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Tickers in this Article: MSFT, RHAT, AAPL, INTC, DELL, GTW, HP, BBY, CC
Microsoft (MSFT) announced last night that they are delaying the consumer release date of their new operating system, Windows Vista, to January 2007 from the original release date of November 2006. However, the business version of Vista is still slated for a November release.

The delay of the new operating system, the first since XP was released in late 2001, came as a result of the need for enhancements to the security of the operating system along with other key functions.

This announcement sent shares in Microsoft down as much as 3.4% in after-hours trading as the market reacted to the delay. So, what are the ramifications of this delay for Microsoft and other related parties?

For Microsoft, this delay, while seemingly bad, should actually have minimal impact on the company, which is a testament to their strong presence in the market. In many cases, when a company fails to deliver a product or delays its release, competition moves in and steals customers.

In the case of operating systems, Microsoft has a stranglehold on the PC marketplace with competitors such as Red Hat (RHAT), the maker of a Linux based operating system, not posing a credible threat.

A much more credible threat comes from Apple Computers (AAPL), which could leverage this delay to sway consumers to their line of computers, removing Vista buyers from the marketplace. While this conversion threat has increased in the past few years, largely due to the success of the iPod along with the adoption of Intel (INTC) chips, it has not materialized into a meaningful increase in desktop sales for Apple.

The impact of the delay should only be seen in the short-term, as additional revenue from the consumer release of Vista will be pushed further into the future but the overall potential of this revenue is seen as unaffected, unless you feel that the delay will set off a wave of conversions to Apple.

On the bright side for Microsoft investors, the business version of Vista, which is highly profitable for the company, is still expected to be released in November. While the delay causes Microsoft to miss out on the holiday spending season, it should have minor impact on the company, thanks to their position in the market. But, the delay does diminish the prospect of Microsoft shares moving above $30, something it hasn't done in over three years.

The parties that will be most affected by this delay are PC makers such as Dell (DELL), Gateway (GTW) and Hewlett-Packard (HP) who were looking forward to a November release of Vista to help drive holiday PC spending. This delay will likely put a damper on their holiday season as consumers delay PC purchases until Vista is released.

The PC makers could even lose sales, as consumers who have spent their holiday budgets elsewhere are likely too cash-strapped to justify the purchase of a new computer when the new operating system is released. While the PC makers will likely offer free Vista upgrades on computers bought during the holidays, it will likely not be enough to recapture the lost sales from the delay. Retailers such as Best Buy (BBY) and Circuit City (CC) will also likely see a hit, as Vista was seen as one of the hot products for the 2006 holiday season.

This delay, while not good news, will have minimal impact on the world's largest technology company but its effects should be felt by its partners who were relying on its release to help drive holiday sales.

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