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August 28, 2006

Vista discount upgrade coupon update

Posted by David Hunter at 11:42 AM ET.

Today’s leak of Vista prices reminded me that I needed to follow up on last Monday’s report of possible Vista discount upgrade offers in the offing for purchasers of PCs in the 4th quarter. Microsoft responded predictably as Tim Culpan and Fred Fishkin report for Bloomberg News:

Discussions are “ongoing,” said Windows director Kevin Kutz, who declined to comment further.

But while Microsoft was shy, others were not: Inc., the largest online retailer, and Advanced Micro Devices Inc. are pressing Microsoft to decide quickly on how or whether to offer customers a coupon or discount for Vista. The software’s delay will cause the PC industry to lose about $4 billion in revenue this year, according to Gartner Inc. research. Windows runs almost 95 percent of the world’s PCs, making its new version a key driver of computer demand.

“It would be in the best interests of consumers and the industry to get it out there as soon as possible,” said Stephen DiFranco, vice president of consumer sales and marketing at Advanced Micro, the world’s second-largest maker of PC processors, in an interview. “They need to tell the world.”

As well they should because all the talk is just a further disincentive to purchasing a new PC now or in the fourth quarter or any time until the coupons arrive or Vista ships.

While all of the above is mostly predictable, there was an interesting twist – the Vista upgrades might not be free:

The final discount model, to be worked out between Microsoft and the computer designers, may include free upgrades for more expensive models, said Tim Li, chief financial officer at Quanta Computer Inc., which makes computers for Dell, Hewlett-Packard Co. and Lenovo Group Ltd.

“If you buy the Mercedes Benz model, they will give you the free coupon, but if you buy the Chrysler, of course you will have to pay an add-on,” Li said.

I suppose it’s an understandable temptation given all the flavors of Vista, some presumably with hefty price tags, but it ignores some consumer reality. Todd Bishop:

I spoke about this yesterday with longtime PC industry analyst Roger Kay, president of Endpoint Technologies Associates, who said that offering the free upgrade “would be a sensible thing” for Microsoft to do under the circumstances. Charging holiday PC buyers to upgrade to Vista would be like “making everybody else take the hit for their production problems,” Kay said.

Of course, it begs an even more pressing consumer question – how many folks want to buy a new machine and then do an operating system upgrade from XP to Vista, free or not?

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

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One Response to “Vista discount upgrade coupon update”

  1. Vista coupon rumors redux -- Microsoft News Tracker Says:

    [...] Vista discount rumors seem to keep popping up, and on Monday, Digitimes had the latest provided by the Chinese-language Apple Daily: Microsoft has informed PC makers that free upgrades to Vista will only be available for MCE (Media Center Edition – ed.) users, the paper said. For Windows XP users, upgrading to the entry-level version of Vista will cost US$116, while upgrading to the premium version will cost US$269, noted the paper. The cost may affect PC demand through the first quarter of next year, PC makers were quoted by the paper as saying. Aside from the uncertain provenance, one wonders if there is a localization disconnect since the upgrade prices for XP Home users are more than standard retail and there’s another line in the article about MCE being only 10% of new PC Sales in the 4th quarter which seems unlikely in the USA. However, there’s a germ of a good idea here – Microsoft providing “like to like” free Vista upgrades for the various versions of XP before Vista is available. Nathan Weinberg provides a modest proposal in that regard and mentions some cons associated with it too. The biggest one I see is that sticking XP Home users with Vista Home Basic which lacks the fancy Aero “user experience” would seem to be an unpopular move. [...]

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