Holiday PC buyers get Vista upgrade promise

Program lets people buy now, upgrade to Vista later, as Microsoft tries to persuade holdouts to spend during the peak shopping season.

Ina Fried Former Staff writer, CNET News
During her years at CNET News, Ina Fried changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley.
Ina Fried
5 min read
Computer buyers who pick up a new PC this holiday season won't get the latest version of Windows or Office, but they can score a discount if they decide to upgrade later.

Those who buy a system with Windows XP or Office 2003 between Thursday and March 15 will be eligible to move up to Windows Vista or Office 2007. The terms of the Vista "Express Upgrade" offer will vary from one PC maker to another, Microsoft said Tuesday. In some cases, the upgrades will be free, while in some other cases, they may require the customer to pay up to half the price of the updated software.

"We do expect there will be many cases where it will be a free upgrade or just the cost of shipping and handling," said Brad Brooks, a general manager in the Windows product marketing unit.

As for Office, computer makers will include a coupon that allows PC buyers to get a similar version of Office 2007 by mail from Microsoft for the cost of shipping and handling.

What's the upgrade?

People who buy from smaller PC makers will get their new software directly from Microsoft. This is what's on offer for U.S. shoppers:

XP version Vista upgrade
Media Center 2005Home Premium
Tablet PCBusiness
Professional x64Business 64
HomeHome Basic (half price)
HomeHome Premium (half price)

Those who buy from bigger PC makers will get their upgrade through those companies. Here's what Hewlett-Packard is offering free, plus shipping and handling:

HomeHome Basic
Media CenterHome Premium

Microsoft had long hoped to have Vista on store shelves in time for this year's holiday buying season. It said in March, though, that the Windows update would not be ready to be put on PCs for sale until January, casting a cloud over the busiest computer-selling season of the year.

Brooks said Microsoft hopes the Office and Vista upgrade programs will allay any concerns people might have about buying a PC for the holidays. The company has been working for the past few months on coming up with a program that met with approval from computer makers and retailers.

"The holiday season is a big season for PC sales," Brooks said. "Our partners did not want to see a slowdown because consumers might have an objection."

Deferred gift
But a coupon makes a lousy stocking stuffer, said Michael Cherry, an analyst with Directions on Microsoft. "If you were a young child, and you really wanted a bicycle this Christmas, how would you feel when you wake up Christmas morning and your folks give you a picture of it and say they will give it to you as soon as it is ready?" Cherry asked. "I am not surprised they are doing it. But I am not sure how much impact it is going to have."

Also, getting a coupon means manually upgrading the operating system. "The upgrade could be fairly seamless, but it might not be," said Roger Kay, an analyst at Endpoint Technologies Associates. "As the consumer, you want to get this thing preloaded so it will just run."

Vista's arrival after the December shopping season will dampen holiday sales and shift them to 2007, Kay predicted. However, "if they had no coupons, it would be worse," he noted.

Michael Gartenberg, an analyst with Jupiter Research, believes that the program could persuade some of those who have hesitated to buy. "If you're sitting on the fence in terms of buying a computer, it may be that push you need to get over the fact that Vista is coming," Gartenberg said.

Getting the upgrade
While those who buy a big-name PC will handle the upgrade through the computer maker, those who buy from smaller PC makers--known as system builders--will get their software update directly from Microsoft.

In the U.S. version of the system builder program, owners of Windows XP Professional or Tablet PC Edition can upgrade to Windows Vista Business for the cost of shipping and handling. Similarly, Windows XP Media Center can move to Windows Vista Home Premium, again for the cost of shipping and handling.

Windows XP Home users can move to Vista Home basic for about $50 or to Vista Home Premium for $79, plus shipping and handling. That's about half the cost of the standard upgrade price in both cases.

As for the big-name PC makers, Hewlett-Packard said that it will offer free upgrades to XP buyers, though shipping and handling charges may apply. XP Home users can move to Vista Home Basic, Media Center Edition customers can move to Home Premium, and XP Pro buyers can move to Vista Business, again at no charge beyond the shipping and handling charge, HP said.

Dell's program is roughly similar, though the company is charging $45 plus shipping and handling for XP Home users to move to Vista Home Basic.

The direct seller is hoping that the Vista transition will give it a chance to stand out more from its retail brethren by moving quickly to offer both the upgrade offer and, once it ships, to quickly load Vista onto new machines.

"People have questioned the strength of the direct model," said Dell spokesman Bob Kaufman. "This is a key indicator of how strong it is and how unique it is."

The coupon program looks quite complex, analysts said. "But Microsoft seems to think it will work for consumers because they will see just one offer," Kay said. "In general, I think it is problematic, and the fact that Microsoft put some cost in it at all is going to be an inhibitor."

In essence, a coupon allows buyers of a PC with Windows XP to get some form of protection on the cost of the operating system, Cherry said. The complexities of the program won't help, he said. "It doesn't make sense to make this harder than it has to be, if the goal is to get people to purchase a computer now and feel comfortable," he said.

Microsoft has been widely expected to a coupon program allowing holiday season PC buyers to upgrade to Vista. The software maker declined to say how it would account for the program, noting that it is scheduled to release quarterly earnings on Thursday. It is likely to give more details then on the financial impact of the upgrade program.

Kevin Johnson, co-president of Microsoft's Windows unit, told CNET News.com in May that the company was likely to offer some sort of technology guarantee.

"There's likely to be something, and they're working on specifics now," he said.