Microsoft has said it plans to cut the cost of its Windows Vista operating system sold at retail outlets.
Although no exact date has yet been given, Microsoft said price cuts would be introduced in 70 countries.
In the US, the cost of the most expensive version, Vista Ultimate, will be reduced to $319 (£161) from the current retail price of $399.
Analysts said Microsoft was aiming to boost the number of customers upgrading to Vista, which was introduced in 2007.
Really its a'Greater opportunities'
The price cuts apply to the packaged versions of Vista, which account for less than 10% of its sales.
By contract, 90% of Vista sales are to PC manufacturers, which the operating system is pre-installed.
"We anticipate these changed will provide greater opportunities... to sell more stand-alone copies of Windows," said Brad Brooks, a Microsoft corporate vice president.
Microsoft says it has now sold 100 million Vista licences since it was launched.
As far back as 2005, Microsoft executives knew that confusing hardware requirements for the Windows Vista Capable program might get them in trouble. But they did it anyway--over the objection of PC makers--at the behest of Intel, according to e-mails released as part of a class-action lawsuit pending against Microsoft.
In early 2006, Intel's Renee James, vice president and general manager of Intel's software and solutions group, was able to prevail on Microsoft's Will Poole to change the proposed requirements for Microsoft's proposed "Vista Ready" marketing program to include an older integrated graphics chipset that couldn't run Vista's Aero interface. At the time, Intel was worried that it wouldn't be able to ship the more advanced 945 chispet, which was capable of running Aero, in step with Microsoft's proposed schedule for the introduction of the marketing upgrade plan.
This led to the creation of the "Vista Capable" logo, which is the reason Microsoft is now in court, facing a class-action lawsuit on the part of PC owners who bought so-called Vista Capable machines in late 2006 only to find those machines could only run Vista Basic, which doesn't feature the Aero interface. The potential for confusion was well-understood both outside the company, as noted here in this CNET News.com story from March 2006, and within the company, as multiple e-mail threads reveal.
treasure trove of e-mails has been released as part of that case, and the Seattle Post-Intelligencer's Todd Bishop has spotlighted a number of e-mails that call into question whether Microsoft was acting, at least in part, on Intel's behalf when it set the requirements for the Vista Capable marketing program. Several pages of e-mails were redacted by the court. All e-mails quoted in this report were taken verbatim, typos and all, from a PDF file put together by the Seattle Post-Intelligencer in a blog posted by Bishop yesterday.
"In the end, we lowered the requirement to help Intel make their quarterly earnings so they could continue to sell motherboards with the 915 graphics embedded," Microsoft's John Kalkman wrote in a February 2007 e-mail to Scott Di Valerio, who at the time managed Microsoft's relationships with the PC companies and recently took a job with Lenovo. The change took place in January 2006, and was formally rolled out by Poole, currently corporate vice president of Microsoft's unlimited potential group, without the knowledge of Jim Allchin, the now-departed Microsoft executive who was supposed to be in charge of Vista's development
Intel declined to comment on specific e-mails until it had a chance to review them. But in response to the Kalkman e-mail, read to a Intel representative, the company said, "We do not know who John Kalkman is. We do know that he is not qualified to know anything about Intel's internal financials or forecasts related to chipsets, motherboard or any other products. He would have no visibility into our financial needs in any given quarter."
(Credit: Microsoft)The planning for the Vista Capable program started long before it was publicly announced in May 2006, a few months after the final delay in Vista's ship date was announced. The idea was to mimic what Microsoft did with Windows XP, to assure customers buying PCs sold within a few months of the launch date that their hardware could run the new operating system when it was formally released. This helps PC makers avoid a swoon in demand in the weeks and months prior to the launch of a new operating system.
Microsoft knew that Vista's Aero interface would put a significant strain on the hardware used in those PCs, and so in 2005 it started putting requirements together for the Vista Ready program using Intel's 945 chipset as the baseline chipset needed for designation as "Vista Ready."
