Enterprises also can look forward to lower PC prices heading into the new year, but for entirely different reasons, said Samir Bhavnani, the Current Analysis research director who authored the report.

After all, Microsoft Corp said it would release the business version of the OS on November 30. It also will release Office 2007 and Exchange 2007 at that time, said the company.

The announcement was, no doubt, intended to ease enterprise concerns that the troubled OS would be delayed yet again. Still, it was somewhat troubling when Microsoft chief executive Steve Ballmer said yesterday, at an unrelated joint press conference with Novell Inc, that the business version of Vista would be available before the end of the year – rather than specifying November 30

Another major delay of the OS, the first Windows update since 2001, threatens to displace the typical three-year update cycle for enterprise hardware. The next update year is 2008, which coincides with the time most large enterprises in the US will be looking to install Vista in volume, Bhavnani said. That is, based on a November launch.

While the bulk of large and medium-sized US companies will be testing Vista from the day it is launched, it will take several months for them to test the software on a few machines. IT departments must first insure the OS can be stably deployed companywide, and also jibe with existing infrastructure.

A lot of them will buy PCs when they’re ready to deploy in volume, Bhavnani said. A lot of the systems by 2008 will be due to be upgraded in any case.

When it comes to consumers, Microsoft and PC makers have attempted to persuade consumers to buy PCs during the holiday season, ahead of the promised January launch of the consumer version of Vista. They have lured them with vouchers to upgrade to Vista for free or with discounted copies of the OS.

But consumers don’t seem to be biting, and Bhavnani forecasts blowout PC sales as a result. This holiday season, 70% of notebooks sold in the country will be priced below $1,000 versus 58% last year, he estimates. And half of desktop PCs will have sub-$500 price tag, versus 35% a year ago.

By just how much lower prices on business machines will fall during the next couple of months remains to be seen. Bhavnani expects it will be less dramatic than the consumer pricing drop-off, but not far less dramatic.

The expected downward pricing trend in business PCs will be driven in part by lower component costs, notably LCD panels, which are becoming cheaper as the industry moves toward standardizing on wide-screen systems, Bhavnani said. Also, the cost per gigabyte in hard drives continues to fall as new technologies emerge to increase capacity, he noted.

Also, business PC OEMs are becoming more aggressive in order to win market share, Bhavnani said. Hewlett-Packard Co has been particularly brassy on pricing lately; so much so that it recently stole the top spot from chief PC rival Dell Inc. Bhavnani reckons Dell is likely to respond with its own aggressive pricing.

Of course, by 2008, PC pricing could be a different story, he noted.

Enterprises also should brace for the large hidden costs in the deployment of a new OS like Vista, which not only demands more resources from the IT department, but also training time with workers. It’s not going to be like learning a new language, but it is going to be the equivalent of learning a whole new software.

But the bottom line for PC makers this holiday season won’t be so jolly. For the full year, the notebook market in the US will likely grow by 40%, according to Current Analytics. Had there not been a delay in Vista, the research would be predicted 54%.

Similarly, the desktop market is expected to rise 7% this year, but would have grown 11% if the OS launch had not yet again been pushed back.

Overall, Bhavnani expects the total PC market to grow 24% in 2006, versus an original prediction of 33% in a perfect Microsoft world.