Microsoft Slashes Some Windows Vista Prices

By Peter Galli  |  Posted 2008-02-28

Microsoft Slashes Some Windows Vista Prices

While the bad news around Windows Vista continues for Microsoft, the good news for U.S. PC users who want the operating system is that the price of several retail versions and upgrades has been cut by as much as 20 percent.

The price cuts, which come into effect when the first service pack for Vista ships next month, are even more significant in some of the other 70-odd developed and developing countries around the globe affected by the move, such as the United Kingdom and South Africa.

The move appears designed to take advantage of the fact the Microsoft executives and analysts expect Vista SP1 to fix many of the issues that have been plaguing Vista and derailing purchases of retail versions of the operating system.

In fact, Microsoft CEO Steve Ballmer told eWEEK in a Feb. 27 interview that "we have made a lot of progress with Windows Vista. ... I think Windows Vista SP1 will be a kind of milepost that people will use to see where we are with it now."

In the United States and other developed countries, the price cuts center around the Windows Vista Home Premium and Vista Ultimate editions, the two new versions of the product introduced last year.

The U.S. retail price for Windows Home Basic remains unchanged at $199 and $99 for the upgrade, while the retail price for Home Premium is also unchanged at $239. But Microsoft will slash the upgrade price for Home Premium 19 percent to $129.

The retail and upgrade prices for Vista Business also remain unchanged in the United States at $299 and $199, respectively. But the cost of Vista Ultimate has been slashed some 20 percent, or $80, to $319, while the upgrade price drops $40 to $219.

In the United Kingdom, the price cuts are even more significant. The price for the full version of Vista Ultimate has been slashed almost 44 percent, or 101.68 British pounds ($202), to 131.92 pounds ($262).

Steve Ballmer defends Vista. Read more here. 

But markets such as the United States will see lower prices even before SP1 ships as a result of partner promotions, Brad Brooks, corporate vice president for Windows Consumer Product Marketing, said in a statement released Feb. 28.  

The price cuts come just a day after Microsoft CEO Steve Ballmer told eWEEK in an interview that the issues around Vista are not in regard to adoption, which has been strong and crossed the 100 million mark.

"It's not really a popularity question in the broad market," he said, referring to Vista sales figures and Microsoft's last quarterly financial results.

Microsoft is sticking to that line with its explanation about the price cuts, although Brooks did point to the fact that the "solid sales" have come "primarily through the sale of new PCs."

With regard to retail sales of boxed products, Brooks said that while this segment does not account for a large percentage of the business, it "represents an area of opportunity for additional growth the company sees based on the new editions introduced in 2007."

Early Adopters


Most people buying retail versions of Vista until now primarily have been early adopters or those building their own machines, Brooks said.

Having experimented with lowering the prices on different versions of Vista in different markets, Microsoft believes there is an "opportunity to expand Windows' reach to other segments of the consumer market over the long term," he said.

Emerging markets will see the "full and upgrade Home Basic and Home Premium versions combined into full versions of these editions," along with price changes that Brooks said will "meet the demand we see among first-time Windows customers who want more functionality than is available in current Windows XP editions."

For example, the retail price of Vista Home Premium drops 41 percent to 1,700 South African rand ($224) from 2,912 rand ($384) previously.

But, despite its upbeat stance on Vista, Microsoft was forced last September to give its OEM and retail partners an extra five months in which to continue offering Windows XP on new machines-until June 30, 2008-after receiving complaints that customers were not ready to switch to Vista.

Some analysts have said that the upcoming release of Windows XP SP3 will also slow adoption of the new operating system.

In fact, to Rob Enderle, principal analyst at the Enderle Group, consumers view Vista as "a flawed, incomplete product, containing things they didn't want and nothing they did want, at an excessive price. Fixing that will be really tough." 

But Microsoft's Brooks said the decision to alter some prices on stand-alone retail editions is "only impacting a small segment of the overall Windows market. But we think it's important in order to continue growing our consumer business," he said.



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