Monday, February 27, 2006

Vista SKUs: losing the forest for the trees

Microsoft’s SKU plans for Vista are out and I’m disappointed with the complexity. It’s an example of the importance of keeping an eye on the big picture. The SKU plan is the result of a series of decisions--each looks rational and reasonable when viewed in isolation but when you add them together, you get a mess.

First: Microsoft wants to promote Media Center features to all consumers but many large corporate buyers don’t want those features on their desktops. Result: Microsoft breaks the traditional superset-subset relationship between the business and home products by removing media center features from the business line.

Second: Vista has steep hardware requirements that many bargain PCs won’t meet. Plus, Microsoft wants to charge more for the new consumer features and cost-conscious PC buyers are likely to balk. Result: the home line splits in two with a Basic edition, likely to be priced the same as today's XP Home, and a Premium edition likely to carry a premium price.

Oh, and SA is controversial and Microsoft feels like it needs to add more value to it. Result: the BitLocker encryption features appear in an SA-only Enterprise edition.

Next: Having removed Media Center from the business line, Microsoft no longer has a product to offer to home users who want Media Center features but also need to access their corporate network or use the advanced security features. Result: add an Ultimate edition that has everything.

For the purposes of this discussion, I'm ignoring the "N" editions that the EU forces Microsoft to produce. OEMs don’t want to sell them so they really are just an exercise in pleasing the bureaucrats. I'm also ignoring the Starter edition because it has very little overlap with the other SKUs. Customers in emerging markets aren't likely to be able to afford any of the other SKUs and customers who can afford the regular SKUs aren't likely to choose Starter.

What’s the likely outcome? While some OEMs will opt for Home Basic in order to keep rock bottom prices, I think most OEMs will standardize on Premium. Many of them already offer a bewildering array of product lines that are hard for customers to understand. (Quick quiz: go to HP’s site and try to explain the differences in the zd, dv, ze, and zv lines of Pavilion notebooks. Now add on the Presario line they also sell. I don't mean to pick on HP, most OEMs have a similar problem.) There's just no way these OEMs can offer each of those models across this many SKUs. They are going to have to do some editing or they will risk turning off buyers.

And don’t forget that ISVs will likely have to test their applications against each of these editions, in addition to still testing on the XP variations. If I were a QA manager for an ISV, I’d order a Costco-sized bottle of Excedrin.

In the end, although I understand the rationale for each decision, Microsoft could have found other ways to solve some of these problems that didn’t introduce this complexity. Why not make Media Center features subject to group policy? Why not give SA customers a couple of add-ons instead of producing a whole new SKU? Those two moves would eliminate the need for Enterprise edition as well as Ultimate, leaving a much more manageable set of three: Home Basic, Home Premium and Business.

But simplicity wasn't the goal here. Rather, the goals were increasing Windows revenue by shifting customers to more expensive editions and shoring up the percieved value in the controversial SA program.

There's a lot to like about Windows Vista, but Microsoft's packaging isn't one of them.


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