August 24, 2006 4:00 AM PDT

Can a Vista coupon save holiday PC sales?

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Windows Vista isn't ready to be loaded on new PCs yet. But that doesn't mean computer makers won't be trying to sell the new operating system this holiday season.

Already, PC manufacturers and retailers are touting some models as "Vista-capable." And as the computer industry gears up for the all-important end-of-year sales period, there is likely to be even more focus on the not-yet-finished update to Windows.

Microsoft is planning some sort of promotion to allow those who buy PCs this year to move easily and affordably to Vista when it ships next year. Windows unit head Kevin Johnson told CNET News.com in May that the company was looking into offering some sort of technology guarantee for holiday PC buyers.

"There's likely to be something, and they're working on specifics now," Johnson said. However, Microsoft has yet to share details on what exactly it plans to offer.

Some analysts expect Microsoft to offer coupons for free, or nearly free, updates to Vista. However, the upgrade may only be to the basic version. That would mean customers will have to pay more for the Home Premium version of Vista, which includes the new Aero graphical interface, Media Center software and other features.

Alternatively, Microsoft could offer upgrades to Home Premium from today's Media Center Edition.

"Coupons make perfect sense," Endpoint Technologies Associates analyst Roger Kay said. "They ought to do it."

Cloud over sales
But NPD Group analyst Stephen Baker said it's not clear that even a free upgrade would be enough to keep PC sales from being dented significantly.

Microsoft had originally hoped to have Vista on sale for the November-December holiday season, even removing features in order to try to make that goal. However, in March, the company said the software wouldn't be ready for new PCs until January. That has cast a cloud over this year's holiday sales outlook.

"It adds a lot of uncertainty," Baker said. "It gives (gift shoppers) a reason to say, 'I won't buy a PC this holiday season. Maybe I will buy a flat-screen television.'"

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Microsoft knew the minute it announced the Vista delay that it would have to come up with some sort of a program to help out retailers and PC companies, said Samir Bhavnani, an analyst at Current Analysis. Such an offer could help sway some people to buy a PC rather than spend their holiday budget on some other type of electronics.

"This will (encourage) that small percentage of people that are waiting to make a purchase," Bhavnani said.

Microsoft has continued to say that it is still finalizing the Vista offer. Some say, however, that the software maker and PC companies could just be staying mum about it so as not to hurt back-to-school season sales.

Kay said he believes the coupon offer will start in late October, noting that Microsoft probably has no incentive to lay out its plans until the back-to-school shopping season winds down at the end of September.

"Talking about it right now is probably not a good idea," Kay said.

The key question is whether Microsoft's offer is good enough to persuade buyers who are on the fence over whether to get a PC later this year. Kay said that with the exception of Windows 95, consumers have largely not changed their buying habits because of a pending operating system or chip introduction.

However, Baker said that customers may think twice about a PC purchase, even with an option to move to Vista, as they could be leery of having to upgrade their computers shortly after getting them.

"People don't want to buy ahead of such a big event, when they know having to do it on their own could cause problems," he said. Baker noted that sales expectations have already been somewhat muted.

"Everyone I've talked to, their expectation is for flattish sales this holiday," Baker said.

CNET News.com's Tom Krazit contributed to this report.

See more CNET content tagged:
Stephen Baker, coupon, holiday season, PC company, back-to-school

24 comments

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Consumer upgrade to Vista? Bad Bad Idea....
Considering that critical applications on the PC such as the antivirus, firewall,other security applications, CD & DVD writing apps will no longer function under the upgraded system then what is the customer going to do?
Are the Manufacturers going to give free updates to the licensed apps that normally come with the system? Are they going to be preloaded on the system or is the consumer going to have to get the system on the internet unsecured to go download them?
Look you missed the timeline, get over it. Having the typical consumer upgrade an OS and all of it's critical applications is a catastrophe in the waiting.

The ONLY way to make this a viable path is to deliver an image of the new OS and all of it's apps like a restore disk set. Then all the consumer has to worry about is backing up their data, yeah that'll happen.
Posted by fred dunn (793 comments )
Reply Link Flag
Restore disk?
"The ONLY way to make this a viable path is to deliver an image of the new OS and all of it's apps like a restore disk set."

