Microsoft says it has not decided how many versions of Windows 8 it will release, and it could easily offer the same number as it did with Windows 7. However, based on the registry in the Consumer Preview version, the Windows 8 Beta website suggests there could be an unexpected extra: Windows 8 Professional Plus. Whether such a thing exists, or what it might include, is open to entirely fact-free conjecture.
As with the Windows 7 versions, most buyers will make the obvious choice between two retail versions: Windows 8 Home Premium for consumers and Windows 8 Professional for business users. This is simple enough. However, Microsoft also likes to offer a premium priced edition for geeks, which in this case would be Windows 8 Ultimate. It's probably not a big seller, but presumably shifts enough units to make the extra stock-keeping unit (SKU) worth the effort.
Large businesses can also buy a separate version, which in this case will be Windows 8 Enterprise Edition. This includes features designed for centralised IT management, and particularly for the use of virtualised PCs and multiple languages from a single system image. It also includes features such as BitLocker and AppLocker. This version can't reasonably be said to confuse consumers because they can't buy it, and there's no reason they should ever have heard of it.
My guess for the putative Windows 8 Professional Plus edition is that it will be pretty much the same as Windows 8 Enterprise Edition, but available under a licensing scheme that suits smaller (SME) businesses. But as mentioned, it may not actually exist.
According to the Windows 8 Beta website, the registry also allows for a Windows 8 Enterprise Eval edition, presumably for evaluation purposes.
PC manufacturers also have another three options that are not available for consumers to purchase directly. These are Windows 8 Starter edition, Windows 8 Home Basic edition, and Windows 8 ARM edition. What they have in common is that they can only be purchased pre-installed on certain hardware.
Windows 7 Starter is the cheapest available version of Windows, and it is only sold for netbooks with limited specifications. It was created to replace a cut-price version of Windows XP, specifically to help those PC manufacturers sell netbooks to offer them at a lower price than full-spec laptops. Presumably Windows 8 Starter will continue this tradition, though netbooks represent a shrinking market.
Windows 8 Home Basic is another concession to price-conscious manufactures in certain geographical areas. These areas do not include the US and Europe. Again, Microsoft is offering a version with reduced functionality, and taking a corresponding cut in profits.
The Windows 8 ARM edition is, obviously, the version for devices based on ARM processors. It will only be available pre-installed on devices -- tablets, convertibles, laptops etc -- that enforce a "secure boot" procedure. This is best seen as offering the features of something like Apple's iOS5 on an iPad, via Microsoft's new Metro interface, with access to a Windows 7 desktop underneath. However, ARM devices cannot run traditional Windows programs written for Intel/AMD x86 chips, and (so far) only Microsoft can enable software to run on the desktop. In other words, the desktop will run Windows management programs, such as Windows Explorer, and some Microsoft Office programs.
Of course, there is really only one version of Windows 7 for x86 processors, and there will only be one version of Windows 8 for x86 processors. Microsoft is a bit like a Chinese restaurant offering several set meals with most dishes in common: if you pay more, you get more dishes, but you are not obliged to pay for dishes you don't want. However, Microsoft makes the most money (at no extra cost) when more people buy the more expensive set meals. This is the "product mix" and it has a significant effect on Windows' profitability.
One difference from the analogy is that consumers who have "consumed" a low-end version of Windows pre-installed on their PC can easily do an "in place upgrade" and get a more powerful version in a few minutes. But while this is superficially attractive, upgrades are not priced to encourage the idea. It would be interesting to know how much Microsoft actually makes from in-place upgrades.
Although some would pefer Microsoft to have a single version of Windows, this is clearly an unworkable idea. Windows covers a vast market, and Windows 8 will hope to appeal to 350 million PC buyers per year plus more than a billion existing users who might be tempted to upgrade. They don't all have the same needs, and they don't all have the same amount to spend. Multiple versions of Windows are the best way both to serve different needs, and to meet Microsoft's fiduciary duty to deliver profits to shareholders.
If Microsoft only had one version of Windows, it couldn't charge home users the full Ultimate price, even if it shipped them the full Ultimate code. There would be huge protests about the price increase, and the users who paid up would be paying for features they neither want nor need. Conversely, Microsoft could slash the Ultimate price to match today's consumer version, but that would pointlessly cost billions of dollars in profits, and would probably lead to shareholder lawsuits. It would be a silly thing to do.
But the fact that there are multiple versions of Windows, doesn't really confuse people -- not even the trolls who pretend it does. Home users buy Home Premium because that's the one pre-installed on the vast majority of retail PCs. There's no reason why they should consider the business version or -- unless they are Windows geeks -- the Ultimate version.
Whether there will be any confusion between the pre-installed Intel and ARM versions is an interesting question. Microsoft must be aware of the risk, and presumably believes it has ways to deal with it. If it's wrong, we'll soon find out.