006 - Media Center PCs reached a significant milestone by accounting for over half of total PC sales (notebook and desktop) in the U.S. retail channel for Q3 2006. With a unit share of 54%, Media Center retail sales registered a 225% annual growth rate over Q3 2005 (in which Media Center sales accounted for only 20% of all U.S. retail PC sales) and a 103% sequential growth rate over the previous quarter, in which it achieved 38% share.