Update: Microsoft cuts Windows Vista price in China

Microsoft has dramatically cut the price of Windows Vista in China in a bid to boost sales of its new operating system.

Microsoft cut the retail price of Windows Vista Home Basic in China to 499 renminbi ($65.80), from 1,521 renminbi -- a 67 percent reduction. The Home Premium version of Vista also got a significant price reduction, down 50 percent from 1,802 renminbi to 899 renminbi.

The new prices, which were introduced Wednesday and outlined in a statement from the company on Friday, represent a steep discount compared to what users in the U.S. and elsewhere are charged for the software. Microsoft's Web site lists the recommend U.S. retail price of Vista Home Basic at $199, with Home Premium priced at $239.

Microsoft also plans to discount retail pricing for the Business and Ultimate versions of Vista in China, but the statement did not indicate how big those reductions will be.

Microsoft sold 60 million Vista licenses by the end of June, but many in the industry remain unimpressed by the new operating system.

That dissatisfaction bubbled to the surface in a recent remark made by Acer CEO Gianfranco Lanci to the Financial Times Deutschland.

"The whole industry is disappointed with Windows Vista," Lanci told the newspaper.

China is the world's second-largest PC market, and is counted among the fastest growing markets in the world. But it also has one of the highest software piracy rates, and many white-box PC makers and consumers install pirated versions of Microsoft's software on their computers.

The main problem is cost. Chinese users have long complained that Microsoft's software prices, traditionally kept in line with those set in other markets, were unrealistically high, given local incomes. Reducing Vista's price in China narrows the price gap between original versions of Microsoft's software and pirated copies, and should result in higher sales.