"One reason we decided not to ship Windows 7 E is concerns raised by computer manufacturers and partners," he said. "Several worried about the complexity of changing the version of Windows that we ship in Europe if our ballot screen proposal is ultimately accepted by the Commission and we stop selling Windows 7 E." OEMs were also worried that if Windows 7E was eventually dropped, customers would be confused when IE suddenly reappeared in the OS.
Although computer makers had not complained publicly about Windows 7E, and the ensuing need for them to install one or more browsers on new PCs, the issue had been raised by analysts. Microsoft was planning on giving away installation media containing IE8 at retail for consumers who bought upgrade editions of Windows 7. That idea is dead in the water, too.
Heiner also hinted that multinational companies balked at Windows 7E. "[This decision] will also streamline ... deployment by large enterprises, because Windows will be the same in Europe as in the rest of the world," he said.
On the plus side for European customers, Microsoft's decision means that they will be able to do "in-place" upgrades from Vista to Windows 7, something that was unavailable with 7E. In 7E, they would be forced to do so-called "clean installs" that would have required them to back up their settings and data files, install Windows 7E, restore settings and files from the backup, and finally, reinstall all applications.
But by ditching Windows 7E, Microsoft will be free to use the same two-tier pricing card it uses everywhere else, where it charges less for "upgrade" editions and more for so-called "full" versions. Previously, Microsoft had said it couldn't sell upgrade editions in the EU, since only a clean-install would result in an IE-less OS; to deal with the problem, it has been selling the full-package versions at the lower upgrade prices.
Assuming Microsoft returns to its dual upgrade/full structure, prices for the full versions of Windows 7 will jump dramatically. Previously, Microsoft had pegged the full price of Windows 7 Home Premium at €200, a 66% jump from the €120 price for the upgrade. The other retail editions' full package prices are also higher: Professional, for example, will cost €309 in a full version, 8% more than the €285 upgrade price.
It's unclear how Microsoft will deal with customers who have already pre-ordered Windows 7E and paid the upgrade price but were told they would receive a full-package edition. As of Saturday, Microsoft's own online stores for both the EU and the U.K. were still selling Windows 7E.
Ironically, the users who may be most affected by the return of two-tier pricing are those who use Macs, but want to run Windows in a virtual machine. While PC owners typically upgrade from an older OS to a new -- and so can get by with the cheaper upgrades -- users who run Windows in a virtual environment often create the faux "machines" from scratch, and so require a full-package version.
Heiner also left the door open to a return of Windows 7E if the commission doesn't play ball. "We recognize that there are still several steps ahead in the Commission's review of our proposal and that we are not done," Heiner said. "...If the ballot screen proposal is not accepted for some reason, then we will have to consider alternative paths, including the reintroduction of a Windows 7 E version in Europe."
Windows 7 is set to launch worldwide Oct. 22, but the first copies of the final code have already been handed to computer makers, and will reach developers and IT professional Aug. 6.