Are there really too many Windows editions?

Ask any Windows pundit about all the different editions of Windows Vista that Microsoft offers and you’ll invariably get the same response. There are too many! Consumers are confused! It all needs to be simplified!

To which I say: Be careful what you wish for. The case for reducing the number of Windows editions to one or two sounds convincing in the abstract, but the argument breaks down quickly once you start to examine the details and consider how such a change would affect the way you and I buy Windows on consumer and business PCs. In fact, if Microsoft were to try, it would have a devastating effect on the low end of the market.

The latest to jump on the too-many-versions bandwagon is my friend and ZDNet colleague Adrian Kingsley-Hughes. After tweaking me for “sweating the small stuff,” in my conjecture about what Windows 7 will ultimately be called, he writes that he’s “far more interested in how many different flavors of the OS we can expect to have to deal with.“ And like so many others who write on this topic, he proposes a simple solution:

Now, ideally I’d like to see Microsoft return to a situation where there’s one consumer and one professional flavor of Windows. In fact, why not take it a step further and adopt the Mac approach and go with a single version.

That’s a bad idea, in my opinion. The next time you hear someone make this suggestion, here are two questions to ask:

How much are you going to charge for this all-in-one Windows version?

Currently, Microsoft has a tiered pricing system for Windows. For OEM copies sold with a new PC (and remember, that's how 9 out of 10 copies are sold), that price is buried in the cost of the system and isn’t broken out. But for the sake of argument, here are my best estimates of how much each Windows Vista edition adds to the cost of a new PC:

• Home Basic $20
• Home Premium $60
• Business $130
• Ultimate $190

Microsoft brings in a steady stream of revenue from this current mix, revenue that is the biggest part of its bottom line. If you were to replace those four editions with a single edition for a single price, my back-of-the-envelope calculation says the new price would have to be in the neighborhood of $90. That would add $70 to the cost of entry-level PCs, many of which are currently being sold to budget -conscious businesses with Vista Home Basic. For a $400 bare-bones PC, that’s a 17.5% price increase. Yikes!

The good news is that this pricing scheme would mean a price reduction for those currently choosing Vista Business and XP Pro. In other words, big business would pay less. As far as I'm concerned, anyone who calls for a single edition of Windows is advocating reverse socialism, a transfer of costs to consumers and small businesses from large corporations. I vote no on that proposal.

How will you split up business and consumer features?

OK, so instead of a single version, let’s have two. As Adrian points out, that was the way Windows XP was originally sold. XP Home was a true subset of XP Professional, lacking the ability to host a Remote Desktop session, join a Windows domain, and edit group policy settings, for example.

Since then, the SKUs have become more complicated. If you ditched the Home Basic and Ultimate editions and offered Home Premium and Business, you’d probably satisfy most people. Except you’d really create a frustrating situation for those people who want both sets of features.

Businesses don’t want their OS cluttered up with frills like Media Center. Consumers don’t need the capability to join a domain. The idea behind Vista Ultimate is that it combines the Consumer and Business feature set (so you can attach five extenders to your Media Center and also use it as a Remote Desktop host and connect to a domain and even encrypt the system volume with BitLocker). Currently, that’s probably 5% of the market or less, but it’s the most demanding and sophisticated segment of all.

I don’t think Microsoft has done a very good job of drawing the lines between different editions. For example, the Complete PC Backup feature should be standard in every single copy of Windows and not restricted to Business and Ultimate. They’ve done a terrible job of educating consumers on the differences between editions. And they’ve made it needlessly expensive and complicated to upgrade, as well.

Still, despite all the howling from pundits, I hear few complaints from real people that they’re confused over which Windows edition to buy. Consumers and OEMs seem to have done a pretty good job of figuring out which versions are right for which segments of the market. Sometimes, simpler isn’t better.