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

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.
Written by Ed Bott, Senior Contributing Editor

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.

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