Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Adam Holt with Morgan Stanley.
Adam Holt – Morgan Stanley
Good morning and congratulations on the quarter. My question is about average selling prices for Windows. You actually saw premium mix increase sequentially. I was wondering where do you think premium mix can go as you get deeper into the Win7 cycle and when would you expect the average selling prices to actually be additive to the Windows revenue story?
Christopher P. Liddell
In terms of the premium mix, clearly that’s going to change with the SKU structure that we have in Windows 7, and I think we’ll start to see a better -- in terms of [inaudible], a better number going forward simply because we won’t have home basic in the developed markets. So we’re going to see a much better home premium mix. In terms of how that feeds through to the financials, which I think is the main point, we will start to see it improve better but in particular we will start to see it better when we get a better business PC mix and to date, we have been clearly seeing a headwind in that and hopefully next year as we start to see a business PC refresh cycle, we will start to see a better mix there. That average selling price, which in the last year has been probably a negative, I would expect it to turn neutral or even slightly positive as we go through the year.
Operator
The next question comes from the line of John DiFuca with J.P. Morgan.
John DiFuca - J.P. Morgan
It looks like you saw some benefit from channel inventory build this quarter, after three quarters of I think it was a net negative contribution in the last three. You mention you expect inventory to build in the channel I think going forward here. I am just curious, how much more is there before we start to get to what you might consider to be I guess ?normal inventory? if there is such a thing? Do we have another quarter or another couple of quarters? Is this something that could be a net positive for the next few quarters?
Christopher P. Liddell
I think it will be a net positive throughout the year simply because channel inventory build, and even if it just stays at that level it will be positive relative to our low levels throughout last year. So we don’t need to see any additional build from what we saw for it to be a year-over-year net benefit. I think it is going to be a benefit right through the year. Whether it continues to get even better again we will see and that is going to depend clearly on the demand that our OEMs see through the Christmas period.
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