The success of Vista is of obvious importance to any developer targeting any Vista-only or Vista-enhanced technology, so the latest news that Vista sales are strong and higher than expected is of obvious interest.

It appears that Vista has been a stunning success for Microsoft, surprizing even the optimists inside the Redmond empire. This stands is a stark contrast with reports of general consumer apathy about this release, and many dire predictions about Vista's adoption (predictions that are dubious, given that Vista is pretty much assured a reasonable level of success given its automatic sale to virtually anyone buying a new PC. Corporations naturally delay adoption of new operating systems, as they have with every prior edition, so only a delusional expected it to storm across business desktops).

You can see their Q3 return on the SEC site. Under the Client division, you can clearly see that revenue has rocketed up, from $3.151 billion in Q3 2006, to $5.272 billion in Q3 2007.

There are a couple of massive, almost-Enronesque caveats to these numbers that deserve some serious scrutiny before you start your Vista-only product launch.

Firstly, they deferred $1.2 billion of XP sales from Q1 and Q2 2007 -- sales that qualified for the upgrade coupon -- rolling it into this result.

Client revenue increased for the three months ended March 31, 2007, primarily reflecting licensing of Windows Vista, including recognition of approximately $1.2 billion of revenue previously deferred in fiscal year 2007 pending the January 2007 release to consumers.

Counting out that rather dubious bit of accounting trickery drops the gross revenue to a growth of just $0.8 billion over the year earlier.

Secondly, some of the gain is attributed to the price premium applied to Vista Premium (effectively imposing a price increase over prior XP licenses, as most PC makers automatically deliver the Premium edition.)

During the quarter, the OEM premium mix increased 18 percentage points over the prior year to 71% driven by the demand for Windows Vista Home Premium.

Not to mention that the computer market in general has grown over a year earlier.

Based on our preliminary estimates, total worldwide PC shipments from all sources grew 10% to 12% from the third quarter of the previous year and approximately 8% to 10% from the first nine months of the previous year driven by strong consumer demand in both emerging and mature markets.

Not quite as successful as some reports are claiming: After a year of market growth, subtracting the hard-to-rationalize rolling-forward trickery, and considering that the price for the operating system was effectively raised via the Premium edition, and suddenly the situation doesn't look quite as rosey.

Rough back-of-a-napkin calculations have OS unit sales remaining relatively flat after incorporating in market growth. If this exceeded inside-of-Microsoft estimates, then clearly they're either lying, or they were expecting an implosion. Applauding about Vista's lofty percentage of OS sales should be quelled by the reality that virtually every new client PC OS sold now is Vista -- if a corporation does want XP, their recourse now is to buy a Vista license that grants them the right to install XP, though it'll carefully get added as another vote of confidence by the Microsoft beancounters.

There are several other surprizes in their Q3 report. For instance that the entertainment division (Xbox, Zune) saw revenue drop over a year earlier, and that the Online Services Business -- this is where Microsoft put a lot of attention recently, with the huge push of the Live platform -- saw a marginal revenue increase, with a significant loss increase.

The only bright spot of the whole quarterly report, from my perspective, is the business systems division: Office 2007 has seen good adoption and has very healthily contributed to earnings.

Reports that this quarterly report validates Vista's success are unfounded. Further, it puts a huge question mark over Microsoft's web and hardware initiatives (the complete failure of the diversification to actually add to the bottom line, instead of just drowning in losses -- excused early on as toothing pains, but there doesn't seem to be a point when they'll actually make money -- should raise serious concern. Microsoft is still held aloft by Windows and Office).