Microsoft names new operating system 'Vista'

SEATTLE - Microsoft has announced it will call the next version of its operating system "Windows Vista" as it prepares to release a wave of new products after posting its slowest-ever year of growth.

Windows Vista, formerly known by its code-name Longhorn, is scheduled to launch in the second half of 2006, five years after Windows XP, the longest time lag between releases of its flagship operating system that runs on nine out of 10 personal computers worldwide.

Microsoft has promised numerous enhancements in Windows Vista, including better security, graphics and computing over the Web.

"It's in the consumer area that they have the best hope of rapid adoption," said Rob Helm, analyst at independent researcher Directions on Microsoft.

Brad Goldberg, general manager, Windows product development at Microsoft, said the new name was aimed at "communicating the idea of clarity."

More details on Vista will be released at a developer's conference in September, Goldberg said, and a beta, or test version, will be released by Aug. 3.

New products, including Windows Vista, the next version of Office, new database software and the Xbox 360 video game console are expected to help Microsoft return to double-digit growth after the company said on Thursday that yearly revenue grew 8 per cent to US$39.79 billion, the slowest yearly growth since Microsoft went public in 1986.

Shares in the company fell 2.6 per cent to US$25.75 on Nasdaq on Friday after it said earnings for the current fiscal quarter would be just below Wall Street's expectations.

Analysts brushed off the slower revenue growth and first- quarter outlook, saying long-term contract renewals would help the company return to double-digit growth.

Unearned revenue, which reflects long-term contracts that have been signed but not recognized as income, were US$350 million higher than Microsoft had projected at US$9.17 billion, indicating strong business demand for future products.

"Office 12 seems to be driving unearned," said Sanford C. Bernstein & Co. analyst Charles Di Bona, referring to the next major release of Microsoft's family of business programs.

Microsoft's unearned revenue balance for the business division that included Office grew the fastest in the latest quarter, rising US$542 million to US$2.8 billion.

Di Bona said investors may have also been concerned over an increase in marketing spending in the latest quarter that cut into Microsoft's operating profit, but said the stock remained undervalued at current prices.

At current prices, Microsoft is valued at 16 times projected earnings, compared with the average 24 times earnings valuation seen for the broader software sector.

- REUTERS