When windows 95 came out, you got the OS disk, then it moved to no OS disk but the OS was on a restore disk. Recently, HP has been selling PC's with NO disk. That's right, no disk. You're supposed to create a backup and burn it to CD. Don't expect me to buy it.
Posted by Seaspray0 (9714 comments )
Link Flag
you're so right
But you stop just shy of the whole truth. The whole truth is it will be a bad idea for consumers to upgrade to Vista, period.
Posted by Michael Grogan (308 comments )
Link Flag
I don't need it
I'm getting a Mac.
Posted by paulsecic (298 comments )
Link Flag
Vaporware Coupons! Cool
I've always said Microsoft was the king at marketing. Can we get a
coupon for WinFS and all the other Vista features that were
originally promised?
Posted by rcrusoe (1305 comments )
Reply Link Flag
And so soon!
Don't worry, the coupons will be ready for the "back to the nursing home" time of the millenium. Just how many people will live long enough to collect on them is still up in the air.
Posted by Seaspray0 (9714 comments )
Link Flag
not vaporware...
Vista is not vaporware, it is just not ready for prime time, and its biggest competition is Windows XP which does its job quite well.
Posted by YankeePoodle (785 comments )
Link Flag
Vista Delay will hurt PC sales
Consumers aware of the delay including myself would wait until Vista comes installed in a New PC. I doubt they will take the chance to install it later and run into problems that will lead to more complaints to both the Manufacturer and Microsoft. Why would consumers wait for a free Basic Vista Upgrade when they could get the Full Home Version after the holidays? PC sales may have excellent discounts this holiday in order to move PC sales but even if Vista was released I would wait to hear people's complaints about the new OS and make my final decision to purchase a new PC based on how stable Vista really is.
Posted by ubnyan (54 comments )
Reply Link Flag
Strategy
It seems to me, as I have observed it, that MS strategy is to lower the purchase price of Vista via coupons and maybe other deals, to get as many upgrades as possible.

If that don't work, Vendors are on their own, and Xbox 360 is the backup plan.

As I see it PS3 is better, soon it will come out, and the real competition will begin.

Will see if this works.
Posted by rmiecznik (224 comments )
Reply Link Flag
((a more simple) strategy indeed
because you've paid for a full XP license fee with your PC and used it for a few weeks before giving microsoft more money .. again.

you may get more of your money's worth as those weeks turn into months.
Posted by javierlopezroman (28 comments )
Link Flag
windows vista
Personally, I want them to take their time with vista. I want them to make the most stable, secure, easy to use operating system they can. If that means waiting, then I'll wait. XP still works and so does linux. I have them both loaded on one machine and they get along just fine.
Posted by thedreaming (573 comments )
Reply Link Flag
Waiting for Preinstalled...
Unless my 2002 computer dies, I'm waiting for Vista Preinstalled.

I can do without the "excitement" of installing a significantly different operating system on my computer.

Even going to WinXP to WinXP SP2 I had to install a number of HP-specific patches from HP's web site.
Posted by john55440 (1020 comments )
Reply Link Flag
Is this a Joke?
As anyone with common sense would tell you. Microsoft had
better pray, with all their hearts, that this marketing approach fails.

If you don't have at least a college degree, don't bother responding.
Nor will I even take the time to educate you.
Posted by Thomas, David (1947 comments )
Reply Link Flag
College Degree?
I agree with your statement but the College Degree thing is silly.

I would assume it was a joke since I don't have a degree and have had to teach IT graduates on mulitple occations on things as simple as how to install software and a printer.
Posted by slim-1 (229 comments )
Link Flag
Snob?
A college degree is nothing more than a piece of paper. I know plenty of people who can prove that point!
Posted by ddesy (4336 comments )
Link Flag
the only joke
is looking at you in the mirror Davie Boy!
Posted by The user with no name (259 comments )
Link Flag
Free with your license for windows . . .
"Microsoft is planning some sort of promotion to allow those who buy PCs this year to move easily and affordably to Vista when it ships next year"

Will it be a coupon for a free CPU/Ram/Video upgrade?
Posted by jabbotts (492 comments )
Reply Link Flag
Vista - Smista
I have never based a PC purchase based on which version of Windows I'll be getting. I think Microsoft and the computer industry is suffering from Windowitis. It's only an operating system for god's sake. It's not even a good operating system. You have to suffer it's need for updates. If there was even something marginally better Windows would quickly became history.
Posted by shanedr (155 comments )
Reply Link Flag
What, the flamewar hasn't commenced?
I'm surprised the Apple fanboys haven't shown up yet. The first
comment for this article lamented the lack of something better
than Windows, and someone else claimed Apple was stupid for
abandoning their OS and basing OS X on Unix. By the way, my next
computer will be a Mac too. People act like an asteroid is going to
hit the earth, when really they're just afraid of the unknown with
alternate operating systems. But boy, what a difference!
Posted by scottk0640 (23 comments )
Reply Link Flag
 

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