February 3rd, 2009

Posted by Mary Jo Foley

If you were one of those individuals holding out hope that Microsoft might go the way of Apple and move to one or two SKUs for Windows 7, your prayers have gone unanswered. But there still is some good news in what’s on tap when Windows 7 ships, most likely in the third or fourth quarter of this year.

Microsoft went public on February 3 with its planned version (SKU) line-up — but not pricing — for Windows 7.  After receiving an admittedly very quick SKU overview from the Softies yesterday, here are my first impressions of Microsoft’s new SKU plan.

The Good

Microsoft learned a lot of lessons from Vista — among them, that too many SKUs with too few justifications created customer confusion.

Microsoft is putting the bulk of its marketing dollars and muscle behind just two of the Windows 7 SKUs: Windows 7 Home Premium and Windows 7 Professional. “We think over 80 percent of customers will be on those two SKUs,” Bill Veghte, Senior Vice President of the Windows business said. “That’s where we are putting our marketing focus.”

Another positive: The era of Ultimate promises (and failures) is over. Microsoft is making sure that each, successive version of Windows 7 is a true superset of the SKU just below it. If you pay more money, you get more features the day you buy the product — not some unspecified time in the future.

Finally, for XP users who’ve skipped Vista and are wondering whether they’ll be able to get upgrade pricing when moving straight to Windows 7, the answer is “Yes, we can!” The official statement, from a Microsoft spokesperson: “Customers can purchase upgrade cialis online overnight media and an upgrade license to move from Windows XP to Windows 7; however, they will need to do a clean installation of Windows 7.” (Microsoft still isn’t ready to talk pricing, but at least you know now you won’t have to buy a full license.)

The Bad

While Microsoft is going to emphasize just two SKUs, it still is going to offer five or six (depending on how you count) different Windows 7 versions. (And more, if you count the stripped-down K, N and KN versions the company is required to sell overseas because of antitrust rulings). Here is the full Windows 7 SKU line-up:

• Windows 7 Starter Edition (for emerging market and netbook users)
• Windows 7 Home Basic (for emerging market customers only)
• Windows 7 Home Premium (the main “Media Center” equivalent)
• Windows 7 Professional (the business SKU for home users and non-enterprise licensees)
• Windows 7 Enterprise (for volume licensees)
• Windows 7 Ultimate (for consumers who want/need business features)

Veghte claimed that Microsoft can’t have a one- (or two-) size fits all SKU plan because it has more than a billion customers worldwide running Windows. There are too many diverse needs to shoe-horn them all into two SKUs.

I’m also still confused about the changes Microsoft is making to its Ultimate SKU with WIndows 7. Veghte told me that Microsoft is anticipating Ultimate to be one of the less popular SKUs with a run-rate in the “low single digits). Microsoft is positioning Windows 7 Ultimate as the preferred SKU for consumers who need enterprise features (but aren’t volume-license customers), as well as for OEMs or retailers with “specific offers” they want to sell around. With Vista, the Ultimate SKU was also aimed primarily at enthusiasts, but was Microsoft’s preferred high-end offering for consumers — one to which it tried to convince customers to upgrade. That doesn’t seem to be the case with Windows 7, leading me to believe Microsoft is on the path to phase out Ultimate….

The Ugly

The rumors were wrong; the reality is there is no netbook SKU for Windows 7. Because Windows 7 has been tweaked to have a smaller memory footprint, etc., the full version of 7 can run on many, if not all, netbooks. Microsoft is offering netbook makers a choice: Put Windows 7 Starter Edition or Home Prmium on netbooks.

Unsurprisingly, Veghte was unwilling to discuss how much Microsoft is planning to charge its PC-maker partners per copy for Windows. Here’s the Pandora’s box I foresee: Is Microsoft going to charge PC makers less per copy for Home Premium than it charges to run the exact same Home Premium SKU on a full-fledged notebook or desktop system? Who will be the judge of what is a “netbook”? Will OEMs decide to preload Starter Edition instead to save money? If they do, users may be unpleasantly surprised when they realize they can run only three apps simultaneously on Starter….

(With Windows 7, Microsoft is now allowing PC makers in all countries, not just emerging markets, to preload Starter Edition on new PCs, by the way.)

My ZDNet blogging colleague Ed Bott will be detailing what’s in each of the new SKUs, in case you’re still confused about how the Win 7 line-up will stack up against the comparable Vista/XP ones.

Update: Steven Bink of Bink.nu fame has a handy chart comparing the various Windows 7 SKUs.