Acer is upset with Microsoft. The software vendor is cheating the system builder out of it profits because it positions the more expensive Windows Vista Premium as the main version of the operating system.

Vista Premium is more expensive than Vista Basic. If customers demand Premium on new computers, Acer's profit margins will suffer, the company claimed according to PC Pro.

Something smells rotten here. Acer's whining only makes sense if it is being singled out.

28 Oct 2006

But if consumers demand that their new systems run Vista Premium, they will make those demands from every PC maker. Consequently, all PC makers have to buy Vista Premium from Microsoft and end up with the same cost structure.

The introduction of Windows Vista won't cause Acer's cost structure to change, compared to that of Dell, HP or Gateway.

Then why could Acer be upset?

Industry analyst Rob Enderle has a suggestion: the introduction of Windows Vista will change a loophole that Acer used to sell consumer PCs to small businesses.

Looking to cut costs, low cost system vendors often equip their business PCs Windows XP Home. Premium brands meanwhile stick to Windows XP Pro. The price difference is about $25 to $50, and most small businesses never really miss the features (such as Active Directory) in XP Pro.

But Microsoft doesn't agree with the practice. For once thing, the company likes the added revenues from the more expensive XP Pro sales.

Windows Vista Basic therefore has been stripped of several business features that make the systems easy to manage. Throw in Microsoft's marketing machine and businesses are expected to shy away from the consumer versions of Vista.

If Acer should be upset about anything, it should be upset about the unattractiveness of Vista Basic for bargain enterprise systems. But the evaporating profit margin argument is bullocks.

Microsoft shuts down Acer's blowout sale

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