Microsoft Discounts Windows 7 Home Premium

For two weeks starting Friday, Microsoft will pre-sell Windows 7 upgrades for as little as $50.

"As a way of saying thanks to our loyal Windows customers, we are excited to introduce a special limited time offer," Microsoft spokesman Brandon LeBlanc said in an entry to a company blog early Thursday.

Microsoft offered a similar deal prior to the launch of Windows Vista three years ago.

"For customers in the U.S., Canada and Japan, starting tomorrow on June 26, they will be able to pre-order a copy of Windows 7 for delivery on October 22 of either Home Premium or Windows 7 Professional," said Brad Brooks, vice president for Windows consumer marketing, in a video interview posted alongside LeBlanc's blog post. "[For] Home Premium in the U.S., pricing will be $49.99, and the Professional version will be $99.99."

Those figures represent a reduction of between 50% and 58% from the standard list prices for the upgrade editions of Windows 7 Home Premium and Professional. Orders can be placed with participating retailers, such as Best Buy and Amazon.com, or at Microsoft's own online store.

The pre-order discount prices are valid from June 26 through July 11 in the U.S. and Canada, but end July 5 in Japan. Customers in the U.K., France and Germany will be offered similar pre-order discounts starting July 15, said LeBlanc.

Microsoft's pre-order discount was not a surprise. Several weeks ago, a leaked memo from retailer Best Buy had disclosed the limited-time pricing plan.

Microsoft also revealed list prices for Windows 7 today, cutting the price of only one of the three retail editions, even though consumers face tough economic times.

"We are reducing the [list] price of our most popular retail product for customers, the Home Premium Upgrade, by approximately 10%, depending on the market," said LeBlanc. Those prices will be in effect Oct. 22, when retailers start selling the new operating system, and computer makers begin selling Windows 7-equipped PCs. In the U.S., the company dropped the upgrade price of Windows Home Premium to $119.99, an 8% drop from the $129.99 of Vista Home Premium. The full version of Windows 7 Home Premium will cost $199.99, a 17% price cut from Vista's $239.99.

"It's a positive sign that they're slightly willing to give on pricing, and recognizing the state of the economy," said Richard Shim, an analyst with research firm IDC. "But the environment has also gotten a lot more competitive, what with Apple and Snow Leopard."

Earlier this month, Apple announced that it would charge just $29 for Mac OS X 10.6, aka Snow Leopard, when it releases the performance and stability upgrade in September.

Prices for Windows 7 Professional -- the replacement for Vista Business -- and Windows 7 Ultimate, however, will remain the same as the corresponding Vista editions: $199.99 and $299.99 for the upgrade and full versions of Professional, $219.99 and $319.99 for the upgrade and full versions of Ultimate.

The largest price cut, the 17% drop for the full version of Windows Home Premium, did not match the smallest price reductions that Microsoft made in February 2008 for the struggling Vista. Then, Microsoft cut the upgrade price of Vista Home Premium by $30, or nearly 19%.

"I wasn't expecting much bigger price cuts," said Shim. "The fact of the matter is, there's still a lot of features in the operating system worth paying for."

LeBlanc made the same point. "Customers will be paying less and getting more with Windows 7," he said, ticking off new features such as a revamped task bar and Jump Lists.

Microsoft is not cutting a deal with Vista Ultimate users, as one analyst had urged and as users, still angry over Microsoft's failure to deliver on its "Ultimate Extras" promise, had wanted. The company is not repeating the "Extras" concept with Windows 7 Ultimate.

IDC's Shim warned not to read too much into the retail prices of Windows 7, however. "Retail hasn't had a tremendous amount of pick-up," he said, noting that Microsoft's Windows Client group makes the bulk of its revenues not from one-at-a-time sales to end-users, but to computer makers.

He wasn't even sure whether the prices, including the cuts to Windows 7 Home Premium, would be duplicated in the price list for OEMs. "It's a mystery," he said, when asked whether outsiders have a firm grasp of what Microsoft charges computer makers for each Windows license. "They probably will be a little more open to engaging in negotiations with OEMs," Shim speculated. "But that's because the economic environment is tough for everybody right now."

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