Microsoft discounts Windows 7 Home Premium to $50; deal to last two weeks

Pre-orders last just two weeks; after that, prices only slightly lower than Vista's

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"It's a positive sign that they're slightly willing to give on pricing, and recognizing the state of the economy," said Richard Shim, an analyst with research firm IDC. "But the environment has also gotten a lot more competitive, what with Apple and Snow Leopard."

Earlier this month, Apple announced that it would charge just $29 for Mac OS X 10.6, aka Snow Leopard, when it releases the performance and stability upgrade in September.

Prices for Windows 7 Professional -- the replacement for Vista Business -- and Windows 7 Ultimate, however, will remain the same as the corresponding Vista editions: $199.99 and $299.99 for the upgrade and full versions of Professional, $219.99 and $319.99 for the upgrade and full versions of Ultimate.

The largest price cut, the 17% drop for the full version of Windows Home Premium, did not match the smallest price reductions that Microsoft made in February 2008 for the struggling Vista. Then, Microsoft cut the upgrade price of Vista Home Premium by $30, or nearly 19%.

"I wasn't expecting much bigger price cuts," said Shim. "The fact of the matter is, there's still a lot of features in the operating system worth paying for."

LeBlanc made the same point. "Customers will be paying less and getting more with Windows 7," he said, ticking off new features such as a revamped task bar and Jump Lists.

Microsoft is not cutting a deal with Vista Ultimate users, as one analyst had urged and as users, still angry over Microsoft's failure to deliver on its "Ultimate Extras" promise, had wanted. The company is not repeating the "Extras" concept with Windows 7 Ultimate.

IDC's Shim warned not to read too much into the retail prices of Windows 7, however. "Retail hasn't had a tremendous amount of pick-up," he said, noting that Microsoft's Windows Client group makes the bulk of its revenues not from one-at-a-time sales to end-users, but to computer makers.

He wasn't even sure whether the prices, including the cuts to Windows 7 Home Premium, would be duplicated in the price list for OEMs. "It's a mystery," he said, when asked whether outsiders have a firm grasp of what Microsoft charges computer makers for each Windows license. "They probably will be a little more open to engaging in negotiations with OEMs," Shim speculated. "But that's because the economic environment is tough for everybody right now."

WINDOWS 7 RETAIL PRICES

Windows 7 Price Vista Price % Decrease
Home Premium Upgrade $119.99 $129.99 7.7%
Professional Upgrade $199.99 $199.99 0.0%
Ultimate Upgrade $219.99 $219.99 0.0%
Home Premium Full $199.99 $239.99 16.7%
Professional Full $299.99 $299.99 0.0%
Ultimate Full $319.99 $319.99 0.0%

Copyright © 2009 IDG Communications, Inc.

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