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Microsoft to reduce prices on some versions of Vista

From the Associated Press

Microsoft Corp., the world’s biggest software maker, said it would cut the price of some versions of its Windows Vista operating system.

The move late Thursday came a day after court filings revealed internal dissent over which computers using its older Windows XP operating system would be considered capable of running Vista, and also a feeling on at least one executive’s part that Microsoft had botched the marketing of computers as “Vista capable.”

Only copies of the year-old Vista operating system that are sold in boxes directly to consumers are affected by the price cuts -- not the versions pre-loaded on personal computers. The cuts will range from 20% to 48%.

The reductions are to coincide with the late March release of Vista Service Pack 1, a collection of security fixes and other improvements.

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Windows Vista’s January 2007 launch was plagued by delays. To keep consumers buying PCs in the holiday season of 2006, Microsoft and PC makers promised free Vista upgrades later to shoppers who bought computers with Windows XP loaded.

At the launch, Microsoft was widely criticized for offering too many versions of the operating system -- including Home Basic, which didn’t have the snazzy new signature look called Aero -- and for setting the price too high.

Brad Brooks, a corporate vice president for Windows marketing at Microsoft, said in an interview that the Redmond, Wash.-based company has since tested lower prices and found “product was moving much, much faster.”

Brooks said he expected so many customers to buy Vista at the new prices that the price cuts would increase Microsoft’s revenue, not subtract from it.

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A federal judge recently said consumers could pursue a class action suit against Microsoft for labeling PCs “Vista capable,” even though many were not powerful enough to run all of Vista’s features, including the Aero interface.

Company e-mails produced in court chronicle Microsoft settling on a plan to market a wide range of XP-based PCs as “Vista capable” after company officials realized in early 2006 that 30% or fewer of computers on the market could run the full-fledged version of Vista.

That realization apparently caused computer makers, such as Dell Inc., to worry that people would stop buying PCs until Vista was launched.

The e-mails also showed Microsoft lowering the bar for “Vista capable” to protect Intel Corp.'s sales of some chips that weren’t powerful enough for the full Vista experience.

According to the e-mails, James Allchin, the executive in charge of Windows at the time, was not involved in the decision to brand a wide swath of computers running XP as “Vista capable.” Upon learning the details, Allchin wrote, “We really botched this.”


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