Microsoft exec shares some of the method behind the Windows 7 pricing madness

In spite of last week's leak about Windows 7 promotional upgrade pricing, Microsoft execs still aren't willing to talk Windows 7 pricing specifics.
Written by Mary Jo Foley, Senior Contributing Editor

In spite of last week's leak about Windows 7 promotional upgrade pricing, Microsoft execs still aren't willing to talk Windows 7 pricing specifics.

Bill Veghte, Senior Vice President of Microsoft's Windows Business, avoided repeated pricing questions during his appearance on June 8 at the UBS Global Technology and Services Conference. Veghte, instead, talked about some of the "philosophy" behind Microsoft's Windows 7 pricing during his 45-minute Q&A session on Monday morning.

Veghte told conference attendees that Microsoft's pricing matrix is complicated. The company has to take into consideration the different set of circumstances for developed and emerging markets; the enterprise, SMB (small and medium business) and consumer segments; and the netbook segments when coming up with a pricing strategy.

Veghte dodged questions by UBS analyst Heather Bellini about how much more (if anything) Microsoft plans to charge PC makers and customers for Windows 7, compared to Windows Vista and Windows XP.

All Veghte would say was that Microsoft is planning to focus on good/better/best positioning at retail, with Windows 7 Starter representing the "good" Windows 7 SKU, Windows Home Premium, the "better," and Windows 7 Professional, the "best."

Veghte also remained bearish on the effect that Windows 7 will have on PC shipments, in spite of the largely upbeat reviews the product has been receiving from testers.

"In the short run, these (Windows) product releases impact PC growth rates very, very modestly," Veghte said. This isn't unique to Windows 7 or these economically challenging times, he said. The same was true of Windows 95 and Windows 2000.

Veghte also hedged when asked by Bellini about the extent to which Microsoft is expecting Windows 7 to return the company to the higher premium mix uptake that characterized the beginning of the Windows Vista sales cycle. Veghte said that the economic climate, coupled with the continued demand for the netbook class of PCs made it "pretty hard to tell" whether users will be willing to pay more for Windows 7 versions that include more features.

A number of users -- especially a number of Windows Vista users who feel they should be paid by Microsoft for their trials and tribulations with Windows 7's predecessor -- think anything other than a free upgrade from Vista to 7 will be too much. Some are incensed that Microsoft will be offering users who buy new Vista PCs between June 26 (the expected start of the Windows 7 Upgrade Program) and October 22 (Windows 7's general availability date) a free copy of Windows 7.

"That's just wonderfully magnanimous of Microsoft to give free upgrades to users who buy Vista a month before Win 7's launch. What about me? I have Vista 64 bought in January. I've doled out a hundred and some odd bucks for 7 months use. Is that fair?" asked one such user, Dan Dyer.

According to industry scuttlebutt, Microsoft could release Windows 7 pricing as soon as next week. What do you think the company could -- and should -- do to entice both Vista and XP users to upgrade?

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