For Free Vista Upgrades
October 24, 2006 6:00 p.m.
Microsoft Corp. said it will offer coupons for free or heavily discounted upgrades to its long-delayed Windows Vista operating system to consumers who buy computers this holiday season ahead of the software's release.
The software giant said the program will defer around $1.5 billion in revenue from its current fiscal second-quarter to its third quarter. Microsoft, which will report quarterly results on Thursday, said it does not expect the deferral to affect its full-year sales outlook.
Vista is currently scheduled to be released to consumers sometime in January, after numerous delays that forced the Redmond, Wash., software maker to push the launch date beyond the holiday season. It's also expected to be released to big business clients in November. The exact launch dates for both versions haven't been made public.
The coupon program begins Thursday and runs through mid-March. Particulars of each deal will vary depending on the computer maker and retailer.
Among the plans by larger computer manufacturers:
• Hewlett-Packard Co. said people who buy certain H-P Pavilion, Compaq Presario and H-P Digital Entertainment Center computers equipped with Windows XP, Microsoft's current version, can upgrade to Vista for free. There may be shipping and handling fees, depending on the retailer.
• Gateway Inc. will offer free upgrades for people who buy Vista-capable computers directly from the company. Gateway spokeswoman Kelly Odle said shipping or product duplication fees may be charged people who buy Gateway computers through other retailers.
• Dell Inc. said buyers of Vista-capable Dell computers running Windows XP Home Edition will be able to buy Windows Vista Home Basic at the discounted price of $45, plus shipping and handling charges. Buyers of computers running Windows XP Media Center or Windows XP Professional will only have to pay shipping and handling to get a comparable Vista version, Dell spokesman Bob Kaufman said.
Mike Sievert, corporate vice president for Windows marketing at Microsoft, wouldn't disclose the financial terms reached with the computer makers.
Analyst Charles Di Bona with Bernstein & Co. said he didn't expect Microsoft's financial results to take a hit as a result of the promotion, although he said the process of accounting for the licenses may mean that revenue from those sales is recorded over a longer period of time.
Mr. Sievert said it was hard to say how many people will actually install Vista on a new Windows XP computer, even if Vista is available for free. "What we wanted to do was make it available," he said.
Microsoft and computer makers have offered similar deals in the past to try to lure people to upgrade. The cost to upgrade or buy a new version of Vista at full retail price will range from $99.95 to $399, depending on the version.
Microsoft said it also is backing a similar program for people who buy computers that come pre-loaded with the current version of its business software, Office 2003, and want to upgrade. The new version of the software suite, Office 2007, is due out to consumers in January as well.