Microsoft chops Vista retail prices
In what may be an unprecedented decision, Microsoft said Thursday that it plans to lower the retail prices for several flavors of Windows Vista.
For those in the U.S., Microsoft is cutting prices only on the higher-end versions of Vista, and only for the upgrade version used to move from XP or another copy of Vista. The suggested price for Vista Ultimate drops to $219 from $299, while Home Premium falls to $129, from $159.
Other developed markets will also see price cuts, while in emerging markets, Microsoft is eliminating the distinction between full and upgrade versions of Home Basic and Home Premium as it attempts to convince more users there to use genuine software.
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Analysts were surprised by Microsoft's move.
"I can't remember a big price cut like this," said analyst Chris Swenson, who tracks retail software sales for NPD Group. "It's very unheard of."
Microsoft finalized Windows Vista in late 2006, but held back its retail launch of the product until January 2007. It has sold more than 100 million copies, largely on the back of a strong overall PC market, but retail sales have significantly trailed those of XP in its early days and Vista has received a number of critical reviews.
In an interview, newly minted Windows consumer marketing vice president Brad Brooks said that Microsoft had been testing lower prices over the past few months and was surprised to find that the amount of revenue lost was more than made up for by an increase in the number of PC buyers willing to shell out for an upgrade.
Brooks said that Microsoft had done a lot of research prior to Vista's launch, but noted that both Home Premium and Ultimate were new products for the company. "We probably got the pricing mix wrong," he said. "You don't always get it right, but you make the adjustment."
Gartner analyst Michael Silver said the move--which applies only to standalone versions sold at retail stores--is puzzling. "It's sort of an odd move," said Silver, who noted that the market for such upgrades is fairly limited. Those who bought XP in the fourth quarter of 2006 got a coupon for a free Vista upgrade, while most of those who have bought systems since then have gotten Vista. Machines purchased prior to 2006 probably aren't all that attractive as candidates for a Vista upgrade.
"I guess at the end of the day anything that makes Vista a little bit more accessible is probably a good thing," he said, but added that a cut in the price computer makers pay would have a far bigger impact, given new PC licenses account for 80 percent of Vista sales. "The whole notion of upgrading PCs has sort of fallen by the wayside."
And, a retail price cut could actually hurt Microsoft when it comes to the market for new PCs and among businesses trying to decide when, or whether, to move to Vista.
"To the extent this ends up damaging Vista's reputation instead of broadening its appeal, I think that's a danger," he said.
Brad Brooks
(Credit: Microsoft)Brooks discounted that, saying that if that were the case, Microsoft would have seen sales drop rather than rise when it tested the lower price promotions in France and the United Kingdom in December and January. As for the limited market for upgraders, Brooks said the new pricing should also make it more attractive for existing Vista PC owners that want to move to a higher-end version.
Swenson noted that while a Windows retail price cut may be unprecedented, Microsoft has seen some gains by cutting the price of other products, most notably when it added the Student and Teacher version of Office. Not only did unit sales go up, he said, but total revenue increased as well as Microsoft was able to tap a new wave of demand.
"Even though they have this huge market share they still have to price their products to move," Swenson said. Swenson had called for such a Vista price cut last year, with standalone Vista sales badly trailing those seen for XP in its first six months.
"While the main culprit behind the poor performance of the 'shrinkwrapped box' Vista (sales) is most likely the more stringent hardware requirements of the new version of the operating system, the lower sales volumes could also be a signal that Microsoft is not pricing its product appropriately," Swenson wrote in a report looking at Vista's first six months on the market. "If PC prices have plummeted almost 25 percent since the launch of Windows XP, then it makes sense that Microsoft would take such price drops into consideration when pricing (boxed copies of Vista). Thus, Microsoft should strongly consider instituting an across the board price cut for all editions of the operating system, the low-end editions in particular."
Brooks also pointed to the increase in sales Microsoft saw when it cut the price to computer makers for Windows XP Media Center Edition. Initially pitched as a high-end version above Windows XP Pro, Microsoft eventually lowered the price to not much higher than Windows XP Home and saw it become the dominant consumer version.
"It went from a run rate of about 1 million (copies) a year to a run rate of several tens of millions a year," Brooks said. "So yeah, we got it right."
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina.
I'm still waiting for SP2 anyway.
Now I see this idea of a decrease in value as a problem with sales, not an increase in demand. I agree with Mr. Silver; Dropping the price to PC makers would have been a home run, if I were an IT director, I would look at this a bad sign of slow migration by consumers and would have no clear desire to upgrade. Even if there was a real need.
Not only is OS X Leopard better, but it's still cheaper than Vista. Too bad you can't install it on PCs. :P
Apple charges $129.00 for Mac OS X Leopard, which has more
features than Home Premium.
I'd love to know what sales breakdowns of the individual
versions of Vista are versus Mac OS X, both bundled and
standalone. I'll bet Apple has a LOT more of the "home
premium" market than their 4% of the OS share might suggest.
