Are Heavy Discounts Behind Window 7's Success?

The early sales numbers for Windows 7 are indeed impressive. According to market researcher NPD Group, U.S. sales of Windows 7 boxed software were a whopping 234 percent higher than Vista's first several days of sales. And as my colleague Brennon Slattery pointed out earlier today, a mixture of media hype and mostly upbeat Windows 7 reviews are working in Microsoft's favor.

The news is so good, in fact, that Microsoft CEO Steve Ballmer called early Windows 7 sales "fantastic" during a Thursday media event in Tokyo, according to the Wall Street Journal .

The NPD figures, however, also show that Microsoft is deeply discounting Windows 7, particularly the Home Premium Upgrade version targeted at consumers. The average selling price of Home Premium Upgrade is $76--that's nearly 37 percent off the $120 list, as this NPD chart indicates:

The business-oriented Windows 7 Pro Upgrade is discounted too, although not as deeply. Its $147 average selling price is 26 percent off the $200 list. The Home Premium Family Pack 3 User Upgrade, which cuts the per-PC upgrade price to $50, isn't discounted at all--no surprise there, as the Family Pack already a relatively good deal.

Recently I wrote that Windows 7 Home Upgrade was overpriced, and that consumers wouldn't pay $120 for an OS upgrade that doesn't offer any whiz-bang new features. That's not a knock against Windows 7, which so far appears to be a worthy successor to Vista. But the enhancements didn't warrant the cost, particularly in light of the Vista public relations disaster.

Microsoft is smart to offer deep discounts right away. The low street price encourages impulse buys--$76 is a lot more palatable than $120--and boosts sales of upgrade versions. Redmond can then trumpet Windows 7 as a huge success--which, to be fair, seems accurate out of the gate.

It'll have to keep selling prices low to keep those sales figures high, however.

Contact Jeff Bertolucci via Twitter (@jbertolucci) or at jbertolucci.blogspot.com.

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