Microsoft Corp said on Thursday that prices for the Windows 7 computer operating system are largely in line with those for Vista, and that consumers who buy PCs before the new system goes on sale in October will get free upgrades.
To drum up demand among people who aren't in the market for a new PC, Microsoft also said it is taking limited pre-orders for Windows 7, selling some for as little as $50.
Windows 7 is Microsoft's first new operating system in almost three years. With Vista, Microsoft made under-the-hood technical changes that left other software companies and device makers scrambling to make their products work with new computers. Many didn't work at Vista's January 2007 launch; people also complained the new system was sluggish.
Microsoft is promising a smoother launch for Windows 7, in part because it's not a radical departure from Vista.
People who have tested near-final versions say Windows 7 boots and runs faster and spends less time nagging the user with alerts and pop-up windows than Vista does. It also tries to make it easier for people to navigate to frequently used Web sites, documents and tasks.
For customers buying new machines, the cost of the Windows software is typically included in the purchase price. The prices announced on Thursday are for people who buy Windows separately or upgrade from older versions.
Consumers who buy Windows Vista Home Premium, Business or Ultimate computers starting Friday can contact the PC manufacturer for a free upgrade when Windows 7 becomes available on October 22. Windows Vista Home Basic is not eligible for upgrade. The offer will run through January 2010.
Microsoft will record only about half the revenue it receives from selling those copies of Windows Vista before Windows 7 launches. The rest, about $200 million to $300 million in sales, will be recognised in later quarters, once the upgrades have been distributed or the program ends, whichever comes first.
The Redmond, Washington-based software maker said it will cost people $120 to upgrade their existing machines to the Windows 7 Home Premium version, $10 less than the comparable Windows Vista upgrade software. Upgrades to the Professional and Ultimate versions will cost $200 and $220 respectively, the same as Vista.
By comparison, Apple Inc said in early June that upgrades to its newest operating system, called Mac OS X Snow Leopard, will cost $30.
The cost is identical regardless of whether the upgraded machine was running Windows XP or Windows Vista.
Versions meant to be installed from scratch on a computer will cost $200, $300 and $320 for Home Premium, Professional and Ultimate.
Home Premium includes the updated look and feel first introduced with Vista, a new system for home networking, the ability to create DVDs and other features. Professional, the next level up, adds features to support people who might have to work from home or use their computer for work on the road. Ultimate is an everything-but-the-kitchen-sink edition with added data security and other features more commonly requested by big businesses.
Microsoft is pushing those versions, but it makes three more: Starter, Home Basic and Enterprise. Starter doesn't include the updated look of Vista or Windows 7 and is only available pre-installed by PC makers on certain types of hardware, such as netbooks. Home Basic is only available in developing countries. Enterprise is sold through volume license agreements to big corporate customers.
Vista's weak reception has prompted Microsoft to extend the life of Windows XP, an older system that is less profitable for the software maker.
This time, to goose early sales and build buzz, Microsoft is cutting the Windows 7 price by about half for people who pre-order upgrade software for Home Premium ($50) and Professional ($100).
The sale will start on Friday in the US, Canada and Japan, and on July 15 in the U.K., France and Germany. It will last for about two weeks, or as long as allotted copies of the software last.
People can buy the software on Microsoft's download site or at retailers including Best Buy Co Inc, which said it is limiting sales to three per customer.
Microsoft would not say how much it will cost to upgrade from a lesser version of Windows 7 to a more robust one. The company also declined to say what effect Windows 7 prices will have on netbooks, a popular category of small, inexpensive laptops. The low prices are possible in part because they run the older, cheaper Windows XP.
Microsoft said this month it is making a version of Windows for Europe that does not come with Internet Explorer, its Web browser, in an attempt to ward off sanctions from antitrust regulators there.
Brad Brooks, a corporate vice president for Windows marketing, said Microsoft hasn't had time to polish upgrade software for Europe, so it plans to sell the full version of Windows 7 to European Union consumers at upgrade prices at least through December.
Shares of Microsoft added 36 cents, or 1.5 per cent, to $23.83 in afternoon trading Thursday.
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