Analyst: Price cuts don't get to heart of Vista's problems

The muddle of multiple SKUs and hardware uncertainty stymies sales

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 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, a research firm. "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."

Late last week, Microsoft announced plans to cut Vista's retail prices. The company did not flesh out the details -- how much prices will drop or the exact timing -- but it did say that customers in some developing countries will see cuts of as much as 50 per cent. The price cuts will be synchronized with the retail release of Vista Service Pack 1 "later this year," said a company executive.

"You can justify three versions of Windows, I think," said Cherry. "Consumer, business and server. But as it is, it's too confusing." Consumers often never reach the "What is the price again?" moment, he added, because they're too confused 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 stock-keeping units (SKU), in fact, is at the heart of the class-action lawsuit that Microsoft now faces over the marketing program dubbed "Windows Vista Capable." The program, the plaintiffs have claimed, misled consumers into thinking that older, less-powerful PCs sold in the last half of that year would be able to run all versions of Vista, not just the scaled-back Vista Home Basic.

But Microsoft didn't reduce the number of Vista versions last week; instead, it said it would cut the price of the operating system. The company's didn't specify the size of the price cuts except in general terms: In developing countries, some prices will be slashed in half, while in established markets such as in the US and Europe, prices may fall just a few percentage points or not at all.

"So is this really that big of a deal?" Cherry asked rhetorically. Perhaps not, he argued, since Microsoft makes more than 80 per cent of its client operating system revenue from sales to rellers, which preinstall Windows on new PCs. "That's the heart of the problem. How many people are going to walk in and buy a retail copy, even with a price cut?"

Instead, Cherry said, this is a pragmatic move that probably doesn't come with a lot of hidden motives. "They're playing with price," he said. "That's maybe not their usual thing, but these are potentially unusual times.

"For one thing, I don't sense the need that people think they need to have the latest technology anymore," Cherry continued, giving his interpretation of what has forced Microsoft's hand. "That's one. The other is that 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."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Gregg Keizer

Gregg Keizer

Computerworld
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?