Microsoft's Windows 7 pricing: Too high, too low, or just right?

Microsoft took the wraps off Windows 7 retail pricing on June 25. There are still plenty of unanswered questions, but some details are now public. So what's your take? Is the pricing too high, too low, or just right?
Written by Mary Jo Foley, Senior Contributing Editor

On June 25, Microsoft took the wraps off its Windows 7 retail pricing. Bottom line: If you preorder (U.S., Canada and Japan only for now), you can save more than 50 percent over what comparable Vista versions cost. If you don't, you'll pay roughly the same for Windows 7 as you paid for Vista at retail.

(My ZDNet blogging colleague Ed Bott has a more thorough look at the retail pricing for each Windows 7 version.)

There's still plenty we don't know about Windows 7 pricing, such as how much Microsoft is charging PC makers per copy of Windows 7, which may have an impact on what PC makers will charge for new Windows 7 PCs. Microsoft isn't talking about whether it will offer a Family Pack for Windows 7 and how much that will cost. (I asked; no dice.) And, as Bott noted, there's no word on what the Anytime Upgrade pricing -- for users who want to jump up to a more feature-rich Windows 7 SKU -- will be.

Microsoft also acknowledged on June 25 that the Windows 7 Upgrade Option program will kick off on Friday, June 26, as was expected. Participating PC makers and retailers will be offering users who buy Vista PCs as of June 26 a coupon for a free copy of Windows 7 once it is available, after October 22. The official details on how the program will work are available on Microsoft's Upgrade Offer site.

Some industry watchers had been predicting -- and hoping -- Microsoft would get a lot more aggressive with Windows 7 pricing, especially given the state of the economy. Others had been anticipating Microsoft would likely hold pricing steady, even though Windows 7 already is shaping up to be a lot more popular than Vista.

Microsoft is offering a retail price cut of  8 percent (for the upgrade version) to 17 percent (for the full version)  for the Home Premium version of Windows 7. IDC analyst Richard Shim said that is a good start, and added he is expecting the preorders, with the 50+ percent cuts to "likely fly off the shelves."

But given the fact that Microsoft sells new versions of Windows via PC preloads and volume-licensing deals -- not in the form of retail copies -- there are other more pressing pricing matters.

"The more important question is what are the cuts like to the OEMs?" Shim said. "That's where Microsoft makes a majority of their revenue when it comes to the OS. Last time around with Vista, OEMs weren't too pleased with the multiple versions, the delivery delays and the removal of some significant features and they grumbled about it quite a bit. This time around, Microsoft might want to try to win back some goodwill with OEMs."

Charles King Principal Analyst with Pund-IT praised the "global uniformity" of Microsoft's Windows 7 retail pricing, and said that Microsoft already has done a lot to make pricing simpler and easier to understand than Vista's. While he said he is expecting fewer users to want to downgrade to Vista or XP from Windows 7, King said he was curious how downgrades will be priced by PC makers. Will users have to pay extra for "downgrade rights"? No word on that yet.

What's your take on Microsoft's Windows 7 retail pricing? [poll ID= 34]

Other Windows 7 pricing questions/observations?

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