February 29, 2008
Microsoft (Nasdaq: MSFT ) is cleaning its Windows. The Vista boxes haven't been flying off the shelves in your local Target (NYSE: TGT ) or Best Buy (NYSE: BBY ) , so Mr. Softy is giving the price tags a haircut.
Pricing experiments in a few test markets over the last few months apparently showed that the average Windows XP user would be much more likely to upgrade to the latest and greatest at price points between 20% and 48% below the current sticker. Most of the 100 million Vista copies sold so far have come preinstalled on new Dell (Nasdaq: DELL ) and Hewlett-Packard (NYSE: HPQ ) systems, while the upgrade packages have been gathering dust on store shelves.
In markets like Europe and North America, the price cuts will mainly affect "upgrade" versions of the software, but there are so many unlicensed Windows installations in the developing world that Microsoft has elected to promote full, fresh installations at upgrade prices there.
It's all timed to the release of service pack 1 for Vista later this month, in order to save retailers the trouble of updating their store displays twice. Online sellers such as Amazon.com (Nasdaq: AMZN ) don't have that problem, and will implement the lower prices ahead of the official starting gun.
Company spokesman Brad Brooks called the Vista sales so far a great success, but then he added that Microsoft sees "an opportunity to grow our business even more with some of the new editions we introduced with Windows Vista." That's marketing speak for "We need to push more units," or even, in some obscure dialects of Corporatese, "What we're doing now ain't working." You just know that the folks in Redmond were hoping for a quicker uptake, and they can't be happy to see plenty of users clinging to XP beyond the supposed closing bell for that market.