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Will Windows Me pricing confuse consumers?

Windows 95 users will have to pay $30 more than their Windows 98 counterparts to upgrade to Microsoft's new consumer OS, in a strategy that could end up befuddling customers.

Windows 95 users will have to pay $30 more than their Windows 98 counterparts to upgrade to Microsoft's new consumer operating system, in a promotional strategy that could end up confusing customers instead of simply rewarding them.

Microsoft announced earlier this month that it will sell its new operating system for home PC users for $59 through January. This promotional pricing represents a new strategy for the software maker, which typically sells upgrades to its operating systems for $89.

In a break with its own tradition, Microsoft confirmed today, it will sell the upgrade under the name Windows Me Promotional Step-Up for $59 to people who have Windows 98 or Windows 98 Second Edition. Windows 95 users will have to pay the full $89 for their upgrade to Windows Me, or Millennium Edition. After January, everyone will pay the full price.

But the company's decision to sell the promotional upgrade under a separate name could cause confusion among consumers over possible differences--if any--between the $59 and $89 upgrades, according to Paul Thurrott, editor of the WinInfo newsletter, which tracks Microsoft software news.

"When a customer walks into a store, they will see three different boxes for Windows Me," Wooster said.

Microsoft insists that the versions of the upgrades are exactly the same, except for a "compliance checking mechanism" in the promotional OS that locks out Windows 95 users.

Microsoft spokeswoman Laura Wooster confirmed today the Step-Up edition will work only with Windows 98 and Windows 98 SE systems.

"It's a way to thank our customers who have upgraded to Windows 98," Wooster said, noting that the upgrade from Windows 95 to Windows Me is more complicated than the upgrade from one of the Windows 98 products.

The number of people who will miss out on the promotion is unknown, but it may not be too many.

Although current statistics are not available, it is believed that most of the people still using Windows 95 are generally office PC users, who are not likely to upgrade to the consumer-focused Windows Me. As of last year, however, Windows 95 was still the most popular OS in the world, according to International Data Corp.

Further, because Windows 95 has not been shipping to retail stores for more than two years, it's unclear how many of the PCs using it would meet the minimum system requirements for Windows Me anyhow. Windows Me requires a system running on at least a Pentium 150-MHz chip, with about 300MB of hard drive space. Microsoft tends to lowball these estimates.

"Any user would have to make sure they have the correct system," Wooster said.

The promotion itself has been seen as an attempt by Microsoft to drive sales for a product that offers fairly incremental updates to Windows 98 SE. Windows 98 was originally intended to be the last release based on Windows 95 technology. Microsoft's plan to transfer both consumer and corporate products to Windows 2000 was pushed back when the corporate version was repeatedly delayed before its launch in February of this year.

Consequently, the life of Windows 98 has been extended to include Windows 98 SE and now Windows Me. Windows Me focuses on four main areas: digital media, home networking, improved reliability and Web improvements. The next OS for home users, code-named Whistler, will be based on Windows 2000, Microsoft says.

"Windows 98 SE was never a huge seller at retail," Thurrott said in an email interview. "I think the price reduction is an effort to get people over their understandable fear that Microsoft is sticking it to them yet again with another 9x upgrade."

The full version of Windows Me, designed for computers without the previous Windows operating systems, will cost $209.

This is not the first controversy tied to Windows Me. A Microsoft sweepstakes site has been hit by repeated outages, after offering free versions of Windows Me to winners.