Microsoft News Tracker

At long last Microsoft held the consumer launch of Windows Vista and Office 2007 today and Ad Age’s Beth Snyder Bulik asks the obvious question about all the accompanying festivities:

There won’t be a PC sold anywhere in the world that doesn’t have Vista within six months,” said Endpoint Technology Associates analyst Roger Kay, a fact that might leave ad watchers wondering why Microsoft is about to launch the product with one of the biggest marketing blitzes of all time.

This will be the company’s “most aggressive launch ever,” resulting in an injection, across 20 countries, of an estimated $500 million into agency and media-owner coffers — which seems excessive for a product that will walk out of the stores on more or less every PC sold from here on in.

But that’s not the point, according to Microsoft — which goes so far as to borrow from images such as a child discovering a snowfall, the fall of the Berlin Wall and Woodstock to persuade consumers that Vista is not just an operating system, but a potentially life-changing event. “Awareness is not enough,” said John B. Williams, general manager-Windows global communications. “The goal for this campaign [is to] get at the heart of excitement.”

Not to mention humor too, apparently. Actually, there are a number of sensible reasons for the marketing campaign not the least of which are co-op commitments to hardware and software partners as well as hopes for general corporate image buffing after the protracted Vista slippage nightmare. Anyhow, today’s launch events are summarized here along with some slips along the way:

But the event was short on corporate substance and long on glitz. And Office 2007, which was released to consumers alongside Vista on Tuesday, was scarcely mentioned as entertainment was more of a focus of the event than software. The rock band Angels & Airwaves performed to kick off the presentation, taking the stage after a three-man drumming outfit warmed up the crowd with a sweaty performance. Following the executives’ remarks, Angels & Airwaves took the stage again and performed a concert for attendees, which included press and beta testers as well as Microsoft employees.

Perhaps Microsoft focused on entertainment because many of those attending the launch waited a long time in below-freezing temperatures to get in. An hour and a half before the official presentation was set to begin, the line to enter the event stretched more than a block down Broadway in midtown Manhattan.

When the plight of attendees was mentioned to a high-ranking executive at Microsoft’s main public relations firm, Waggener Edstrom, he remarked dryly, “We didn’t do this event.” Indeed, it was Microsoft’s other agency, Edelman, that planned and hosted the Vista launch event Monday.

Nice.

There’s a lot of Microsoft hoopla planned today and tomorrow ([1], [2]) for the Windows Vista consumer launch, but since I have a tendency to count the house and not watch the show, I was pleased to see Joe Wilcox’s report on the Windows Vista PC’s available for preorder at on and offline retailers. The hook for the story is the notable absence of systems with preloaded Windows Vista Ultimate except for a pricey laptop from HP. That’s understandable given how pricey Ultimate itself is, but I was more interested in the delineation between Vista Home Basic and Vista Premium. Starting with Circuit City:

The situation is pretty much the same at the company’s online store. The 16 desktops offered there come with Windows Vista Basic or Premium–12 of the latter. Thirty-two of the 40 notebooks come with Premium.

…

I had been concerned that retailers would continue their strategy of offering mostly lower-selling SKUs, which would mean strong proliferation of Windows Vista Basic. Sorry, but Windows Basic isn’t all that exciting compared to even Windows XP Home. Many low-cost SKUs I observed with Windows Media Center Edition a week ago today had either Windows Basic, which is a big step down in terms of performance and features, or Premium.

…

I saw no Ultimate SKUs, which is consistent with CompUSA’s online store. There, three of the 13 desktops come with Windows Basic. Among the seven notebook models, CompUSA offers two with Windows Vista Business and four with Premium.

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What about Dell? Dimension desktop PCs come with Windows Basic or Premium, in base configurations. On the high-end XPS systems, where Ultimate would seem a good fit, Dell offers Windows Vista Premium or–get this–Windows XP Media Center Edition.

There’s much more by following the link, but the good news is that Vista Premium has generally replaced Windows XP Media Center Edition. In the 10-Q filing for last quarter’s financial results, Microsoft reported that the percentage of premium XP versions (i.e. not XP Home) was now 67% percent driven by the continued growth of Media Center systems (after Microsoft stopped requiring special media hardware) which is now seem to be the consumer sweet spot.

The bad news is that some of the bargain Media Center systems fell back to Vista Home Basic. I am suspicious that Vista Home Basic will be a source of continuing consumer unhappiness due to its lack of the distinctive Aero desktop graphical user interface. While it may be that the demographic buying Vista Home Basic systems won’t even care, they may also end up paying for a Premium upgrade after the sale which will be an unwelcome surprise to them if not to Microsoft.

So what’s the net? If Ed Bott’s report on Vista prices for smaller OEMs is any guide as to what the big vendors are paying Microsoft, Home Basic is equivalent in price to XP Home, and Premium is equivalent to Media Center. Therefore, the only way Microsoft is going to increase per system revenue with Vista is to further increase the premium mix. The stripped down nature of Vista Home Basic may well accomplish that.