If Microsoft thought a lower price for Windows Vista was what the operating system needed to kick-start sales, it should have thought twice, an analyst has said.
"In some ways, it's an attempt to remove any barriers that may be dissuading people from buying Vista," said Michael Cherry, an analyst at Directions on Microsoft. "But the missing step here is simplifying what people need to know to buy. People are so confused about the versions and what they need on hardware that they don't even get to the price."
Microsoft has announced plans to cut Vista's retail prices – probably minimally in established markets but possibly up to 50 percent in developing countries. While the company hasn’t fleshed out exact details, it said the cuts will be synchronised with the retail release of Vista Service Pack 1 later this year.
But analyst Cherry thought the array of differing Vista versions posed more of a problem than price. "You can justify three versions of Windows, I think: consumer, business and server," he said. "But as it is, it's too confusing." Consumers often never reach the "What is the price again?" moment, Cherry added, because they're too muddled by the multiple choices, and bewildered by the hardware requirements needed to run the flashier Windows Home Premium and Ultimate.
In the US, Windows Vista is available in four retail editions: Vista Home Basic, Vista Home Premium, Vista Business and Vista Ultimate. In some markets, Microsoft also sells a stripped-to-the-bone version called Vista Starter.
Confusion over hardware and Vista's SKUs is even at the heart of the class-action lawsuit that Microsoft now faces over its "Windows Vista Capable" marketing programme. Plaintiffs claim that marketing misled consumers into thinking that older, less-powerful PCs would be able to run all versions of Vista, not just the scaled-back Vista Home Basic.
Cherry thought the price reductions were more of tweak rather than a big deal, because Microsoft makes more than 80 percent of its client operating system revenue from sales to OEMs, who pre-install Windows on new PCs. "That's the heart of the problem,” he said. How many people are going to walk in and buy a retail copy, even with a price cut?"
One thing prompting the cuts, he added, was that customers were no longer so bothered about having the latest technology.
Furthermore, "Microsoft has always gambled that if their software got bigger and they added more features, they didn't have to fine-tune it because the hardware would be there to bail them out. "That's not what happened here with Vista," he added, saying this also forced the company’s hand.
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