Microsoft Offers Discount Coupons for Upgrade to Windows Vista OS

In an effort to mollify hardware vendors worried that delays in the Windows Vista launch will dampen holiday PC sales, Microsoft is offering a discount to consumers and small businesses that want to upgrade from Windows XP to the Vista operating system.

Microsoft will offer the upgrade coupon to shoppers who buy a Vista-capable PC between this Thursday, October 26, and March 15, 2007, allowing them to redeem the coupons for a free or discounted upgrade from Windows XP to Windows Vista and from Office 2003 to Office 2007.

The timing indicates that Vista will be delivered at the end of March unless Microsoft again delays its shipment.

The exact cost of the upgrade will vary among PC vendors. For instance, HP will offer its new North American customers a free upgrade from Windows XP Home to Windows Vista Home Basic, XP Media Center Edition 2005 to Vista Home Premium, or XP Professional to Vista Business. The offer applies to those who buy an HP Pavilion or Compaq Presario desktop or notebook PC or an HP Digital Entertainment Center, if it includes a qualified XP system, is Vista-capable, and is purchased within the coupon dates.

Other vendors may charge "a nominal fee" to upgrade from Windows XP Professional, XP Tablet PC Edition, or XP Professional x64 Edition to Windows Vista Business or Vista Business 64, Microsoft says. Read more about Microsoft's upgrade program, called Express Upgrade. PC World took a hard look at the program and found there are costs, both in time and money, that you should consider before buying a new PC in 2006.

Who Is Affected?

The program is a moot point for users under Microsoft's volume licensing program, who are expected to get access to Vista at the end of November.

But consumers, small businesses and companies buying desktop PCs labeled "Windows Vista capable" will be eligible for the Vista upgrade coupons.

Microsoft hopes the coupon program will help drive holiday PC sales. In March, Microsoft again delayed the shipment of Vista moving it from Dec. 2006 to the first quarter of 2007. The move appeared to leave PC manufacturers out in the holiday cold.

The Importance of Holiday PC Sales

Vista offers features like translucent desktop windows, improved performance of digital music and photography, and data backup for business users. But those features come at the cost of greatly increased demands on hardware performance. A Vista-ready PC must have at least 512MB of memory and an advanced processor and graphics card.

PC vendors and component manufacturers stand to profit from the boost in demand for those parts, but they have grown increasingly nervous about missing the holiday sales season as they watched Microsoft bypass several earlier deadlines for shipping the new OS, analysts say.

"I definitely see it as a move by Microsoft to appease PC vendors and key component manufacturers such as Intel. Microsoft has very little goodwill left with the vendors, having disappointed them several times with Windows Vista delays," Martin Kariithi, a hardware analyst with Technology Business Research, says.

In fact, he adds, this is a smart way to achieve that goal, since Microsoft will probably incur only a small charge to maintain the coupon program and should not lose much potential profit compared with the full Vista sales price.

Also, Microsoft will share the costs of the upgrade program with vendors like Hewlett-Packard, which has an interest in giving consumers enough confidence to buy PCs now instead of later.

"We do believe that the Vista Express Upgrade program will help early adopter customers who prefer to upgrade to Windows Vista, but [who] would also like to take advantage of the myriad promotions and discounts typically offered during the holiday period," HP spokesperson Tiffany Smith said in an e-mail.

Coupons Also for Microsoft Office 2007

A parallel program called Microsoft Office Technology Guarantee Programs will provide similar upgrades to those that purchase editions of Microsoft Office 2003. The PCs and Office software must be purchased from a certified Microsoft OEM or "smaller computer makers, known as system builders," according to Microsoft.

In addition, those who buy stand-alone versions of Office 2003 between Oct. 26 and Feb. 28, 2007 also will be eligible for the Office upgrade plan.

Users under either program will receive discounted offers on Windows Vista and the 2007 Microsoft Office system, which is now the center of Microsoft's real-time collaboration strategy.

The upgrade program is expected to include free and low-cost upgrades based on the version of the operating system or Office software purchased.

According to the Vista team blog, users will be charged a "nominal fee" when upgrading from Windows XP Media Center Edition 2005 to Windows Vista Home Premium; Windows XP Professional to Windows Vista Business; Windows XP Tablet PC Edition to Windows Vista Business; and Windows XP Professional x64 Edition to Windows Vista Business 64.

Upgrades from Windows XP Home Edition to Windows Vista Home Basic or Windows Vista Home Premium will be available at a "50% discount from the boxed product upgrade price, plus shipping and handling."

John Fontana of Network World contributed to this story.

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