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October 28, 2006

Major PC vendors announce their Vista holiday coupon plans

Posted by David Hunter at 3:23 PM ET.

This week when Microsoft announced their Vista holiday coupon plan, they only gave specifics for the part of the plan that applied to smaller vendors and left it to the major vendors to set their own terms. Some of the majors have done so and the good news is that not all of them followed Microsoft’s lead in hitting up buyers of Windows XP Home machines for more loot for Vista Basic:

–Hewlett-Packard Co. spokeswoman Tiffany Smith said people in North America who buy certain HP Pavilion, Compaq Presario and HP Digital Entertainment Center computers equipped with Windows XP, Microsoft’s current version, can upgrade to Vista for free. There may be shipping and handling fees, depending on the retailer.

–Gateway Inc. will offer free upgrades for people who buy Vista-capable computers directly from the company. Gateway spokeswoman Kelly Odle said shipping charges or duplication fees may be charged people who buy Gateway computers through other retailers.

–Dell Inc. spokesman Bob Kaufman said buyers of Vista-capable Dell computers running Windows XP Home Edition will be able to buy Windows Vista Home Basic at the discounted price of $45, plus shipping and handling charges. Buyers of computers running Windows XP Media Center or Windows XP Professional will only have to pay shipping and handling to get a comparable Vista version, he said.

Two out of 3 isn’t bad, I guess. Some others (including some smaller ones):

Alienware: Won’t offer the upgrade to XP Home, but will have no charge for the other versions. It will charge for shipping.

Lenovo: Going from XP Home to Vista Basic will cost an amount that has yet to be determined–on top of the shipping and handling fee. XP Pro to Vista Business will have a fee for shipping and handling only.

Sony: TBD

Velocity Micro: No charge for any of the upgrades. Shipping-and-handling charges will apply via Microsoft. Made the point that all out-of-channel vendors (read: the smaller guys) will need to point customers to Microsoft directly, hence the shipping charge. The larger vendors have the option to absorb the fee.

That’s more mixed, but the whole question of upgrades to Vista Basic is very grating. Here’s a customer that has bought a PC with the XP Home operating system (which differs in very little but the price from XP Professional) and he’s expected to be happy with Vista Basic which is a distinctly crippled version of Vista. What’s more, he may have to pay extra for it because Microsoft was late. What’s wrong with this picture? More precisely, how stupid do they think the average consumer is? My guess is that if consumers buy PCs for the holidays despite advice to the contrary, they aren’t going to be upgrading them for both price and practical reasons.

Of course, that begs the question of why Microsoft is offering a crippled version of Vista in the first place, but the folks at Acer have a theory:

Acer claims that the Vista Home Basic – the new entry-level Windows – is so poorly featured that consumers will simply reject it. “The new [Vista] experience you hear of, if you get Basic, you won’t feel it at all,” said Jim Wong, senior corporate vice president at Acer. “There’s no [Aero] graphics, no Media Center, no remote control.”

Wong claims that Microsoft’s own marketing machine has undermined Vista Home Basic. “Right at the beginning they started talking about the experience of [Vista Home] Premium. Premium is the real Vista,” he said.

Furthermore, Wong claims that the manufacturer’s licence for Vista Home Premium is 10% more expensive than for XP Home. “We have to pay more but users are not going to pay more,” Wong said. As a result, he claims the total cost of building a PC has risen by 1-2%, which is a significant increase in such a low-margin business.

Despite Wong’s protestations, I consider the chances as slim or none that anyone but the consumer is going to be paying the extra for Home Premium. I guess this is part of the vaunted Vista upsell we had heard so much about and that the real answer to the question of why Microsoft bothered offering feeble Vista Basic is that it provides cover in case any regulators get querulous about a monopoly extracting arbitrary price increases. It’ll be interesting to see how many copies of Vista Basic actually find buyers.

Filed under Financial, General Business, Marketing, Microsoft, OS - Client, Public Relations, Windows Vista

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3 Responses to “Major PC vendors announce their Vista holiday coupon plans”

  1. Wal-Mart starts the holiday shopping frenzy early -- Cool Tech Reviews Says:

    [...] Finally, I have a caveat on buying PC’s this holiday season. The Wal-Mart machine comes with XP Media Center Edition which may well qualify you for a free upgrade to Windows Vista Home Premium, (see also [1]) but there’s no mention of such an offer in the online listing although the machine is the bare minimum “Vista Capable.” If you really plan on upgrading an XP machine bought during the next few months with a coupon, make sure you are getting what you think you are getting. And if the idea of upgrading the operating system fills you with trepidation, then you should wait until Vista actually starts getting preloaded as some commentators are recommending. Posted at 6:28 pm. Filed under Notebook, Companies, Brands, Operating Systems, Bargains, Windows Vista, Laptop, Compaq, Black Friday   [link] [...]

  2. North America holiday PC sales strong -- Microsoft News Tracker Says:

    [...] “There’s not much lower ASPs can go,” said Stephen Baker, NPD’s vice president of industry analysis. Holiday 2006 ASP for desktops was $537, compared to $587 in 2005. More by following the link, but NPD’s Chris Swenson observes that there has been little historical correlation between PC sales and a new operating system (or lack thereof) and these numbers bear that out. I would also suggest that it will be interesting to see how many purchasers will cash in their Vista upgrade coupons if in fact they received them although it’s not clear we will every get firm data. [...]

  3. Microsoft 2Q FY07 earnings pregame show -- Microsoft News Tracker Says:

    [...] We’ve previously discussed the Vista coupons and Microsoft’s related scurrying to claim the oddly named ”deferral,” but the real question is how many people are actually going to take Microsoft up on their offer. This revenue may be not just be deferred, it may be nonexistent. [...]

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