New York – The introduction of Microsoft's Vista in the second half of the year will drive PC demand as users upgrade to higher performing PCs to maximize the benefits of the improved OS, according to Deutsche Bank analysts.

Users may migrate to systems with dual-core processors, 1GB+ RAM and enhanced GPUs, particularly mobile users and those who favor video editing or high-end gaming. DB believes Vista will spur a positive mix-shift across the PC industry, reversing the recent shift towards low-end desktops and notebooks. 
DB expects Vista-driven PC growth to begin towards the end of the year and benefit PC revenue growth trends of both Dell and HP. 

A release date has not been announced, but the new OS is expected to debut sometime in Q3. Previous OS introductions have driven PC upgrade cycles in the past; Microsoft 98 was followed by four quarters of accelerating PC unit growth starting at 12% and rising to 30%, and Windows XP drove a healthy PC cycle, with growth accelerating from -12% in Q3 2001 to 18%  in Q3 2003.  
 
From a form-factor perspective, the mix to mobile computing continues. DB estimates notebook growth at 37% in Q4 2005, with desktops growing 7%.  2006 projections call for 21% growth in notebooks and 7% growth in desktops. Total unit demand is expected to accelerate to 12% in Q3 and 14% in Q4.

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