One of the most accepted bits of conventional wisdom among pundits as 2007 draws to a close is that the marketplace has rejected Windows Vista in favor of Windows XP. The biggest piece of evidence is Dell’s decision in April 2007, based on a vocal response via its Dell IdeaStorm page, to continue offering Windows XP as an option on some consumer systems. It picked up steam with Microsoft’s announcement in September that it was going to allow its large OEM partners to preinstall Windows XP until June 30, 2008, a five-month extension over the original January 30 cutoff date. (A CNET News report from last April indicates that HP and Lenovo have adopted similar strategies, offering XP as an option on business-class machines but for consumer products.)

Both of those moves got a lot of press, but proof about how either decision has actually played out in the marketplace is, unfortunately, pretty thin. Microsoft doesn’t break out its mix of Windows shipments with this level of detail. OEM computer makers are tight-lipped as well. And if any third-party market research firms have done any studies on this subject, they have yet to publish the results.

But I stumbled on an unexpected source of data that has helped me get a much better picture on what the actual numbers might be like. As it turns out, Dell has published a large database of information about its current inventory for anyone to see, and I was able to sift through it to form some surprising conclusions about the current relationship between XP and Vista in the PC marketplace. The short version: Consumers have embraced Vista overwhelmingly, whereas small business is much more reluctant, preferring XP by a better than 2-to-1 margin.

My data source is Dell’s Outlet Center, where I have bought five desktop PCs in 2007. Dell maintains separate outlets for its Home and Home Office and Business and Education divisions. Products in the outlet are all current models, divided into three categories: refurbished products, which have been returned by a customer after purchase (typically within 15-30 days); products previously ordered new but not booted by a customer; and “scratch and dent” products, which have minor cosmetic flaws.

The secret of successful shopping at the Dell Outlet, I’ve learned, is to monitor the inventory carefully. In popular categories, such as high-end XPS desktops, new products arrive and are snagged within hours or even minutes if the deal is especially good.

The selection is especially wide and diverse, covering thousands of notebooks and desktops in all price ranges and configurations. If one assumes that the likelihood of a product being returned is more or less equal across the board, that makes the outlet’s inventory an excellent proxy for Dell’s larger daily cialis business.

And best of all, there’s a fully searchable database front end for the whole thing, which makes it easy to filter the entire inventory by model, processor, memory, video card, or – aha! – installed operating system. In about an hour, I was able to produce some detailed crosstabs and turn them into very informative graphs. Here are the results:

For the time period that I looked at, I examined the full, unfiltered inventory for both outlets. The small business segment included 1509 systems, consisting of low-end Vostro notebooks and desktops and high-end Latitude notebooks and Optiplex desktops. In most of these categories, Dell offers buyers a choice between XP and Vista via its online interface, and 70% of these small business buyers have opted for XP, with only 30% choosing Vista (interestingly, 2% chose the option to have XP Professional installed with a license to upgrade to Vista Business or Ultimate later).

In the consumer category, Dell offers low-end Inspiron desktops and notebooks and higher-end Dimension and XPS desktops and notebooks. Windows XP is available as an online option on a relatively small selection of models. As a result, only 7% of the inventory in the Home and Home Office Outlet is available with Windows XP preinstalled. A full 93% of the systems included Windows Vista.

One apparent reason for the higher proportion of Vista machines in the consumer segment is the lack of online configuration options. To make the comparison with the business category more accurate, I narrowed the field to only those machines that explicitly offer XP and Vista as options in the online configurator. In the notebook category, this includes the Inspiron 1520, the XPS M1710, and the XPS M1730. In desktops, this includes the Inspiron 530 and 530s and XPS 210.

[Update 1-Jan-2008: Some commenters seem to have misunderstood this detail, so let me be more explicit about what the next section includes. On Dell’s Home website, you start by choosing desktops or notebooks. On the landing page for either one, there is a big graphic on the right side of the page that reads “Still looking for Windows XP?” Click that link and you go to this page (if you started out looking for desktops) or this page (for notebooks). Both pages display a huge graphic banner at the top with this label: “THE CHOICE IS YOURS. Windows Vista or Windows XP. You decide.” The following section restricts the results from the Outlet inventory to only machines originally offered via these two links.]

When I restricted the sample to only consumer machines where potential buyers were offered the explicit option to choose between XP and Vista, the proportion opting for XP increased by 5%. Out of a total of 388 desktop and notebook PCs, 49, or 12%, were configured with either XP Home or Pro, compared with 88% that selected Vista. That means that buyers, given the clear choice, are opting for Vista over XP by a ratio of more than 7 to 1.

Two other facts stood out when I looked more closely at the data.

• One is that a staggering 27% of small business customers are opting for either Windows XP Home or Vista Home Basic, even though both are terrible OS choices for any networked business. The implication is that the $100+ difference between the Home and Pro/Business versions is significant for price-conscious business buyers. By contrast, only 13% of buyers in the consumer category are choosing the XP Home/Vista Home Basic option.
• Finally, Vista Home Premium has been a huge hit for Microsoft. More than 72% of all consumer PCs, desktop and notebook, sold in the Dell Outlet system have Vista Home Premium installed. For all the hand-wringing over Microsoft’s decision to squeeze a few extra dollars out of the consumer channel by emphasizing this particular SKU. Looks like that strategy was successful. As for Vista Ultimate, it hasn’t been a runaway winner. In the consumer sample I looked at, it represented just under 5% of sales, and in the small business side it totaled just over 1% of sales.

The bottom line? If these samples represent Dell’s overall business, which in turn serves as a proxy for the PC market as a whole, Microsoft is on target in its mission to convert the consumer market to Vista through new PC sales. Business buyers, however, remain skeptical. I’ll look at these numbers again in early 2008, after SP1 has been officially released and integrated into Dell’s product lines, to see whether it makes a substantial difference in the marketplace.