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Commentary: Why Microsoft charges less for Windows Me

By lowering the price of Windows Me the software giant is underscoring the issues surrounding a product designed to appeal more to consumers than businesses.

By Michael Silver, Gartner Analyst

By lowering the price of Windows Me to $59 from the $89 Microsoft charged for Windows 98 and 95, Microsoft has underscored the issues surrounding a product designed to appeal more to consumers than businesses.

Microsoft made its intention

See news story:
Microsoft slashes price on Windows Me
clear in a series of announcements about Windows Me throughout 2000. This approach--and perhaps circumstances--have altered the equation that Microsoft uses to figure pricing.

Since the product relies more on the consumer market, Microsoft likely wants to make Windows Me as affordable as possible for as many people as possible. Moreover, the software giant may have to boost sales for the third quarter and fourth quarter because profits from its core businesses have been under pressure.

Microsoft may have had to drop the price of Windows Me because it has not developed extensive new features for this version. The new features appeal to relatively narrow segments of the consumer market public and include improved support for home networking and new media formats, PC maintenance tools and Movie Maker software.

Movie Maker will benefit only people who want to edit movies and have a camcorder they can attach to their PC. The home networking features will benefit only those with multiple PCs and the desire to connect them.

For everyone else, the new release holds less value. Microsoft has even removed features that appeal to businesses, including the Windows Resource Kit and support for system imaging.

Gartner continues to think of these new versions of Windows 95 more as service packs than wholesale upgrades.

(For related commentary on the pros and cons of Windows Me, see TechRepublic.com--free registration required.)

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.