3 Reasons Microsoft's Windows 8 Pro at $39.99 Changes Everything
Microsoft (MSFT) isn't going to take any chances: The world's largest software company will be offering most of its customers -- PC owners running XP, Vista, or Windows 7 -- the chance to pay just $39.99 to upgrade Windows 8 Pro when it becomes available later this year.
The move is bold. We still don't know exactly when the new platform will go on sale, but the upgrade pricing is a fraction of what Mr. Softy has charged in the past.
Microsoft seems to be taking a page out of the Apple (AAPL) playbook with cheap operating system upgrades. The company will also include a free download of the upcoming Windows Media Center for those upgrading digitally.
This is a big deal. Let's explore a few reasons that it matters.
1. PC makers will be able to keep selling computers over the next few months.
Desktop and laptop sales have stalled lately, and industry watchers expect that to get even worse this new quarter.
There are several factors holding back PC sales, but one is that buyers have been holding back in anticipation of Windows 8. Why buy a Windows 7 system when the fresher OS is just around the corner?
Well, the $39.99 upgrade -- and the seamless upgrade path for Windows 7 users in particular -- makes that less of a barrier. PC sales will continue to be slow for various other reasons, but at least now there isn't a legitimate reason to wait for Windows 8 to roll out as a factory-installed option in new PCs.
2. Low Price Means High Conversion.
The price tag may hit Microsoft's margins, but the company could very well make that up in volume. There are going to be a lot of people upgrading, and that's going to help the software giant draw developers to its Windows Store.
This is really important. Windows 8 was designed with "good enough" touchscreen computing devices in mind, and strong initial success may improve Microsoft's chances of finally mattering in tablets and smartphones.
3. Microsoft Can Use the Good News.
With sluggish computer sales, this week's $6.2 billion charge at its online business unit, and problems with mobile partner Nokia (NOK), Microsoft needs a hit to win back investors.
Yes, Microsoft's Xbox 360 is now the top dog when it comes to video game consoles, but operating system software has always been the company's bread-and-butter business.
The well-received rollout of Windows 7 proved that the company could overcome the critically maligned Windows Vista. Now it needs Windows 8 to be even bigger.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple, as well as creating bull call spread positions in Microsoft and Apple.