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Microsoft accused of jacking up Vista cost

Microsoft has confirmed that it is to release its new Vista operating system and Office applications suite for businesses at the end of this month. The firm has also been accused by a senior executive at one of its key hardware partners of hiking up the cost to manufacturers of Vista and cutting their margins.

Microsoft has confirmed that it is to release its new Vista operating system and Office applications suite for businesses at the end of this month. The firm has also been accused by a senior executive at one of its key hardware partners of hiking up the cost to manufacturers of Vista and cutting their margins.

Company CEO Steve Ballmer will unveil the software during a special launch event at New York’s Nasdaq stock exchange on November 30. Widespread availability of both Vista and Office is still scheduled for January 2007. That is much later than originally anticipated, with Vista initially scheduled for August this year.

The delayed launch of Vista and Office has caused frayed relations between Microsoft and PC manufacturers, who were counting on the products shipping before the all-important holiday buying season.

Jim Wong, senior corporate vice president at Acer, broke ranks last month to claim the software giant was effectively forcing customers into buying the more expensive premium version of Vista by leaving so many new features out of the basic package.

Wong said a lot of the well-publicised Vista features such as the Aero graphics display and Media Centre were not in the basic version and that without these trademark features the cut down OS would not be the “real” Vista and therefore no one would be interested in it.

“The new [Vista] experience you hear of, if you get Basic, you won’t feel it at all. There’s no [Aero] graphics, no Media Centre, no remote control,” Wong told PC Pro magazine.

“Right at the beginning they [Microsoft] started talking about the experience of [Vista Home] Premium. Premium is the real Vista.”

Wong went on to say that Microsoft had also increased the manufacturer’s licence for Vista Home Premium by 10% compared to XP Home, increasing the total cost of building a PC by 1-2%. The profit margin for PC vendors is around 5% or less.
“We have to pay more but users are not going to pay more,” he added.

The Vista Home Basic version can be pre-ordered for US$293, while Vista Home Premium costs US$359.

Microsoft Gulf denied that the lack of features in the basic version of Vista would put off customers.

“The Home Basic version is dedicated for people who are home users. They want to go into photos, view videos, listen to music, play games, use the internet and that’s it,” said Bahaa Issa, regional manager for corporate communications at Microsoft Gulf. “It [Vista Home Basic] is targeting a different set of users. With the features it has it satisfies the home user.”

Acer’s Middle East operation declined to comment.

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