Microsoft is splurging on a special promotion for the launch of Windows Me by cutting the retail cost on the upgrade version by half.
The Windows Me discount only applies to Windows 98 and Windows 98 SE users and will see the original price of $206 slashed to $109. The full version of Windows Me costs $380.
While the lowered price will take a bite out of reseller margins, Microsoft product and marketing manager for Windows, Paul Roworth, said this will be compensated by the massive range of value adds to which the product lends itself. "It's a matter of increased sales as opposed to increased margins," he said.
"There are some great features in the product and it's the first version of Windows focused solely on the consumer," Roworth said.
The special discount will be available when Windows Me hits the market on September 14, and will last until January 15, 2001.
Resellers' opinions on the launch are mixed. Retailers, while remaining tight-lipped about preparations, are calling Me one of the most "progressive products the market has seen in a long time".
According to John Slack-Smith, Harvey Norman's general manager of computers and communication, Me's "ability to interact with music and movie making products has created a level of excitement within Harvey Norman franchisees".
Slack-Smith sees a double opportunity with the Me product. "Number one is just the product itself within the Microsoft family," he said. "But number two is the association with so many other products. It's going to have a positive effect on the customer inquiry and sales volume of secondary products."
At the same time many resellers are heaving sighs over yet another Windows upgrade. "Microsoft needs to do some decent marketing," said Vince Mazzeo, purchasing manager for Hitech Distribution. "They are charging people to upgrade again and really there isn't a huge difference the user will see.
"[Microsoft] probably feel that they needed to drop the price to convince people they have to upgrade so soon after Win 98," he added.
Roworth is promising that Windows 98 will still be available in the channel for a period of time. "Specific decisions about its removal will be reviewed as demand for the product drops off," he said. There is no set metrics for it, it's based on a demand principle.
Roworth predicts that most of the OEMs who bundle Windows with hardware will make the switch to the new operating system almost immediately. However, Maree Lowe, managing director of local OEM ASI Solutions, said: "There is no major implication for OEMs like [ASI] because the offer is definitely aimed at the consumer market and the SOHO sector."
"The retail channel should take advantage of Microsoft marketing," she added. "It [the promotion] is basically the Microsoft marketing machine going into high gear, and retailers stand to make some money out of it."