Recently, Microsoft made news by making worldwide cuts to the retail price of their Windows Vista operating system, and this just a little over a year since it was released to the general public. Vista hasn't exactly been the most acclaimed product, just as Microsoft hasn't exactly been the company of the people, so you can bet the so-called “experts” expressed their fair share of opinions on the matter. This article will break them down.
Contributed by Michael Lowry Rating: / 2 March 24, 2008
The news came in late February 2008 that the Vista price cuts would be up to almost 50% in poorer countries for certain editions. In developed countries, like the U.S., the discounts will be far less (5% or less) and will only affect the upgrade versions of Vista Home Premium and Ultimate. It's important to realize that these price cuts only pertain to the retail copies of Vista as opposed to those sold to PC manufacturers through an OEM (Original Equipment Manufacturer) license. This could have something to do with low retail sales of Vista upgrade editions as compared to its predecessor, Windows XP, when it first came out, but these statistics are all relative.
Windows Vista came out with a primary objective to improve upon the security of previous Windows operating systems, especially XP, which had been frequently criticized for its vulnerabilities. But Vista also came with many new and "better" features, such as an updated GUI, called Aero, and new multimedia tools. However, as I mentioned earlier, Vista got a less than warm reception because of its incompatibility with older PCs.
If you examine the situation closely, you'll notice that Windows XP came out just one year after the release of Windows 2000 and ME. People with these OSs are much more likely to upgrade to XP after such a short time since the release of 2000 and ME than those who had to wait up to five years for Vista to come out. All the new features on Vista require some powerful hardware for which most people simply aren't willing to shell out the money. I think people would much sooner buy a new computer with Vista already installed on it.
Michael Cherry, and analyst with Directions on Microsoft, gave this analysis: people are so confused about the versions and what they need for hardware that they don't even get to the price. Currently in the U.S., Vista has these versions: Home Basic, Home Premium, Business, and Ultimate. Cherry also said, "Microsoft has always gambled that if their software got bigger and they added more features, they didn't have to fine-tune it because the hardware would be there to bail them out."
That's just one person's opinion. In the next section, we'll look at much more analysis (hint: you may want to strap in if you're a Microsoft fan), so keep reading my friends.
Most of the opinions I've come across point to the fact I mentioned earlier about how very few people actually update their PCs in the first place. This is a major reason why the vast majority of Vista's sales have come from the sale of new computers with some version of Vista on it. But putting all these factors aside, it's time to look at the actual price of Vista compared with its competitors. In the U.S., the main price cut figures are these (rough estimate): Vista Ultimate (full version) from $399 to $319, (upgrade) from $259 to $219, and the Vista Home Premium upgrade from $159 to $129, which obviously makes it the most "economical" version because it's just $30 more than the Home Basic upgrade.
David DeJean of Computerworld.com argues that the most viable competitor for the Vista Home Premium upgrade is Apple's OS X -- Linux, although much cheaper, is still not as easy to use or maintain. DeJean says, "Today I can buy the 'family pack' retail upgrade of Leopard from Amazon.com for $171.49 and install it on up to five computers. That's $34.30 a copy." If you do the math, the Vista Home Premium upgrade is more than 3.5 times as expensive. However, DeJean notes the major arguments coming from such a comparison. He says, "the PC side will say, $34.30 for Tiger-to-Leopard doesn't buy you nearly as much of an upgrade as XP-to-Vista represents...But then, the Apple side will say, you weren't waiting for six years for better security either."
Perhaps a better question to ask is whether Vista is truly an "upgrade" from XP. I mentioned the hardware issues earlier and these specifically have to do with the compatibility of drivers (recently with the pre-released version of Service Pack 1). Mike Elgan, also from Computerworld.com, seems to think that Microsoft has grown a bit too comfortable in their own shoes. They've taken what's gotten them this far and refused to adapt to what has become a new revolution in UI (see the Windows Mobile OS), banking on the fact that they still dominate the OS market. Elgan says, "The future belongs to what I call the 3G user interface, which replaces flat icons and folders with multitouch, gestures, physics and 3-D."
