Analyst: Windows 7 'Anytime Upgrade' prices won't tempt netbook users

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Computerworld - Microsoft may find it tough to convince netbook users running the low-end Windows 7 Starter to later upgrade to a more expensive edition, a retail market analyst said Saturday.

Previously, analaysts have speculated that Microsoft will try to move users of Windows 7-powered netbooks to a more expensive version as a way to squeeze revenue out of its next operating system. One route: the built-in Anytime Upgrade, a feature that lets users move up to a more feature-filled edition by plunking down cash for an unlocking code.

But Anytime Upgrade prices may be anything but cheap. Several online resellers recently leaked prices of Windows 7's Anytime Upgrade from Starter, the version designed for netbooks, to Home Premium, the edition destined for most consumer desktops and notebooks.

Anytime Upgrade prices as leaked by four resellers -- eCost, Fadfusion, PC Nation and PC Mall -- ranged from $89.98 to $80.99. The average of $85.42 represented 71% of the retail price of Windows 7 Home Premium Upgrade, a license for upgrading Windows XP or Vista to the new OS.

That's too much, said Stephen Baker, an analyst with the NPD Group. "Microsoft needs to be more aggressive," said Baker. "At those prices, there won't be many opportunities to [convince users to] trade up. If people are buying cheap [PCs] they're buying cheap for a reason."

Netbooks sell for between $200 and $500, making the $85 upgrade an extra expense of between 16% and 40% of the original purchase price of the PC.

Another factor adding to upgrade reluctance, said Baker, is Microsoft's decision to drop the three-application limit it once baked into Windows 7 Starter. In late May, Microsoft backed away from the limitation, which would have blocked users from running more than three applications simultaneously. Before it changed its mind on the Starter restriction, Microsoft had been broadly blasted by users and bloggers.