Eric Charbonneau, an unidentified Microsoft executive, told his direct reports in August 2005 in an e-mail that the older 915 chipset wouldn't cut it. "Any OEM who plans to ship an Intel 915 chipset system (using UMA, without separate discrete graphics hardware) for Summer 2006 needs to know that: 1. Their systems will not be eligible for the Windows Vista Ready designation..." Simply put, the 915 chipset couldn't support the Windows Vista Display Driver Model (WDDM), and that capability was a requirement at the time for being able to slap a "Vista Ready" sticker on a PC.
However, at some point between that e-mail and January 2006, Microsoft changed its stance on the 915 chipset. The 945 chipset was Intel's top-of-the-line integrated graphics chipset when it was introduced in May 2005, but it still sold lots of lower-end 915 chipsets in both desktops and notebooks. Intel didn't launch the notebook version of the 945 chipset until January 2006, and was apparently concerned that it would be unable to get enough 945 systems into the market by the middle of 2006, the (at the time) launch expectation for the Vista Ready program.
With notebooks a far-faster growing segment of the PC market than desktops, Intel apparently felt that if only 945 chipsets were deemed Vista Ready, that demand for systems with 915 chipsets--still a significant mix of its products--would fall off the face of the earth. And also, that it would be unable to produce enough 945 chipsets to meet its committments to PC makers--orders that might otherwise go to Advanced Micro Devices.
In January 2006, Poole sent an e-mail to several Microsoft executives informing them that the plan had changed, and that Intel approved. "I went over the new plan with Renee tonight. Not surprisingly, she is pleased with the outcome. I told her we wanted to communicate to OEMs and retail first, and then they can cascade their own communication. They are losing orders every day, so we need to get a simple communication out ASAP."
In February 2006, one month after Will Poole informed the Vista team of the decision, Microsoft's Will Johnson wrote an e-mail laying out some more of the specifics.
"We have removed the WDDM requirement for Vista Capable machines, the modern CPU and 512 RAM requirements remain intact, but the specific component that enables the graphical elements of Windows Vista (re: aeroglass) has been removed. This was based on a huge concern raised by Intel regarding 945 chipset production supply and the fact that we wanted to get as many PCs as possible logo'd by the 4/1 US retail REV date. The push to retail should be that while this opens up a wider band of machines to being Vista Capable retailers should be very aggressive in communicating to their OEMs (and thus Intel) to maximize production of 945 chipset equipped machines going forward."
According to e-mails exchanged, many inside Microsoft were appalled at the decision to let Intel's supply concerns dictate its marketing policies. Now Microsoft had to go out and create a two-tiered program promoting both "Vista Capable" machines and "Vista Premium Ready" machines.
A Vista Capable sticker would simply mean the PC could run Vista Basic, allowing PC makers to promote their PCs as "Vista" PCs while glossing over the fact that the minimum hardware requirements for that label couldn't really handle the improved graphics that were one of the major reasons to upgrade to Vista. This confusion was exactly what Microsoft and its PC partners hoped to avoid when they were first drawing up the requirements in the first place, and several e-mails show those concerns were shared widely prior to, and following, Poole's decision.
Hewlett-Packard was particularly incensed, since it had decided to adopt Intel's 945 chipset more aggressively, believing it was the only chipset that would support the Vista Ready program.
Microsoft's Mark Croft wrote in response to Poole's e-mail that, "We need good messaging for the elimination of WDDM in Capable, as we have had this as a requirement since inception over 18 months ago."
But perhaps the most surprised executive inside Microsoft at the move was Allchin, the head of the Vista development team.
"We really botched this," he wrote in a thread responded to Poole's e-mail. "I was not involved in the decision making process and I will support it because I trust you thinking behind the logic. BUT, you have to do a better job with customers that what was shown here. This was especially true because you put me out on a limb making a commitment. This is not ok."
Will Poole, co-head of Microsoft's emerging markets efforts, who authored the e-mail acknowledging pressure from Intel.
(Credit: Microsoft)Later, in a private e-mail, Mike Ybarra of Microsoft pleaded with Alchin to step in and reverse the decision. "Jim, I am passionate about this and believe this decision is a mistake," he wrote. "We are caving to Intel. We worked hard the last 18 months to drive the UI experience and we are giving this up."
