Microsoft Reduces Price on Several Retail Stand-Alone Versions of Windows Vista

REDMOND, Wash.,  Feb. 28, 2008 – Since its release, Windows Vista  has seen solid sales through the first year of availability, primarily through the sale of new PCs. Stand-alone retail sales, while not representing a large percentage of the business, represents an area of opportunity for additional growth the company sees based on the new editions introduced in 2007. To help reach that goal, Microsoft today announced price reductions on several consumer stand-alone editions. PressPass spoke with Brad Brooks, corporate vice president for Windows Consumer Product Marketing at Microsoft, to discuss how these price reductions will take effect and what prompted Microsoft to make this decision.

PressPass: What did you announce today?

Brad Brooks, Corporate Vice President, Windows Consumer Product Marketing

Brooks: Today we announced a variety of price reductions for copies of Windows Vista sold on retail shelves. In developed markets, the price changes will most notably impact upgrade retail versions of the new editions we introduced in 2007 — Windows Vista Home Premium and Ultimate editions. In emerging markets, we are combining full and upgrade Home Basic and Home Premium versions into full versions of these editions and instituting price changes to meet the demand we see among first-time Windows customers who want more functionality than is available in current Windows XP editions. In addition, we are also adjusting pricing on Windows Vista Ultimate in emerging markets to be comparable to price changes developed market customers will see.

These price changes will take effect globally with the retail release of Windows Vista Service Pack 1 later this year, though some markets will see reduced prices sooner as a result of promotions many of our partners already are driving, such as in the United States.

PressPass: What’s prompting Microsoft to make these price reductions?

Brooks: Windows Vista has been on the market for more than a year now, with more than 100 million licenses sold in its first year. While this is great progress, we see an opportunity to grow our business even more with some of the new editions we introduced with Windows Vista. Today, the vast majority of Windows licenses are sold with PCs; retail stand-alone sales, in contrast, have been primarily from customers who value being early adopters and those building their own machines. We’ve observed market behavior, however, that suggests an opportunity to expand Windows stand-alone sales to other segments of the consumer market.

Over the past year, we conducted promotions in several different markets combining various marketing tactics with lower price points on different stand-alone versions of Windows Vista. While the promotions varied region to region, one constant emerged – an increase in demand among consumers that went beyond tech enthusiasts and build-it-yourself types. The success of these promotions has inspired us to make some broader changes to our pricing structures, to reach a broader range of consumers worldwide.

PressPass: It sounds like your strategy is to have different price points in different countries and regions, depending on whether they’re developed or emerging markets. What will the changes look like when they’re in place?

Brooks: 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.

PressPass: Why has Microsoft chosen to announce this reduction now?

Brooks: Our retail partners will be refreshing their Windows Vista inventory once SP1 is released to the market later this year. We’re trying to make this as easy and efficient as possible for our retail partners to update their displays once.

PressPass: What does this mean for the business and future trends you expect to see? Are people buying more stand-alone products or are they buying Windows Vista preloaded on their computers?

Brooks: As we said earlier, traditionally, the vast majority of Windows licenses are sold through PC makers. That isn’t going to change because of what we’re announcing today. That said, 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.

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