The boss is retiring, Crazy Stevie’s in charge, and our prices are INSA-A-A-A-NE!!

In the year since its introduction, Microsoft has moved more than 100 million copies of Windows Vista into the market, and just on the numbers, you’d have to call that a success. But the vast majority of those sales have gone to a captive audience, the folks buying new PCs with Vista preinstalled. Meanwhile, among the existing base of Windows XP users, there’s been a broad reluctance to brave the upgrade path (see “No chance we could relabel it Windows Classic and find a quiet exit strategy, I suppose“). The hardware demands, the performance issues, the incompatibilities with peripherals, the sour reviews all contributed to giving XP users a new appreciation for the old OS. But of all the things holding back upgrade sales, price seemed to be the least of them. It was, however, the easiest to fix.

Late Thursday, Microsoft announced it was cutting the retail prices on the upgrade versions of Vista Home Premium and Ultimate editions (the Basic price holds steady). The Premium edition drops from $159 to $129, and Ultimate goes from $299 down to $219. What does not change are the prices Microsoft charges computer makers (another captive audience), so most consumers won’t see any benefit. All of which left analysts a little baffled, both at the markdown itself (“I can’t remember a big price cut like this,” said Chris Swenson of the NPD Group. “It’s very unheard of.”) and its focus on upgraders (“It’s sort of an odd move,” said Gartner’s Michael Silver).

But with the new prices coinciding with Vista’s first major update, Microsoft is seeing an opportunity, however small. Said Brad Brooks, corporate vice president for Windows Consumer Product Marketing, “Over the past year, we conducted promotions in several different markets combining various marketing tactics with lower price points on different stand-alone versions of Windows Vista. While the promotions varied region to region, one constant emerged – an increase in demand among consumers that went beyond tech enthusiasts and build-it-yourself types. The success of these promotions has inspired us to make some broader changes to our pricing structures, to reach a broader range of consumers worldwide.” Well, we’ll see, but in any case, it’s good to hear that there have been no major changes in the traditional relationship between price and demand.

 
 

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  • Jeff & Dennis

    We participated in the Vista beta and at the launch were sent the full version from Microsoft. Unfortunately, enough incompatibilities still existed that it was soon uninstalled so we could get back to some work results. We thought the disc was still sitting here on the desk, but now see that it has moved into the big cardboard box in the corner with the WordStar and 5-1/4 floppies.

  • GaryM

    They could give away the upgrades, and I still wouldn’t bite. I see no compelling reason to run Vista, and I have no desire to spend hours attempting an upgrade without any reasonable expectation of success.

  • RedRat

    I have Vista running on two HP machines, XP on a machine I built, and Linux Ubuntu on a Dell 530n. Anyway that MS would take back the Vista?? Comparing them, Vista is a POS. I have now become a convert to Linux, Hallelujah Praise be to Linus!

  • Hmmm, after reading a couple of the posts I’m not sure I want to share the arena with them…Praise be to Linus?? All righty then.
    We too shared in the beta test; one machine is a Compaq S4000nx (no hardware upgrades); Ran perfectly.
    Our mandate in our lab is Q/A, so problems usually don’t occur unless rules of science are ignored.
    Migrated several accounting firms to Vista; the only issues were: Simply Accounting had to scramble to update their side.
    Last time I checked, sorry for this, but we counted over 300 flavors of Linux and counting, user support? Hmmmm; a poor carpenter always blames the tools.
    I enjoy GMSV, so keep up your humor and refreshing editorial dialogue.

  • Mike Cunningham

    I run XP on my two machines, one PC and one Laptop, and I would upgrade in an instant to Vista except that for a new version of Vista we are expected to pay $453.00 dollars, or $298.00 for an upgrade.

    The resellers in the UK have a stranglehold on software, and the imposition of VAT tax on all imports doesn’t help either!

    The commenter who has the 5 1/4 Floppies has the right idea, always keep the back-ups, because you can never tell when you are visited by the dreaded ‘Blue flame’ screen.

  • Tommy Ward

    At $129 for an upgrade, it is still too expensive. Why does MS get a pass on their exorbitant pricing. A PC operating system is commodity software….if the price of Windows kept up with advances in price performance of PC hardware, it would be faster and have a cost approaching $0.

    Instead, it is slow, bloated, and cost more than any PC operating system ever had before. The price performance Microsoft’s software makes a pretty strong argument for open source.

  • Claude

    Microsoft here’s the deal to make Vista popular, give your new Vista Ultimate to every student in every school everywhere then, watch the Vista sales escalate.
    Now send me a free copy.
    Simple solution to a complex dilemma eh!

  • Perry

    Your comment about the 100 million copies sold being to a “captive audience” missed the point that this is a lot less than half the 250 million PCs sold in the same period. This is a discrepancy that I’ve yet to see properly investigated.

  • engineer_scotty

    A while back, prior to the Vista launch, New Zealand IT professional Peter Gutmann refered to the Windows Vista Content Protection spec as the “worlds longest suicide note”–which was in turn a reference to the 1983 platform document of the British Labour Party.

    http://www.cs.auckland.ac.nz/~pgut001/pubs/vista_cost.html

    It appears that he may have been right.

  • Val

    18 months ago I interviewed at Microsoft for Prod Mgr – Vista Home Networking. When asked, I told them pricing & upgrade path needed revising. They argued – pricing was fine and forget upgrade path – consumers should buy a new machine instead with Vista pre-installed. Six interviews in one day, everybody asking my opinion as to what might be weak in the Vista marketing strategy, then arguing with me about it. Did not get the job, but it seems that they have started taking my advice. Maybe I’m not as big an idiot as they sent me away from Redmond feeling!

 
 
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