Microsoft cuts retail Vista prices

Microsoft on Thursday said it plans to slash prices for retail copies of Windows Vista up to almost 50 percent for certain editions in poorer countries, in order to boost sales that one analyst said have failed to meet expectations.

But many customers, especially those in wealthier countries such as the U.S. or Europe, may only see additional discounts as small as 3 percent -- or none at all -- depending on which of Vista's four consumer versions they are interested in.

[ Analysts say:  Price cuts don't get to heart of Vista's problems ]

"The vast majority of our retail customers -- especially those in developed markets -- may not notice anything different from the promotions they've already seen in their region," according to a spokeswoman. "This is really about formalizing promotions we've run with several partners already to continue to grow our retail business."

In a Q&A interview posted on the PressPass section of Microsoft's Web site, Brad Brooks, the new corporate vice president for Windows consumer product marketing, said that the cuts will arrive "with the retail release of Windows Vista Service Pack 1 later this year," though some markets will see reduced prices sooner through promotions such as with Amazon.com in the U.S.

In developed markets, according to Brooks, Microsoft is mostly cutting prices for retail upgrade versions of Windows Vista Home Premium and Ultimate. "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."

"I think this is a smart strategic move," said NPD Group analyst, Chris Swenson. "Vista hasn't hit their initial expectations."

While Microsoft has sold more than 100 million Vista licenses in its first year -- a figure which excludes the tens of millions of Windows licenses sold to corporations -- more than 80 percent of those licenses have been sold to PC makers to install on new PCs, according to Swenson.

Retail copies of Vista sold through online and brick-and-mortar stores make up most of the rest, Swenson said. They are mostly bought by consumers upgrading their existing computers, as well as some do-it-yourselfers assembling their own PCs, he said.

Microsoft can afford to make the discounts, since it makes much more money per retail copy of Vista sold compared to OEM licenses sold to a PC manufacturer.

In fact, Microsoft has previously done just that, offering a flock of retail discounts at Vista's launch a year ago.