Vista Mythbusters #4: Yes, Microsoft really is price-gouging

Vista Mythbusters #4: Yes, Microsoft really is price-gouging

Summary: Microsoft says they haven't raised prices for Windows Vista. And if you hold your head sideways and look at the official price list just right, you have to agree. Unless you're planning to buy Vista Ultimate edition, that is. With the highest price tag for any Windows version ever, the pricing makes no sense at all.

TOPICS: Windows

Myth: The officially announced prices for Windows Vista aren't any different from previous versions.

Reality: It all depends on how you look at it. By most measures, Windows Vista prices will indeed be virtually identical to prices for Windows XP. But one price in particular stands out, and unless Microsoft has a real surprise in store, Windows customers who buy Vista Ultimate are being gouged.

Microsoft says they haven't raised prices for Windows Vista. And if you hold your head sideways and look at the official price list just right, you have to agree. The two Vista editions that are directly comparable to Windows XP editions available at retail will be released with the same price tag as their predecessors. The estimated retail price (ERP) for Vista Home Basic is $99 (upgrade) and $199 (full license); that's identical to the ERP for XP Home Edition. Similarly, Vista Business has the same ERP as XP Professional: $199 (upgrade) and $299 (full license).

What about the other three editions? Well, Enterprise edition is available only to Volume License customers and isn't sold at retail. It also has no direct predecessor, so no head-to-head comparison is possible.

Likewise, there's no way to compare the price of Vista Home Premium. It's a direct descendant of Windows XP Media Center Edition 2005, but the XP version is only sold with new computers or through the OEM System Builder program, so there's no ERP to compare. The main extra ingredient in Vista Home Premium is Windows Media Center (with the companion Windows Movie Maker HD and DVD Maker utilities). The ERP of $159 (upgrade) and $239 (full license) puts a price tag of $40-60 on those features, which doesn't seem out of line. (Earlier this year, I put together an explanation of exactly what you get for that extra $40-60. See Vista Media Center: Ready for the Living Room? and the accompanying detailed image gallery.)

And then there's Ultimate Edition. It combines the workplace-centric features of Business edition (an excellent image-based CompletePC Backup utility that outdoes Norton Ghost, support for Windows domains, full access to file ACLs, Remote Desktop host support, and so on) with the Media Center features in Home Premium edition. It's got literally every feature available in every Vista edition, and its price tag is the one that has Windows customers fuming. At $259 (upgrade) and $399 (full license), it's the most expensive version of Windows ever sold - with a $100 premium over Vista Business and XP Professional, it's a full 33% higher than the most expensive Windows ever sold.

And the pricing makes no sense compared to the other editions. In most daily commercial transactions, you get a discount when you buy more. Business costs $100 more than Home Basic. Home Premium costs $40-60 more than Home Basic. So logic says that Ultimate, which combines the extras from both editions, should come in at a price that is greater than Home Basic by the sum of those two packages, or $140-160, maybe with a little discount for pushing the I Want It All button. Instead, there's an extra premium. To get it all, you have to pay $20-40 extra.

So... ripoff? Sure looks that way.

But maybe, just maybe, there's an ace up Microsoft's sleeve, something they're planning to throw into the pot to sweeten the deal. The new Windows Update page in Vista RC1 includes this reference to Windows Ultimate Extras.


What are those mysterious "extras"? Microsoft is being deliberately coy. Some older beta versions had a separate Control Panel icon that promised "cutting-edge programs ... available only through Windows Ultimate Extras" along with "innovative services" and "tips and tricks ... to get the most out of Windows Vista Ultimate Edition."

Doesn't sound all that exciting, does it?

Through the years, Microsoft has been pretty damn smart about its product marketing, but they've screwed this one up completely. Announcing the ridiculous price for Windows Vista and allowing it to sit out there for weeks, perhapes even months was a blunder. It's hard to imagine what sort of goodies they can include in the Ultimate Extras box that will make this package irresistible and worth the extra cost. If there really is something great there, wouldn't it have made more sense to offer some teasers now for beta testers? That way, the super-high price for Vista Ultimate wouldn't look out of line

Until that surprise appears, anyone who's eyeing Vista Ultimate has every right to feel like they're being ripped off.

For the introduction to this series, see Vista Mythbusters #1. For all posts in this series, see this page.

Topic: Windows

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  • "Most Expensive Windows Ever"

    A quibble, but there's a "client" hiding in there someplace, since the server flavors put Ultimate in the shade.
    Yagotta B. Kidding
  • Hey, Ed, I've got your answer...

    Please email me at and I will point you to the feature(s) that will make it all worth $40 and more.
    • VirtualPC ...

