May 24, 2006 1:02 PM PDT

Microsoft primes PC buyers for Premium Vista

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SEATTLE--Don't expect Microsoft to talk much about the Basic edition of Windows Vista when the operating system ships. The software maker wants you to go Premium.

Microsoft is readying its marketing efforts for Vista, the successor to Windows XP slated to be broadly available in January. In its consumer campaigns, the company plans to highlight specific uses--which it calls "scenarios"--of the operating system. In each case, Windows Vista Home Premium will be the product Microsoft tries to sell.

"Scenarios should increase Windows Vista PC sales and drive the desire for Windows Vista Home Premium," Tim Richardson, a product manager in Microsoft's Windows group, said Wednesday in a presentation at the company's Windows Hardware Engineering Conference here.

Vista versions

Pushing to adoption of higher-priced editions of Windows is one of Microsoft's clear strategies. The software maker got some experience with Windows XP, where businesses paid more for Windows than consumers with Windows XP Pro, and consumers paid more for Home with Media Center Edition. With Vista, Microsoft is building out that effort.

"It is a continuation of what they started with Windows XP Media Center Edition," said Greg DeMichillie, an analyst at Directions on Microsoft. "It is a way to make revenue grow faster than volume sales."

Richardson said Vista marketing will focus on six areas where Microsoft believes the new software offers a lot to consumers: music, TV and video, gaming, productivity, communications, and digital memories.

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The campaign should "increase the purchase intent" of customers and also sell more third-party products for use with Windows, he added.

Microsoft announced the different editions of Vista in February. There will be six versions of the operating system, two of them aimed at the home user: Windows Vista Home Basic and Windows Vista Home Premium. A third, Windows Vista Ultimate, offers all the features of the business and consumer versions.

Windows Vista Home Basic is comparable to Windows XP Home. It has the security and search abilities particular to Vista, but does not offer the update's fancy graphics or high-end media features. Windows Vista Home Premium adds support for Vista's new graphics as well as Media Center and Tablet PC features.

Microsoft is not expected to put any marketing muscle behind Home Basic. "They are going to leave that for the $300 PC," DeMichillie said. "Other than the few PC makers that really live at that price point, you won't see much of Windows Vista Home Basic."

Windows Vista pricing hasn't been disclosed yet. But consumers might not even notice that they are paying a premium, DeMichillie said, "simply because the price of the OS is not visible when you buy a PC from Dell, for example."

Microsoft doesn't have any forecast of sales of Basic and Premium versions that it can share publicly, a company representative said.

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Microsoft Windows Vista Home Basic, WinHEC, Microsoft Windows Vista Home Premium, Microsoft Windows Vista, Microsoft Windows XP Media Center

14 comments

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"price of the OS is not visible"
>the price of the OS is not visible when you buy a PC from Dell, for example.<

Does anyone happen to know how much Microsoft is currently charging Dell/HP per-computer for WinXP?
Posted by john55440 (1020 comments )
Reply Link Flag
Re: Price
I've been wondering why the price of Vista isn't being discussed
too.

You think the "premium" version will be a case of "if you have to
ask, you can't afford it"?
Posted by rcrusoe (1305 comments )
Link Flag
Re: "price of the OS is not visible"
I'm not sure if this is currently true, but the price used to be around thirty-five dollars for the consumer oriented OS.
Posted by colonna (24 comments )
Link Flag
Is it true?
Seems like I've read their is only 1 graphics card available at this
time that will support all the high end vista graphic features. And
it costs as much as a cheap PC.

Can anyone confirm this?
Posted by rcrusoe (1305 comments )
Reply Link Flag
Re: is it true?
No, this is not true. Almost any video card bought in the last two years should work with the advanced graphics. I know, in regards to ATI, any card from the 9500 series and above should work with the advanced Vista graphics (gui).
Posted by colonna (24 comments )
Link Flag
I'm not sure.
I'm not sure if any GPU's are fully vista capeable right now. Some of them are are partialy working, but none of them are Direct X 10 (or whatever they are calling it these days) compatible yet.
Posted by rawker (12 comments )
Reply Link Flag
The Microsoft Tax!
..."Windows Vista pricing hasn't been disclosed yet. But consumers
might not even notice that they are paying a premium, DeMichillie
said, "simply because the price of the OS is not visible when you
buy a PC from Dell, for example."...

Yeah, we already know about the tax before the tax!
Posted by JuggerNaut (860 comments )
Reply Link Flag
Penny Pinching
You have to wonder if companies like Dell (who chase every
possible penny) will settle on the Home version, rather than the
more expensive Premium version. It's not just the $300 PC they're
trying to make a buck on.

If cost cutting leads to Home being the defacto standard, what is
that going to mean to the adoption of Areo and the other stuff that
makes Vista Vista?
Posted by JScottK (40 comments )
Reply Link Flag
Ooops
Ignore this one.

Sorry
Posted by JScottK (40 comments )
Link Flag
Penny Pinching
You have to wonder if companies like Dell (who chase every
possible penny) will settle on the Basic version, rather than the
more expensive Premium version. It's not just the $300 PC they're
trying to make a buck on.

If cost cutting leads to Basic being the defacto standard, what is
that going to mean to the adoption of Areo and the other stuff that
makes Vista, Vista?
Posted by JScottK (40 comments )
Reply Link Flag
In effect a price increase for Windows
By gutting the Windows that comes as the base OS on the PC MS is effectively implementing a significant price increase for new PCs, and all but extinguishing the market for low-end computers by nixxing any reason for vendors to sell them.

What is most clever is that by using an upgrade-to-the-useful-version after purchase approach, MS will be taking this price increase for itself at the low-end, making the low-end PC as expensive as a mid-range system, but denying mid-range profits to the PC vendor who selss just the base OS on a cheap PC.

So in effect the cost of a base model PC will increase for the consumer (because the base model PC will no longer do all that a base model XP system does), while vendors selling low-end PCs will see none of the markup attached to the low-end PC.

Prediction: The end of low-priced PCs, as there is no reason for PC vendors to sell Vista this way. It will only make sense to sell middle- and up-market PCs with premium Vista installed, so that the vendor can take some of the cash "premium" of the "premium OS" upcharge with the purchase price, and not leave it to MS in an after-sale upgrade of Vista basic.

Very clever indeed, as it zeroes out any incentive to sell low-cost PCs in the first place, compelling PC vendors upmarket and compelling all sales toward premium OS levels AND the resulting premium profits.
Posted by PolarUpgrade (103 comments )
Reply Link Flag
Priming Premium Vista Buyers
Why doesn't MS just come out and say, "This is the best OS, period!"

There are enough gimmicks & sales pitches out there already.

MS OS is used by, how many gazillion people on the planet? Is anyone really surprised about this?



Bring it on!
Posted by oilfieldmedic (1 comment )
Reply Link Flag
Whatever happened to "user confusion" due to different OS versions?!
It wasn't too long ago that Microsoft said they were reducing the number of versions of Windows DUE TO USER CONFUSION and manageability.
Posted by technewsjunkie (1265 comments )
Reply Link Flag
What's wrong with one version?
What's so wrong with simply selling "Windows Vista - Does
everything version"? As I understand it Vista will dumb down to
the equipment it's on anyway, so why confuse the buying public
with 15 (ok, 6 is it?) different versions?

I work in marketing, and I can't envisage ever recommending to
a client that they confuse their audience like this.

RB
Posted by ross brown--2008 (57 comments )
Link Flag
 

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