Analyst Criticizes Windows 7 Upgrade Limit

A key Microsoft analyst criticized the company’s free upgrade program for Windows 7 for limiting free copies to only the first 25 PCs a purchaser buys. Meanwhile, early “pre-order” sales of Windows 7 seem to have taken off like a rocket on Friday, at least according to e-tailer Amazon.

In a report, Friday, Gartner analyst Michael Silver pointed out the problem regarding what Microsoft (NASDAQ: MSFT) calls its Upgrade Option Program (UOP). This is not the first time Microsoft has offered similar promotions, also called “tech guarantees,” which are aimed at keeping sales of PCs from falling off precipitously as customers wait for the new version of Windows to come out.

Not surprisingly, the company defended the limits.

“Like prior tech guarantee programs, the Windows 7 Upgrade Option is designed for consumers and small business,” a Microsoft spokesperson told InternetNews.com. “We’re providing more choice for customers with Windows 7 than we did before,” the spokesperson added.

Last Thursday, Microsoft announced pricing for Windows 7, as well as two promotions meant to give the new system a head start out of the blocks.

One provides customers that purchase a new PC with Vista installed as of last Friday and running through October 22 with a free copy of Windows 7 after it becomes publicly available. The other is a pre-order discount whereby consumers can order Windows 7 for more than half off — $49.99 for Windows 7 Home Premium instead of $119.99, for instance. That promotion runs for 16 days (also as of last Friday). Pre-order sales are only via online outlets, however, including Amazon.com, Best Buy, and Microsoft’s Store.

Microsoft announced the UOP promotion in early June, the same day that it announced that Windows 7 will be commercially available on October 22.

Previous UOPs limited the number of PCs subject to free Windows upgrades even more than the new promotion, however, the Microsoft spokesperson pointed out.

“With Windows 7 Windows Upgrade Option for new PCs, Microsoft has increased that limit by five times, to 25 upgrades,” the spokesperson said.

Paying twice?

That still leaves some customers in the unenviable position of paying twice, though, according to the Gartner report.

“Organizations without client Windows Software Assurance that are purchasing more than 25 new PCs between now and 22 October would have to enroll these PCs in Software Assurance at an additional cost to get the right to upgrade them to Windows 7,” Silver continued.

Microsoft Software Assurance is a volume licensing program that entitles subscribers to all upgrades of specified products over a period of time — for instance, three years. In addition to product updates, Software Assurance also includes pre-paid support, training, and consulting.

Still, as Silver points out, it’s an added expense for small and mid-sized companies that can’t wait to buy new PCs until after October 22 when Windows 7 is scheduled to be generally available.

Silver goes on to suggest that business customers who need to acquire more than 25 PCs ask their OEMs to extend free upgrades beyond the limit — and if that doesn’t work, to simply put off buying more than 25 PCs until after October 22. For those who find Software Assurance affordable, costs range from $100 to $150 per machine, he said.

In the meantime, pre-orders for Windows 7, available through a number of online outlets, appeared to have jumped into high gear as soon as e-tailers opened their queues on Friday.

For instance, Windows 7 packages hit Amazon’s number one slot in most popular software sales almost immediately and have stayed there. At publication time, upgrade editions of Windows 7 Home Premium and Professional were riding high at number one and two on Amazon.com’s best selling software list.

A spokesperson for Best Buy declined to say how Windows 7 pre-orders are going, citing that as competitive information. The spokesperson did say, however, that Windows 7 pre-orders “moved immediately on Friday” when sales kicked off.