Microsoft has noted that both Gateway and Compaq surprised analysts by posting strong financial gains in fourth quarter 2001, thanks to better-than-expected PC sales. The primary reason for these gains, according to Microsoft, was Windows XP. But is XP truly the best-selling product that Microsoft claims?

According to software-tracking firm NPDTechworld, XP sold well at retail outlets through the end of 2001, but not at the pace of Windows 98. NPDTechworld analysts said recently that XP's lower sales probably relate to the weak economy and to high sales of XP-based PCs, which aren't included in retail sales figures. (XP-based PCs were widely available a month before XP's launch.)

"Just taking a look at the numbers, it's not selling as well as Windows 98," said senior analyst Steve Koenig. "The volume isn't there." NPDTechworld noted that XP sold 400,000 copies at retail in October 2001 and 250,000 copies in November 2001. These numbers compare with the 580,000 and 350,000 copies that Win98 sold in its first and second months, respectively.

However, retail sales represent less than 10 percent of XP's overall sales. Most copies of XP are sold with new PCs, and PC sales during the 2001 holiday season were higher than expected. According to NPDTechworld's figures and Microsoft announcements, manufacturers sold more than 6.5 million copies of XP with new PCs by the second week of November. Microsoft claims that these numbers make XP the best-selling Windows release ever.

Chairman and Chief Software Architect Bill Gates noted that XP sales were "more than double" that of any previous Windows release. In his Consumer Electronics Show (CES) keynote in January, Gates said XP had sold more than 17 million copies, a rate that exceeded Windows Me or Win98 sales during a similar post-release period by 200 to 300 percent. Regardless of whether XP is the all-time OS best seller, it's clearly a major success for Microsoft.