Microsoft slashes Windows Vista retail price in surprise move

Microsoft appears to be attempting to increase Windows Vista sales by making the operating system more affordable both in the United States and abroad.

In the US, the changes will only apply to the Premium and Ultimate upgrade versions of the software. Premium will fall from $159 to $129, while the Ultimate version will now be $219, down from $299.

Elsewhere, price cuts will vary widely. Some developed countries will see cuts as small as three percent, while in other areas Vista's cost may be cut nearly in half. In addition, Microsoft is doing away with the upgrade versions of software in some markets.

The company says this move has a lot to do with encouraging the use of genuine software in these countries. By making Vista more affordable, it hopes that the instances of pirated software will decrease.

Microsoft had been testing out lower prices over the past few months, and found that the revenue lost in the price cut was more than recouped by the additional uptake from users who may have not upgraded otherwise.

"While the promotions varied region to region, one constant emerged, an increase in demand among consumers that went beyond tech enthusiasts and build-it-yourself types," marketing chief Brad Brooks said.

He also conceded that the initial pricing for Vista may have been a little ambitious. Most of the price cuts will take effect with the launch of Service Pack 1, expected later this year.