Microsoft offers Vista upgrade discounts

Microsoft said Tuesday it will help holiday-season computer buyers upgrade to its forthcoming Windows Vista operating system, in some cases paying 100 percent of the upgrade cost.

The upgrade-assist program, which begins Thursday, is meant to bolster PC sales during the critical holiday period despite the discouraging absence of the long-delayed Vista.

Windows director Kevin Kutz said major computer makers such as Dell, Gateway and Sony are free to set the discounts themselves, while Microsoft will manage the discount program for the smaller computer makers known as system builders.

Until early spring, Vista -- five years in the making -- was due for release by the holidays. But on March 21, Microsoft delayed it for further testing, much to the disappointment of computer makers and retailers.

Microsoft said the upgrade-assistance program, covering both Windows Vista and Office, will cost it about $1.5 billion in sales in the current quarter. It will defer the revenue from the fiscal second quarter ending Dec. 31 to the following quarter, according to a slide presented on its financial Web site. The company plans to release its first-quarter fiscal 2007 results Thursday. Among U.S.-based system builders, four upgrades will be free, except for shipping and handling, the company said Tuesday. Those are:

Windows XP Professional to Windows Vista Business

Windows XP Media Center Edition 2005 to Windows Vista Home Premium

Windows Tablet PC Edition to Windows Vista Business

Windows XP Professional x64 Edition to Windows Vista Business 64

Also among U.S. system builders, upgrading from Windows XP Home Edition to Vista Home Basic will cost $49, plus shipping and handling, while moving from Windows XP Home Edition to Vista Home Premium will cost $79, plus shipping and handling.

System builders will give buyers coupons that, when combined with proof of purchase of a computer, can be mailed to Microsoft in exchange for a DVD with the new operating system.

Kutz said Microsoft remains on track to release Vista for high-volume business buyers sometime next month and versions for home users worldwide sometime in January. He said no specific dates have been released.

Among the major PC makers:

Hewlett-Packard Co. spokeswoman Tiffany Smith said people who buy certain HP Pavilion, Compaq Presario and HP Digital Entertainment Center computers equipped with Windows XP can upgrade to Vista free. There may be shipping and handling fees, depending on the retailer.

Gateway Inc. will offer free upgrades for people who buy Vista-capable computers directly from the company. Gateway spokeswoman Kelly Odle said shipping charges or duplication fees might be charged to people who buy Gateway computers through other retailers.

Dell Inc. spokesman Bob Kaufman said buyers of Vista-capable Dell computers running Windows XP Home Edition will be able to buy Windows Vista Home Basic at the discounted price of $45, plus shipping and handling charges. Buyers of computers running Windows XP Media Center or Windows XP Professional will only have to pay shipping and handling to get a comparable Vista version, he said.

PCs capable of running Vista at a basic level will be marked with a "Certified for Windows Vista" logo.

But even those PCs won't deliver the full features of Vista unless they're also "Premium Ready," Kutz said.

That designation is not indicated with its own logo, so customers must ask salespeople which PCs are Premium Ready or consult Microsoft's Web site.

Microsoft said it is backing a similar upgrade program for people who buy computers pre-loaded with the current version of its business software, Office 2003, and want to upgrade.

The new version of the software suite, Office 2007, is due out in January as well.

Shares of Microsoft, which have risen 8.2 percent this year, closed down 17 cents, or 0.6 percent, at $28.28, losing an additional 12 cents in after-hours trading.

WINDOWS VISTA

Suggested stand-alone retail prices for Microsoft's new operating system:

Home Basic: $99.95 for upgrade from any earlier version of Windows, $199 without upgrade

Home Premium: $159, $239

Ultimate: $259, $399

Business: (32-bit or 64-bit): $199, $299

Enterprise: Volume licensing only, no pricing disclosed

More information is available online at www.microsoft.com/windowsvista/getready/capable.mspx

This report includes information from The Associated Press and Bloomberg News. P-I reporter Dan Richman can be reached at 206-448-8032 or danrichman@seattlepi.com.

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