Microsoft plans to market several versions of Vista but will distribute all of the OS bits with every product shipped so users can easily unlock and step up to more full-featured versions using electronic keys, sources said.
"No matter which edition you buy you get all the bits and a key to unlock it. Everyone will have all the bits," said one source familiar with Microsoft's plans. "Right now we maintain master images for each version of Windows XP and it's a lot of work. Now there's just one master image."
Having a master Windows Vista operating system means customers that buy PCs preloaded with one Vista SKU, Home Basic, for example, will be able to punch their credit card into a Microsoft Web site to unlock Vista Home Premium and more speedily deploy media center features without an on-site visit or requiring a wipe and reload of the system.
The impact on the channel will be "huge" since partners will no longer have to support multiple Windows images for each customer or do reloads, sources familiar with Microsoft's plans said this week. It will also make up-selling much easier and vastly expand channel opportunities, the sources said.
Yet such a move removes partners from the step up process and revenue stream and gives Microsoft a more direct relationship with corporate customers and consumers worldwide.
Microsoft would not comment on the story.
But sources familiar with the packaging plan said it will drive more incremental revenue for the software giant and better enable the software giant to target Windows Live services and content to users globally.
The company currently distributes patches and updates via its Microsoft Update site and MSN services and over the long term will offer electronic digital distribution of all of its software, sources expect.
Microsoft is not there yet. But having all the bits available on each system and a Web site to activate the step up process gets Microsoft electronically closer to customers.
Having all the bits available and ready to turn on will also alleviate a headache many partners and customers encountered when they purchased Windows XP Home Edition-based PCs and found they could not join the Active Directory domain at their company without a reload.
"It's a pretty good idea," said Paul Freeman, president of Coast Solutions Group, Irvine, Calif. "The only challenge is what the load size would be."
Another source in the channel who also knows about the plan said he expects all the bits to ship on a DVD.
"There will be a single binary for all versions—the installation and WPA [Windows Product Activation] process will match the product key to the version you paid for—or to the distribution license your system is a part of in a corporate environment," said the partner, who requested anonymity.
Partners said putting out all of the bits is an effective way to stimulate incremental revenue and reach customers online, but they hope Microsoft rewards partners who make the sale.
According to published reports, Microsoft plans to ship seven SKUs of Vista that fall into business and consumer categories, corresponding with the existing Windows XP Pro and Home Editions.
The consumer versions include Vista Starter Edition, Vista Home Basic Edition and Vista Home Premium Edition, the report said. The business lineup includes Vista Professional Edition, Vista Small Business Edition, Vista Enterprise Edition and Vista Ultimate Edition.
The high-end version, Vista Ultimate, contains all consumer and business features, including Media Center and Tablet PC bits, sources said.
Solution providers said the step up plan will likely drive more Vista business overall but could remove one source of revenue from the channel.
“We're confident Vista will lead to a huge new cycle of system upgrades, and having the ability to upgrade the operating system at a later date should make it even more attractive for businesses and consumers,” said Todd Swank, vice president of marketing for system builder Nor-Tech, Burnsville, Minn. "But I'm guessing it won't matter a bunch to our bottom line because I doubt they plan on paying any additional revenue to the system builders should a customer later decide to buy a higher-end version once they own the system."
Some sources said this was the current thinking, but anything could change between now and the end of the year when Vista is expected to launch. The full-featured Beta 2 version of Vista is due within weeks.
Still, others said it's been in the game plan since Vista, formerly code-named Longhorn, was conceived. "This was always in the plan, right back at the start of 2002," said one source. "It's much easier from a logistics point of view."