      ... is the part of Ultimate that no one is talking about. It will give native linux capabilities to Vista and, at $40, it is about what Linux costs when purchased from a vendor.
      M Wagner
      • Virtual PC is now free...

        And VPC 2007 will be as well. Virtualization software is not much good without a license to run the software inside the VM.

        Enterprise edition (not Ultimate) will reportedly offer multiple licenses to run additional copies of Windows in VMs. If Ultimate offered that, it would be huge and worth the premium, but Microsoft hasn't said anything along those lines yet.
        Ed Bott
      • 'Native linux capabilities'

        Have you tried the new FREE VMWare Player? I have installed it, along with the FREE Browser Appliance, AND a FREE copy of SUSE 10.1 . SUSE (with KDE) runs flawlessly in a virtual environment *inside* XP Home.

        I'm not a linux nut--I mostly program in Windows, but this is a serious shot across the bow of Microsoft. What they need to do is change their licensing model so that I can run multiple copies of Windows on the same hardware at the same time, or risk exposing many customers to the killer browser combo of linux and Firefox.
  • For My Wallet: Sticking with XP unless Vista Ultimate drops price

    If for Comparison Purposes:

    Vista Home Basic = XP Home = $99 upgrade/$199 full
    Vista Business = XP Pro = $199 upgrade/$299 full

    Why bother to upgrade? I see no value in upgrading. I could care less about the new eye candy that is in Vista. The security upgrades in Vista are tempting, but I have XP doing everything that I want since XP has all it's updates + my own selected antivirus, antispyware, firewall, and I'm using StripMyRights (the update to DropMyRights) to strictly limit internet apps from doing anything more than what they are suppose to do. Plus, I have Firefox customized the way that I want and that IE7 would have to catch up with. I'll stick with XP.

    However, from my perspective, the best situation for upgrading is get Vista Ultimate since that has everything that I would want to upgrade to if I were to get Vista. I not want anything less than Vista Ultimate. I would not settle for less if I were to upgrade to Vista. But with Vista Ultimate costing $259 for the upgrade or $399 full license, I would have to save more pennies to get the upgrade. So why bother? I would want to give Microsoft the least amount of money to legally have Vista Ultimate. Microsoft is greedy and wants the extra hundred dollars. Microsoft has got to drop the price because how much more Operating System Upgrades do people really want? The geeks and the techheads like the EdBott always want more, but normal people could care less particularly if the pricing is looking ridiculous.

    The EdBott has finally gotten it right this time. The pricing for Vista Ultimate is a ripoff. Any other version of Vista has no value compared to Vista Ultimate if you have XP running fine and if you are not an geek techhead who may only have a slight fleeting casual question as to whether to upgrade. If you are a geek techhead, then of course any upgrade even Vista Basic would probably make you happy. But for the rest of us, who cares about Vista unless if you can have the Ultimate version.

    I would not want to upgrade to Vista at all unless Vista Ultimate had discounts to decrease the Microsoft pricing on Vista Ultimate. The Vista Ultimate pricing is in the Ultimate stratosphere beyond my wallet's Ultimate tolerance for buying any sort of Microsoft Operating System.
  • Bill's kids have to go to college

    This is no big suprise, but if you plan to upgrade Office at the same time, the cost will be close to roughly $800. Ouch! Way too much given PC prices are dropping like a stone. Without a box, Microsoft's is making frisbees. They should consider this strategy well. I know that the last time I bought skis, my PC OS didn't come close. I think MS will find that it is a BUYERS market. If we have waited this long for Vista, what's a few more years to let the price fall.

    Be serious, Bill. You are not selling "joy in a box."
    • Silly Rabit

      I won't say they would never ever lower the full retail price but, if history is any indicator Microsoft won't drop the retail price. The full retail price of XP from Microsoft is still the $199.00 they charged 7 years ago.

      Where you will see price savings is by purchasing Vista as part of a pre-installed package from an OEM.
      Edward Meyers
      • I've seen Retail copies

        For Windows XP Home as low as $135 on store shelves. But if you buy direct from Microsoft it's $199.

        I also found that if I buy a hard drive from certain hardware shop I can get an OEM version of Windows XP home for $90 and I think it was $169 for the Pro version.
        • Those are the OEM versions

          And Wal-Mart has them for $119. The OEM versions ties you contractually to 1 computer. When the computer dies you can not transfer it.

          The full retail version allows you to transfer it to a different computer.
          Edward Meyers
          • But when is a new computer a new

            If I replace all the components of my computer over the course of a year, am I breaking the rule? Microsoft's WGA doesn't think so.
      • That is Microsoft's business model ...

