Windows Vista prices cut to half, except in the US

 

Prices for the OS will be trimmed 15% to 20% in the U.S.

Microsoft Corp. decided to cut the retail price for Windows Vista operating system by as much as 20 % inside U.S., and plans are to cut somewhere arround 46% for some of the Vista Versions in the U.K and the European Union, as per company press release.

Another release on the laste Thursday announced sweeping price cuts to boxed copies of Windows Vista, saying that the cuts will range from as low as 3% in developed countries to half the price for some editions sold in poorer nations.
As the numbers that Microsoft released today, countries like France, Germany, Spain, Uk and some from Western Union will also see prices fall by nealry half.

A comment from Chris Swenson, an analyst at the NPD Group Inc. said: “This is a perfect case of price elasticity of demand, this is Economics 101″.
Swenson noted that cutting the price increases demand to the point that revenues at the new, lower prices outstrip the money made at the old prices. “Microsoft now has a year of sales data, so they were able to calculate sales elasticity, which told them they needed to drop the price”.
But he acknowledged that the comparision wasn’t “apples-to-apples”, Swenson held out Microsoft’s $149 Office Student and teacher edition as an example the Windows Vista team likely looked at.

“When they dropped the licensing restrictions, that essentially cut the price of Office in half at retail,” said Swenson. “[Revenue] went up significantly, the growth curve looked like a hockey stick.”

According to Microsoft, the price for the upgrade version of Vista Home Premium will drop 18.8% in the U.S., from $159.95 to $129.95. The full edition of Vista Ultimate, on the other hand, will be cut 20%, from $399.95 to $319.95.

But in the U.K., Vista Home Premium upgrade will get chopped by 46.8%, while the price of the full edition of Ultimate drops by 43.5%.

The price cuts in the EU, said Microsoft, will be quite just as dramatic: the Home Premium upgrade will be slashed by 46.2%, and the full version of Ultimate will be cut by 44.3%. Some of the pound and euro amounts yanked off Vista’s retail price are impressive: Ultimate sheds L101 in the U.K., and €165 in the EU.

In markets like India, the price will be cut even more, more exact the full version of Windows Vista Home Basic will drop by 48%. Microsoft is combining the former full and upgrade packages into one SKU, this happens in many markets, including India.

Microsoft have plans to institute the cuts when Vista Service Pack 1 (SP1) reaches retail. Earlier in february, the company announced it had shipped the SP1 code, and added that it would not deliver it to users via Windows update for another six weeks. Microsoft, however, has not yet set a specific retail date-of-availability.

“Retail customers will see a boxed product with SP1 code on shelves in the next few months,” said a Microsoft spokeswoman today.

“They’re still extracting a premium for Ultimate,” said Swenson, “but this really brings down the price of Home Premium, which is smart. They want that version in more hands than any other.

“They want [market] penetration, that’s what they’re after,” Swenson concluded. “If [users] are happy with XP, it’s hard to get them to upgrade. If all grandma does is e-mail and the Web, it’s hard to get her to upgrade. But price is one of the levers they can pull to get grandma to upgrade.”

If Microsoft Corp. thought a lower price for Windows Vista this all was what the operating system needed to kick start sales and they should have thought twice when decided this.

Popularity: 66% [?]