Apparently what Microsoft is lacking is simplicity. They are going for more features and applications, while still gearing toward customers and vendors' products made over a decade earlier. And what Microsoft isn't doing, their competitors are. According to Elgan, "Apple is eating [Microsoft's] desktop marketshare because they succeed with simplicity and UI elegance. Google might do so with its cell phone UI. And Asus...was able to cobble together a quick and dirty UI for Linux that's way better than Windows Vista for UMPCs."
In the next section, I'll cover an even more embarrassing gaffe having to do with how Microsoft tried to deal with those hardware compatibility issues.
In case you don't know, there has been an ongoing lawsuit against Microsoft alleging that they intentionally misled customers by labeling PCs as "Windows Vista Capable" when in actuality they could only run on the most basic version of the OS, Vista Home Basic. The main beneficiary of the scheme, besides Microsoft, was Intel because the whole plan was supposedly set up to help Intel sell older chipsets with the 915 graphics embedded. Well recent emails from within Microsoft have added more fuel to the fire, pretty much corroborating all allegations made against them in the case.
Here are some of the more interesting emails I came across:
2-1-08 From Mike Ybarra, a senior director at Microsoft, to Jim Allchin, former director of Microsoft's Windows Division - "We are really burning HP - who committed to work with us to drive the UI experience across platforms and have already made significant investments. We are allowing Intel to drive our consumer experience...I don't understand why we would cave on this when the potential to drive the full UI experience is right in front of us." Allchin's response - "It might be a mistake."
3-1-06 A response from Anantha Kancheria, a program manager lead, regarding whether Intel's 865-based platforms would qualify as Vista capable - "Based on the criteria that exist today for Capable, even a piece of junk will qualify..."
2-14-08 From Sergio Larrian detailing the number of desktops that could run Vista Premium - "As of January, 81 percent of desktops are Windows Vista capable...only 4 percent of desktops are Windows Vista Premium capable."
The situation upset many of Microsoft's biggest clients, including Wal-Mart, Dell, and Best Buy. In another Microsoft email dated Feb. 23, Robin Leonard, a consumer sales manager, said, "[Wal-Mart] would like to see Microsoft reconsider the program and allow for the use of two different logos...They also went so far as to say that they wished that Windows Home Basic was not even in the sku line up."
These emails haven't answered all the questions yet. In the next section, I will go over some of the more important ones regarding this case.
The emails I brought up in the last section came out roughly around the same time Microsoft announced the price cuts to the Vista OS, leaving almost no time to sort out the emails and decipher the case's particulars. For instance, we know that Intel stood to gain from Microsoft's help by allowing them to meet quarterly earnings, but what did Intel promise to give Microsoft for their efforts? Seems to be a bit confusing, if you ask me.
Also, Windows Vista Home Basic really seems to be lacking the most essentials features of the other versions of the OS (it doesn't even have the Aero GUI), so why is it even put in the same class? Clearly Microsoft was too ashamed to distinguish their Vista Capable logo as Home Basic only. This probably has something to do with keeping Intel's older chipsets being relevant in some form of Vista.
Then there's the fact that Microsoft actually let this happen. Jim Allchin claims he didn't even learn about the scheme until after it happened. But even so, Microsoft should have settled the suit long before the emails came out, instead of taking it on the chin like they did. As far as I can tell, no one at the top of Microsoft's food chain has been punished. Of course, we're still recovering from the aftershocks of the emails.
All this brings us back to the fact that the Vista price cuts directly coincide with the emails and this case. Is it a cover up? Probably. But I don't think Microsoft will be able to swat this problem away so easily. Even if they do, there's the 899 million euros fine they received from the European Commission in late February for using high prices to prevent software competition. It looks like Bill Gates chose the perfect time to step down, eh?
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