90% of Apple machines are sold to homes. And they are clearly a premium offering (mostly due to the hardware premium).
So I think it is obvious that a company must have a higher market share in its exclusive niche than in the full market. It's math 101.
No surprises here; Microslop continues to spew out not-ready-for-primetime garbage; half-baked and unpalatable.
Very unimpressed with this Shasta cola without any fizz. Microsoft still sucks; they will always be numbah one in that department.
And the joke plays on. The gang that can't seem to grasp the concept of releasing clean, logical OS on the FIRST TRY has struck yet again.
I WANT MY MONEY BACK. PERIOD.
Why would they refund it to you? What's the specific problem you have that would justify a refund? If it works just fine for me on my two year old hardware, I think it's user error more than OS error what you have.
By the way, your Vista license grants you the rigt to downgrade to XP. So you already got what you are asking for, courtesy of the company you are criticizing.
nb - XP SP3 release candidate is publically available from Microsoft.
It has finally gotten Home Premium to the price range that I thought it should be at. Now, they just have to cut the price for Office 2007, and I will be an exceedingly happy camper.
To those who are saying that "Vista is a turd!".... Have you even used it? I have been using it for a year, and the only thing that I have a problem with is DEP, which I turned on for every program and that hits me sometimes because some programs trigger DEP.
Are you for freaking real? Was price the only factor stopping you from using that mediocre OS? I purchased a Vista Capable laptop for my mother and got burned over the POS OS. Do you work for MS? Possibly as a contractor?
as in OpenOffice.org, or Google Docs.
And you must be kidding if you think MS needs to be saved. They have a market capitalization of $260 billion, a profit margin of 30%, an operating margin of 40%, and earnings of $1.76 per share. As measured by market capitalization, they're one of the largest public companies out there. The largest being Exxon Mobil, their profit margin is 10%.
I cant see what any DRM in Vista has to do with it being ready for release.
The only DRM that I have come across in Vista is the activation DRM for Windows Vista itself.... which I only had to do ONCE.
Does vista have DRM? Yes. It has one. The only DRM it does contain is related to the code from your certificate of authenticity.
Because Vista already sold well over 100 million copies.
Get with the times cnet! virtualization is becoming more and more mainstream.
Aero is cool, but all other new features are invisible to the average user. Search indexing helps me none. All my documents are in My Documents folder. It really doesn?t take all that to find them. My music also happens to be in a folder called My Music. I know, I?m a rebel.
The other problem is all the features that were supposed to be in Vista, and never made it. I don?t know what WinFS was. For some reason Microsoft thought I wanted to tag my all my data so I can find it. If I?m tagging it I probably already know where it is.
Or they wanted programmers to create some sort of schema for every data type so it?ll fit nicely into a relational data base that they can access in an Object Oriented way just so I can search for my music that I already know is in my Music Folder.
Maybe someone else can explain what this WinFS thing was.
I think Microsoft got off track with so many things that Vista ended up being a pretty GUI and not much else the average user would notice.
I think they could cut the price all day and it wouldn't matter. Vista doesn't really do anything.
One said, (more or less) "People buy a pc, not an operating
system."
The days when you HAVE to buy Windows to do business, etc.
are over. The days when you don't know or care what operating
system you run are just around the corner.
Computers are becoming a commodity like a telephone. People
just want something that "just works". This, IMO, explains in
part why Apple is seeing unprecedented marketshare growth
while Microsoft (& Dell, etc) is cutting prices.
If it works well, we'll buy it, if it doesn't we won't.
Ballmer could throw every chair in the world and still no one would want it.
I think one of the problems is that Microsoft releases too many versions of it's operating system and thereby confusing potential users. I think the path to upgrade needs to be more cut and dry.
Deciphering the features among the versions is not rocket science.
Bashing Microsoft has always been considered a sport by many.
If you build your own PC, you could get an OEM Vista Ultimate for under $200.
So why would anyone with the right mind pay over $300 for a copy of boxed Vista? Even the boxed upgrade costs more than the full OEM version.
Then again, why would anyone pay for an OS for the pretty interface and doesn't work on older hardware?
I really feel that microsoft thinks of me as a stupide idiot to offer me some crap like Vista. I bought it, I use it and I am totaly insulted by it. I wish I could sue them for defamation of character.
It would have been good for them to fine tune XP a bit. I mean JUST a bit. It works and makes the nation run well. I feel Vista has put the breaks on my creativity. I connot even use a textured background like I can in XP. Vistas background choices are just to noisey and gives me a headache.
Please Microsoft if you read these things, don't drop XP Pro for another five years and just improve it abit. Besides I also build many ITX embedded computers for biomedical machines that need XP as an operating system. How in the world am I expected to fit Vista on these anyway??? Or even get our software to run on them. It's probably going to put us out of buisness.
If only you would listen....
For another point, that is the exact reason why they made the 'Home Basic' version of the software: for companies like yours who do not need full-fledged Vista.
