Microsoft ramps Xbox production, delays Vista.

SEATTLE -- Microsoft has delayed--again--the launch of its Windows Vista operating system, pushing out the next generation software for PC consumers to January 2007. Business customers will get in the door a couple months earlier, in November.

Analysts are mixed on whether the delay will impact overall PC sales, but the consensus is that buyers will wait the extra few months for the new OS. Thus, fourth quarter shipments might not be as robust as previously forecast.

"A lot of people were pinning their hopes on Vista to drive a PC upgrade cycle this year," the Associated Press quoted Romeo Dator, co-manager of the All-American Equity Fund for U.S. Global Investors.

Most agree that the delay benefits Apple Computer (apple.com), as some consumers won't wait to buy machines from Dell, H-P and others that run the Microsoft OS.

Deutsche Bank (db.com) analyst Chris Whitmore said the release of Vista "will support improving price and mix as customers migrate to richer configurations that support the higher requirements of the new OS." He said that in the wake of the delay PC estimates remain unchanged, but DB does expect many buyers will wait until 2007 to purchase new machines.

In late March, Microsoft increased supplies of its Xbox 360 games console to retailers by two to three times. The company (microsoft.com), which due to component shortages has struggled with production of the popular device, has lowered its target to 4.5 million to 5.5 million units to be shipped by June. The component situation has been resolved, the company said.

Microsoft outsources production of the consoles to Wistron (wistron.com), Flextronics (Flextronics.com) and Celestica (celestica.com).