Allchin appeared to agree in his response, but seemed resigned to fate.
"It might be a mistake. I wasn't involved and it is hard for me to step in now and reverse everything again," he wrote to Ybarra. "We might be able to thread the needle here if we make 'capable' just related to 'old' type hardware."
And so, confusion began, just as Microsoft employees and partners predicted it would. Some Microsoft marketing units started saying that the even older 865 chipset would now qualify for the Vista logo program, which was squashed. But it was easy to see where the confusion stemmed once the requirement for WDDM was dropped, as essentially anything relatively modern that could easily run Windows XP would be capable of running Vista Basic.
Anantha Kancheria wrote to Rajesh Srinivasan as part of a discussion in March 2006 around the 865 confusion, and employed a little gallows humor.
"Based on the objective criteria that exist today for capable even a piece of junk would qualify. :) So based on that yes 865 would qualify. For the sake of Vista customers, it would be a complete tragedy if we allowed it. I don't know how to help you prevent it."
The 865 was eventually scrubbed from the program, but the 915 was allowed to remain. And so, PCs with the 915 chipset were sold as Windows Vista Capable, while others sold with the 945 chipset or better were labeled Vista Premium Ready. As predicted, confusion ensued, and even Microsoft executives and directors were snared.
Steve Sinofsky, the former head of Microsoft office development and current head of Windows and Windows Live development, wrote an e-mail to Microsoft's Brad Goldberg in July 2006 asking about a Dell Latitude he purchased that he thought was labeled as "Vista Ready," but in reality didn't have enough graphics hardware to run Vista.
Steven Sinofsky, Microsoft senior vice president, Windows and Windows Live Engineering Group
(Credit: Microsoft)Goldberg, then vice president of Windows product management, explained, "Some PCs that are windows vista capable will run aero and some will not. In the interim we've created a marketing designation that allows OEMs to market PCs as "premium ready." every pc that is premium ready will run aero."
Goldberg continued, "for holiday oems will be heavily pushing premium ready machines but because Intel was late with their integrated chipset the majority of the machines on the market today are windows vista capable but not premium ready. originally we wanted to set the capable bar around aero but there are a bunch of reasons why we had to back off...a bit messy and a long story that I'm happy to walk you through if helpful. :)" Goldberg has since been reassigned.
In January 2007, Jon Shirley, a former Microsoft COO and current member of the board of directors, wrote CEO Steve Ballmer an e-mail complaining about driver support for some peripherals he wanted to use with his Vista PC. Ballmer forwarded the e-mail to Sinofsky, asking for input on whether Microsoft should be doing anything differently.
Sinofsky launched into a post-mortem on Vista itself, with this graph pertaining to Intel.
"Intel has the biggest challenge. Their "945" chipset which is the baseline Vista set "barely" works right now and is very broadly used. The "915" chipset which is not Aero capable is in a huge number of laptops and was tagged as "Vista Capable" but not Vista Premium. I don't know if this was a good call. But these function will never be great. Even the 945 set has new builds of drivers coming out consistently but hopes are on the next chipset rather than this one."
Ballmer's response? "Righto thanks."
Microsoft is now defending itself against claims the Vista Capable program was misleading and unfair, all thanks to a decision to allow Intel to sell older chipsets that couldn't run Vista's Aero interface--really one of the main reasons to upgrade--with the word "Vista" attached. As the e-mails show, many within the company knew they were heading down this path when they embarked on a two-tier logo program, but the need to keep Intel happy--over the objection of the world's largest PC maker--won out in the end.
UPDATED: 6:25 p.m., PST - Microsoft issued the following statement after this blog was posted: "We included the 915 chipset as part of the Windows Vista Capable program based on successful testing of beta versions of Windows Vista on the chipset and the broad availability of the chipset in the market. Computers equipped with this chipset were and are capable of being upgraded to Windows Vista Home Basic. Microsoft authorized the use of the Premium Ready designation on PCs that could support premium features of Windows Vista."