Report: Microsoft preps Windows 8 upgrade deal for early June debut

Even with the offer, summer sales expected to remain 'lousy,' says analyst

Microsoft will kick off a Windows 8 upgrade program for buyers of Windows 7 PCs in early June, according to a report.

But unlike past deals, this one may come with a price tag.

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The program will, said Cnet yesterday, provide a discounted upgrade to Windows 8 to anyone who purchases a new Windows 7-powered PC between June 2012 and January 2013.

Citing unnamed sources, Cnet said that the upgrade offer would let buyers of Windows 7 systems purchase Windows 8 Pro -- the highest-priced edition that will be sold at retail -- for an undisclosed price.

The offer will debut at the same time that Microsoft launches Windows 8 Release Preview, which the company has pegged to the first week of June. The most likely date is June 5, assuming Microsoft follows the same schedule it used in 2009 to deliver Windows 7's release candidate.

Three years ago Microsoft ran a similar program for Vista-to-Windows 7 upgrades, which was itself a repeat of a 2006 deal that promised buyers of Windows XP machines an upgrade to Vista.

Both deals provided the newer operating system for either no cost or for a small fee. Details varied, as computer makers actually fulfilled the offer, with some charging shipping and handling fees while others gave the upgrade to earlier buyers gratis.

Stephen Baker, a retail software analyst for the NPD Group, said that it probably doesn't matter whether the Windows 8 upgrade is free or comes with an attached fee.

"Consumers have short memories," Baker said in an email reply to questions Friday. "Even I don't remember exactly what happened last time, [so] how could a consumer remember? They will take the upgrade and it if suits their needs they will use it. If not, they will not."

Microsoft has already laid the groundwork for a Windows 8 upgrade program: A URL seen in a screenshot that accompanied the Cnet story -- windowsupgradeoffer.com -- was recently registered by Microsoft. A WHOIS search for that domain showed it was activated by Microsoft on Feb. 22, 2012.

Browsing to the URL now redirects the user to a Bing results page that would normally appear if the search phrase "windowsupgradeoffer" had been used. Bing is Microsoft's search engine.

Upgrade programs are important to OEMs, and thus to Microsoft, said Baker. Microsoft generates the bulk of its Windows revenue from selling licenses to OEMs such as Dell and Hewlett-Packard, so if PC sales stall, so do Microsoft's income.

That's doubly true during the summer, when back-to-school sales usually boost PC numbers.

"It is impossible to know if consumers would have stopped buying if there was no offer, but the sales trajectory for consumer sales before the last couple of upgrades -- and especially the last one for Windows 7 -- show that sales continued on pace as we got closer to the switchover," said Baker. "Back-to-school is a very inelastic purchase period. ...If someone needs a new PC for the start of the school year, they really do have to buy one in August."

With an expected final release of Windows 8 in October -- the same month that Windows 7 debuted in 2009 -- Microsoft and OEMs are in the same bind as three years ago for the back-to-school season.

Baker's convinced that upgrade programs like Microsoft's work, but cautioned that sales will probably be weak this summer, even during back-to-school promotions. "Sales have been lousy all year and we anticipate that to continue until the release of Windows 8," Baker said.

While Windows 8 is a major overhaul of Microsoft's veteran operating system -- the OS promotes touch for input and features a new app environment, dubbed "Metro," where simpler, touch-enabled apps run. But Windows 8's touch-first attitude may be lost on people who buy a Windows 7 machine, most of which lack touch support, this summer.

"Touch is meaningless to the upgrade market we are talking to here," argued Baker. "How many consumers have any idea that Windows 8 is touch focused, or even what it looks like? Very few."

Instead, Baker said, consumers seeing the upgrade offer will assume Windows 8 is an improvement on Windows 7, which more than half are familiar with.

A major unknown in this year's upgrade program is how Microsoft or the OEMs will deliver the discounted Windows 8.

"Will Microsoft use the Windows Store or a direct download, or will we see a lot of discs being mailed out?" Baker wondered.

The last two upgrade programs relied on physical media that was shipped to customers, but as Baker hinted, Microsoft has other options, including the Windows Store -- if it opens that e-market to Windows 7, which it has not done -- or downloads from its website linked to redemption or activation codes it distributes to eligible PC owners.

Microsoft has the ability to offer that last option: Microsoft sells upgrades of Office 2010 minus installation media by providing activation keys that unlock downloaded versions of the suite.

For users who have already purchased Windows 7 PCs and want to upgrade, Microsoft has said it will reveal "limited-time programs and promotions" for Windows 8 at some point, hinting that it may repeat the aggressive pre-sale discounts it offered for Windows 7 before that edition's ship date.

Apple, which is also releasing a new operating system upgrade this year, has not announced an upgrade program, but is expected to: Last year it offered buyers a free copy of OS X 10.7, or Lion, if they bought a Mac in the second half of 2011.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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This story, "Report: Microsoft preps Windows 8 upgrade deal for early June debut" was originally published by Computerworld.

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