I have a little bit of a problem with the 'size creep' of Vista myself...... but when I looked at the reason why Vista is so big, most of it is drivers, drivers, drivers that Microsoft shouldn't include with the operating system but direct people to download from the hardware manufacturer..... about 2/3 of the size of Vista is solely drivers. In XP, it was 3/4's.
Major operating system upgrades via the boxed-retail route is an unacceptable hassle.
Also, "You will not believe, but the fate of OS / 2, many companies are interested. Группа компаний Альфа, например. Alfa Group of companies, for example. Одни затраты на смену банкоматов огромные, да и, по сообщениям с мест, - глючат линуксовые банкоматы. Some of the cost of replacing the ATM enormous..."
http://translate.google.com/translate?prev=/language_tools&u=http://forum.ecomstation.ru/viewtopic.php?t=1037&sid=6edc4c15496fcd0ac642c458073fa505
"OS2LDR Replacement ver 0.1 (test version")
http://hobbes.nmsu.edu/cgi-bin/h-search?key=os2ldr&pushbutton=Search
Read the subject line.
Also, Told ya all about those "smart" Russian computer programmers.
Live Long And Prosper (With OS/2) ;-) !
its retail launch of the product until January 2007. It has sold
more than 100 million copies, largely on the back of a strong
overall PC market, but retail sales have significantly trailed those
of XP in its early days and Vista has received a number of critical
reviews."
It's the "finalized", and "held back" remarks I can't get enough
of.
ROLFLMAO!!!!
iPhone SDK, anyone?
OSX Leopard?
Spore?
It sounds like you're reading something that isn't there.
ROFLMAO
That's the funny part. They think they are the advanced ones...
- Odd, They don't need to
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by Karl Viklund
February 29, 2008 7:08 AM PST
- I bought Vista OEM and it was really really cheap and I'm very happy. I'm not a Microsoft fan-boy but Vista is actually a system that I could and will recommend. Vista is damn good. And nice.
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Reply to this comment
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- Exactly!
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by BobbyCannon
February 29, 2008 7:39 AM PST
- Exactly! I couldn't have said it better myself.
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- Take a look in your "rear" view mirror...
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by Commander_Spock
February 29, 2008 7:40 AM PST
- ... and tell the rest of the world what you see:
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View
reply
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- Vista is nice, but...
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by frankwick
February 29, 2008 7:44 AM PST
- there are perception problems. For example:
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- Where does it come from
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by Maclover1
February 29, 2008 10:41 AM PST
- ....well if you read the emails from the top brass at MS....it starts
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by kenmoo
August 31, 2008 4:48 PM PDT
- Somehow, I needed to hear this Karl. (You sound like "a voice of reason" in a world full of insanity.) I am not a computer "sophisticate" and I was actually AFRAID to buy a new computer BECAUSE it would come with Vista Premium pre-installed! Then I started to wonder how much I'd have to pay for a boxed version of XP. Then I wondered if I wouldn't be able to just use Vista for a while and see how it goes. This is what brought me here today. There is so much bad-mouthing of Vista all over the internet. But now that I think of it, there is a whole lot of bad-mouthing of Microsoft in general on the internet. (And I haven't had any major problems with XP, so I never understood what the Hell everyone was kvetching about anyway! Is the Mac OS absolutely flawless? I seriously doubt it. If you come across a minor problem, you find a solution, and move the Hell on, no?) So thank you Karl. I have no more fear of a new PC with Vista Premium, DAMMIT. (The Mac vs PC commercials probably scared me more than anything else!!!)
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Showing 1 of 4 pages (206 Comments)I have no idea were all this whine about Vista comes from. All the negative articles on Cnet about Vista comes to mind. I can't understand that at all. Vista is really good. It only took like 3-4 weeks to get used too it. Things are different in Vista, but what is that to whine about.
Vista needs to be recognized as the great OS it is and people and media should stop whine about a system that they are clearly not using on a daily basis. I have been using Vista every day in 5-6 months now and I could not be happier.
Re: "ESWay-kernel:: Improvements in the nucleus / OS/2 Kernel Improvements"
http://translate.google.com/translate?prev=/language_tools&u=http://forum.ecomstation.ru/viewtopic.php?t=1037&sid=e5caa1462c9f7bf66a5f4f390f63da1a
"OS2LDR Replacement ver 0.1 (test version)"
http://hobbes.nmsu.edu/cgi-bin/h-search?key=os2ldr&pushbutton=Search
Looks like the "Russians Are Coming - Again" Isn't it? ;-) !
1. The driver issues were the major problem. Nvidia, Creative, and even Apple had issues at lauch. To many, those were Vista problems.
2. The interface is different than XP. People who are used to finding something in one place, who now have to hunt, are not happy.
3. The HW requirements are double that of XP without much gain in productivity. That just doesn't make economic sense.
If MS can push 7 out the door without the above three problems, then they will see a smooth roll-out. For years, people will say, Win7 is what Vista should have been. That's not really true, but perception is everything.
there:)