Microsoft forecasts bountiful Vista impact

As Microsoft revs up the Windows Vista marketing engine, it's touting the economic boon the software is expected to bring to the rest of the technology industry.

Microsoft commissioned an economic-impact study, released Sunday night, that suggests Vista will help generate $70 billion in revenue and 157,000 new information-technology jobs in 2007.

The 14-page study by IDC draws on the research firm's published data and forecasts covering all segments of the IT industry, including hardware producers, third-party software vendors and service providers.

IDC estimated the portion of the industry tied to Windows Vista to determine what amount of incremental growth it might produce.

"There is economic activity that's going to happen anyway, but we think Vista will have a bump effect in 2007," said John Gantz, IDC's chief research officer.

Vista, the first new version of Microsoft's flagship operating system in five years, was launched last month for business customers and will be available to consumers late next month.

The 157,000-job gain IDC attributes to Vista is in addition to normal employment growth in the industry. Gantz acknowledged that those workers may not work on Vista exclusively.

"It's the share of employment that's driven by Windows or that touches Windows," he said.

IDC forecasts that for every dollar of revenue Microsoft brings in directly from Vista in 2007, the rest of the industry will see $18 in revenue.

IDC expects Microsoft to ship 35 million copies of Vista in the United States, generating nearly $4 billion in revenue in 2007. (That works out to about $114 in revenue per copy of Vista sold.)

Using IDC's multiplier, Vista could be worth $70 billion in revenue to the IT industry in the U.S. next year.

Not all of that is net gain for the estimated 200,000 IT companies. Some revenue that is tied to Windows XP and earlier versions of the operating system will be replaced by Vista revenue, Gantz said.

David Gerhart, CEO of Seattle information systems and management consultancy Tyrnstone Systems, said he is not expecting Vista alone to expand his company's business in 2007 and isn't planning to increase his 10-person staff immediately.

"Vista, to us, is just another layer on the onion," he said, adding that his small- and medium-business customers are more interested in getting e-mail on their smart phones than moving to the new operating system right away.

Suresh Kotha, a business professor at University of Washington, said Microsoft benefits from funding and publicizing the IDC research because it highlights the company's position at the top of the industry and shows that it cares about more than just its own balance sheet.

"They see themselves as an important leader and contributor in the IT space, and not just focusing on the bottom line but on their overall impact on the economy and society," he said.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com