Wow: Microsoft decides now is the time to lower Vista pricing

Alex Zaharov-Reutt
Friday, 29 February 2008 22:01

Opinion and Analysis

Microsoft’s Brad Brooks says that “The desire for the best value remains the same” all over the world. He’s saying people like cheaper prices and value for money as though it’s some kind of amazing revelation.

He notes that: “Our research, along with feedback from promotions by our retail partners, has illustrated powerfully to us the degree to which customer needs vary, not only between developed and emerging markets, but also within markets. But the desire for the best value remains the same. As such, the Windows Vista editions involved and specific price decreases will likewise vary from region to region across the globe”.

The Q&A questioner at Microsoft asks Brooks: “Why has Microsoft chosen to announce this reduction now?”

Brooks explains that as Vista SP1 goes to retail, when the price drop is set to officially kick in, that Microsoft are trying “to make this as easy and efficient as possible for our retail partners to update their displays once”.

However Brooks concedes that many people buy Vista pre-loaded onto their new computers, and that this “isn’t going to change because of what we’re announcing today”.

But he notes that “it’s a great opportunity for our retail partners to sell more stand-alone copies of Windows, and help grow this small but important part of our business. At the same time, it will also enable more consumers worldwide to experience the benefits of genuine Windows software”.

CNET’s Ina Friend explained that some analysts thought lower prices might ‘damage Vista’ and its reputation, potentially causing some people to think less of Vista, but Brooks said that lower prices in the test markets of France and the UK in December and January saw sales go up – not down.

Fried also quoted Brooks talking about the massive tens of millions of extra sales of Windows XP Media Center Edition per year once its cost was lowered to being just marginally higher than Windows XP Home Edition – rather than the one million sales per year they were achieving when Media Center was priced much higher.

So, Microsoft has finally learned an important economic lesson. Lower prices can mean higher profits, happier customers and, importantly, legal customers.

Don’t stop now, Microsoft – as the threat of Mac OS X and Linux grows ever stronger, and with Windows 7 still years away, actually making your products much more affordable can stave off the competitive threats – and make you more money!

But please don’t think that lower prices will make us forget the debacle of Vista’s birth, and the madness of SP1’s botched release.

There’s still plenty of pricing room to move further downwards if needed - on all your software products, and chances are that ever stronger competitive pressure, even from the likes of online software such as Google Apps, you’ll need to lower prices again in the future, probably sooner rather than later.