Microsoft unveils $40 Windows 8 upgrade

Microsoft (Nasdaq: MSFT)announced a promotion that later this year will let users of Windows XP, Vista and Windows 7 PCs upgrade to the new Windows 8 Pro for $39.99.

Even though he declined to label the price as “aggressive,” analyst Stephen Baker of the NPD Group acknowledged that it signaled Microsoft seriousness about getting as many people as possible to adopt the new operating system.

“It’s even more important this time around,” said Baker, referring to the gamble Microsoft is taking with the dramatically different Windows 8 and its new Metro user interface [UI].

The deal kicks off when Microsoft launches Windows 8 later this year, and offers the most advanced retail version of the new OS, Windows 8 Pro, as the upgrade.

Microsoft has yet to divulge the release date for Windows 8 or the regular prices of either Windows 8 Pro or the lower-cost Windows 8. Most analysts expect the company to debut its newest Windows for Intel- and AMD-powered desktops, notebooks and other devices this fall. If the company makes its “release to manufacturing,” or RTM, milestone later this month, as seems likely, it could launch the OS in October.

Today’s announcement follows the one four weeks ago when Microsoft said it would sell a $14.99 upgrade to Windows 8 Pro to buyers of new PCs equipped with the still-current Windows 7. That deal, like today’s, is good through Jan. 31, 2013.

Although the new offer is open to customers with PCs powered by XP, Vista or Windows 7, the upgrade is most thorough from Windows 7, said Microsoft in a blog post on Monday.

“You will be able to upgrade from any consumer edition of Windows 7 to Windows 8 Pro and bring everything along which includes your Windows settings, personal files, and apps,” said company spokesman Brandon LeBlanc.

That fits with what Microsoft had told users when it launched Windows 8 Consumer Preview last February, and what reports said had been passed along to partners last week.

The $39.99 fee is for a download of the Windows 8 Pro upgrade. Microsoft will also sell a DVD in a box at retail for $69.99.

The download price is $10 less than Microsoft charged for a Windows 7 upgrade three years ago. Then, the company ran a two-week pre-sale for $50 upgrades to Windows 7 Home Premium, a 58 per cent discount, and for $100 upgrades to Windows 7 Professional.

“I would call this a fair price, but aggressive? No, given what other operating system upgrades cost,” NPD’s Baker said. “Many are free or cheaper than that.”

Among free upgrades, Baker cited those offered by Apple and Google for their iOS and Android mobile operating systems. Apple’s upgrade later this month to OS X Mountain Lion will cost $19.99, half that of Windows 8 Pro.

Microsoft has little incentive to lower its prices to near Apple’s, said Baker, because ultimately it really wants people to buy new hardware, not upgrade already-purchased machines.

“Over time, we’re seeing less and less movement directly to a new OS versus buying new hardware,” said Baker. “It behooves Microsoft to get people to move to new hardware, so they’re not going to make an upgrade extraordinarily cheap.”

That’s especially true this cycle because of Windows 8’s emphasis on touch and gestures, which has prompted computer makers — “original equipment manufacturers,” or OEMS in industry parlance — to plan new, touch-enabled hardware, including so-called “convertibles,” or devices that blend elements of both tablets and laptops.

“This [upgrade cycle] is even more about hardware,” Baker said. “Microsoft wants people to get off XP and into the new different types of hardware.”

Microsoft’s focus on downloads rather than brick-and-mortar sales — the boxed copy comes with a 75 per cent surcharge — is also indicative of trends, said Baker. “They can’t ignore the retail piece, but given the state of broadband and how people buy most software now, [the emphasis on downloads] is a fact of life,” he said. “It’s just another part of the movement away from disk-based sales.”

Although retail has typically welcomed Windows upgrades as a way to get customers into store, brick-and-mortar won’t automatically rue Microsoft’s decision to push downloads, Baker added.

“They’ll try to drive hardware sales,” he said. “There are bigger dollars there, and more opportunities to sell add-ons.”

Microsoft will uses its website to sell and distribute the Windows 8 Pro upgrade in 131 different markets and in 37 languages.

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