Will MS Give Shoppers a Free Pass to Windows Vista?

Industry watchers say Microsoft will offer holiday PC buyers a free upgrade to the new operating system to boost sales.

Microsoft says it continues to discuss with PC makers and other partners a program to furnish PC buyers who intend to purchase new machines this holiday season with operating system upgrades to Windows Vista.

Having put years of effort into creating the latest version of Windows, Microsoft is now working on ways to launch it.

Company officials have discussed plans to offer an upgrade program—something the software giant has done in the past to help maintain PC unit sales momentum—but have declined to offer details thus far.

Microsoft plans to make Windows Vista widely available on PCs in January 2007. Many analysts expect Microsoft to work with PC makers to offer a free Windows Vista upgrade to holiday PC buyers.

Such an offer would give the buyers the maximum amount of incentive to purchase new machines during the holidays, rather than hold off until the operating system comes preloaded, analysts said.

/zimages/1/28571.gifMicrosofts latest goal is to release Windows Vista and Office 2007 simultaneously in January. Click here to read more.

Details of such a program, which would mainly affect consumers and small businesses that buy PCs at retail or direct from manufacturers, have not been ironed out as yet, a Microsoft spokesperson said.

"Microsoft is talking with all of its partners about plans for a coupon offer, but those discussions are ongoing and we have nothing more to share at this time," the spokesperson said in an e-mail to eWEEK.

A "free" upgrade, analysts said, would be the most powerful motivation for PC buyers. "If you went into a retail store in Q4 thinking about buying a PC and knowing in advance that they had a coupon [for a Vista upgrade] waiting for you, it would tend to reinforce the buying behavior," said Roger Kay, president of EndPoint Technologies Associates, in Wayland, Mass.

"At first, I thought they might charge you something like $25—a sort of subsidized coupon," Kay said. "But they really needed to step up to the plate and offer a full subsidy."

Some reports have suggested Microsoft will do exactly that. A report by DigiTimes in Taipei, Taiwan, for example, said Microsoft would sponsor a free Windows Vista upgrade for PC buyers, starting in October.

The Microsoft spokesperson declined to comment on the report.

/zimages/1/28571.gifMicrosoft is offering manufacturers design suggestions for PC hardware that will run Vista. Click here to read more.

However, industry watchers seem confident. "There will be some kind of coupon," said Steve Baker, an analyst with The NPD Group, in Port Washington, N.Y. Furthermore, Microsoft "will extend it out farther than it has done in the past, meaning itll make [the offer] last the whole holiday season."

However, given that not every buyer will take the offer, "The cost the program to Microsoft is relatively neutral," Baker said. "What theyre trying to do is prevent the bigger cost meltdown, which is a big slowdown in PC sales."

Microsoft is also working on a new reparations strategy for corporate customers with volume licensing programs that will be negatively affected by the delay in the release of Windows Vista and Office 2007.

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