Intel sees Windows 7 launch boosting hardware buys

Packages of the new Windows operating system, Windows 7 sit on a desk before being installed in Golden, Colorado October 22, 2009.

LISBON (Reuters) - Intel Corp (INTC.O), the world's biggest chip-maker, expects the launch of Microsoft's (MSFT.O) new Windows 7 operating system to prompt corporate buyers to replace hardware in 2010, a company executive said on Tuesday.

"With Windows 7 coming along, you're going to see that as a factor in corporate computer purchasing. That stuff will start moving the PC market," John Davies, who is in charge of sales and marketing, told Reuters by telephone while in Portugal to promote Intel's computers for schools.

Microsoft, whose software powers more than 90 percent of personal computers worldwide, launched Windows 7 on October 22, aiming to win back customers disappointed by its previous Vista platform.

"We see it (Windows 7) now mainly in the consumer segment. The industry is still in pilots on it. In 2010 it will probably deploy Windows 7 and they will need new hardware," Davies added, declining to make any predictions for Intel sales.

U.S. investment bank Morgan Stanley (MS.N) last week cast a shadow over growing optimism among investors and executives that a revival in corporate and consumer spending would prop up chip sales, saying revenue growth could peak in early 2010.

Analysts also warn that U.S. unemployment, already above 10 percent, would depress consumer sentiment. Some also say the bulk of computers at companies may actually be newer than four to five years old, which is a typical replacement age.

However, Davies said he was optimistic about a corporate inventory refresh cycle coming soon.

"You cannot forecast these cycles perfectly, but we had a big one in 1999 with the Y2K and the dotcom burst, then there was a refresh about four years later and another one has to be coming soon," he said.

In the consumer segment, Davies said unemployment was not necessarily a hampering factor for computer sales.

"It's a harsh reality, but what we've seen is that the need for consumer computers is increasing. There is a lot of retraining and job-seeking going on, people have to be able to use 21st-century skills to compete for jobs," he said.

He also said sales in emerging economies, particularly in China and in Latin America, were growing.

At the same time, government purchases of computers for education around the world have jumped over 20 percent.

Portugal last year launched a program to supply school children with 500,000 ultra-cheap, locally-assembled laptops based on Intel's Classmate PC. Venezuela has already agreed to buy 1 million of these from Portugal.

Davies attended an Intel-hosted conference in Porto with representatives from 40 countries who discussed the use of computers for education and Portugal's example.

"We're only beginning to ramp up this segment, it's going to take a long time. But there's a billion schoolchildren out there we could take the technology to, it's a tremendous potential," Davies said.

(Editing by Simon Jessop)