        ... to support OEMs by making retail upgrades unattractive.
        M Wagner
        • Not really

          The OEMs still are able to sell PCs for less than the retail cost of the hardware due to economies of scale.

          Windows doesn't come out with upgrades fast enough for it to matter to the OEMs . Most home users wouldn't want to self-upgrade the OS anyhow as each new version's features isn't compelling enough to the home user to justify the cost or the trouble of the install not to mention that few home users would even consider an upgrade in the first place due to the fact that there is a lot of inertia, a lot of it dealing with the cost of relearning, if the OS changes anything significantly.

          Home users tend to buy a computer with an OS installed and don't upgrade unless there is some program, usually a game, that they feel they must have that isn't supported... that or the computer no longer functions. Because home users don't quickly upgrade, software companies (and FOSS) targeting home users tend to support the older OSes longer. You can still buy shareware/consumer software that runs on 9X.
          Edward Meyers
          • Not Quite

            I agree with most of your post, but the OEMs do care about OS upgrades. Witness the bad feelings toward MS when the release of Vista was delayed past the Christmas buying season. And that's what they were willing to say publicly. I get the impression a lot of them blame MS for lost sales as a result of Vista not coming out earlier.

            But for the rest of it? I know one person who is only now considering upgrading to Windows 2000 from 98 (I don't like XP and that's rubbed off on many of the people who come to me for tech advice). For most, if the system works without too much trouble, they stick what they have.
          • I agree with what most of what you say, but...

            I don't think the OEM's are losing PC sales because of Vista. The problem is the newest hardware isn't "better enough" than the computers people already have. People are going to be spending oodles on plasma, LCD and HD TV's, maybe a few Media center boxes will go along with that, but most people don't see any need to spend $500-$1000 for a new 3+ GHz box to replace their 2+GHz box, especially as it does everything they want already. I don't think Vista is going to sell many new boxes to the masses by itself. They need the killer app, game, or ability that XP doesn't have and can't do, and then Vista may make it happen. Security might do it for a few, eye candy for others, but not for the masses. You come out with Halo 3 for the PC and it needs Vista, and sales will go through the roof...speaking of which, where's Halo 2 for the PC?
  • Microsoft vs Microsoft...

    Who will be the winner?

    A few points for those not content with a comparisons between
    Microsoft's products.

    1) Vista is not available commercially at any price until sometime
    next year.

    2) OSX Tiger is available now in 1 SKU. It's cost is $129 US for a
    single seat and $199 US for a 5 seat license.

    3) OSX has been available for 5 years.

    4) System requirements for Tiger are 256 RAM and a 300 Mhz
    G3 processor.

    5) The cost of a computer to run this system is hovering around
    $50 US
    Harry Bardal
    • Where do I get that $50 computer?

      I think you meant $500. And it's actually $599 for the base Mac Mini, which needs a few upgrades to be really useful.
      Ed Bott
      • Ebay

        Hovering around $50-$100 is the current going price for used G3 Macs.

        Although you can actually charge someone $25 for them to have you take away a PC capable of running DeLi or Puppy Linux, especially in areas with E-Waste laws.
        Edward Meyers
      • Apples and Apples

        Minimum requirements are minimum requirements. If a
        comparison is to be made, it has to start somewhere. As the
        comparison scales, so to do the onerous Vista demands. There
        is no point at which it's remotely favorable to Vista. Now their
        gouging to boot.

        The minimal listed requirement to run Tiger is a G3 iMac. Please
        look it up. These start at $50. It just so happens, because Tiger
        is OSX is 5 years old now. The minimum happens to be a used
        computer. This is just one advantage of being around a while.

        The comment that it requires upgrades to be useful is patently
        false. You might try to further your cause by using the same
        distortions to address the other points I brought up. It's worth a
        try anyway. At the end of the day, you will have successfully
        compared Microsoft with Microsoft. You have found Microsoft
        lacking? This blog yes, it builds that street cred, but let's call it a
        dead heat for arguments sake. The solution regardless of it
        being XP or Vista? Well, that will be Microsoft. This has been a
        vain trip to the shooting gallery. Nothing has shot back.

        Say, weren't you the same guy who accused me of cognitive
        dissonance yesterday? Well, not to worry Ed, you were still first
        to market with album cover art.
        Harry Bardal
        • You win Harry

          From now on this blog will be called Ed Bott's Apple Report. I'll write only about Apple products and will ignore everything from Microsoft.

          Thanks for the shipment of Kool-Aid, btw. It was delicious.
          Ed Bott