Expert: Microsoft earned US$1.5B from Vista Capable program

Microsoft may have earned more than US$1 billion from its controversial Windows Vista Capable sticker program.

An expert has determined that Microsoft may have earned more than US$1 billion from its controversial Windows Vista Capable sticker program, which is still at the center of a class-action suit being decided in a Washington state court.

In a court report, Keith Leffler, an associate professor in the University of Washington's Department of Economics, estimated that Microsoft derived revenue of US$1.505 billion from its Vista Capable program, in which the company partnered with hardware vendors to put stickers on PCs letting customers know the machines could run Vista reliably.

Though portions of Leffler's statement were redacted, it appears he based his estimate on revenue figures he received from Microsoft. His statement was made public as part of a class-action lawsuit filed March 2007 in the U.S. District Court for the Western District of Washington in Seattle by Washington resident Dianne L. Kelley. She claimed that Microsoft's program was deceptive because a PC she purchased could not run a premium edition of Vista. The case is still pending.

Microsoft's hardware partners began shipping PCs with the "Windows Vista Capable" logo in April 2006 as a way to let customers know if they purchased a new Windows XP PC before Vista was available, their machine could easily be upgraded. However, the designation was potentially confusing because a PC with the label was only guaranteed to run the least expensive, most basic version of Vista, called Home Basic.

A month later, Microsoft launched a Web site to explain the hardware requirements for different versions of Vista, as well as a new PC designation called "Windows Vista Premium Ready." Microsoft used the new designation to label PCs that could run premium editions of Vista -- such as Home Premium and Ultimate -- which have more features than Home Basic. The company also provided coupons for people who purchased these PCs to upgrade to the appropriate version of Vista either for free or for little cost once the OS was made available.

Many see Vista ultimately as a failure for Microsoft, as many consumers have complained about the OS and many business customers have opted to skip it and run Windows XP until Vista's follow-up release Windows 7 is available. This is all in spite of the fact that Microsoft spent more than five years developing Vista and claimed it would be the most successful OS for the company since Windows 95.

Microsoft CEO Steve Ballmer is widely expected to unveil a beta of Windows 7 during his keynote scheduled Wednesday at the Consumer Electronics Show in Las Vegas. Windows 7 is due for release early next year, but some think it may be available sooner in time for the 2009 Christmas holiday shopping season.

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Elizabeth Montalbano

IDG News Service
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