System Builders Get Win XP Pro Rebate For Whitebooks

The “instant rebate” on Windows XP is part of a bundle deal unveiled by Microsoft, Intel and Seagate at the summit last Wednesday. It is not a significant cut but represents the first time Microsoft has ever reduced the price of Windows for system builders, sources said. At the event, Microsoft also pledged to spend $500 million in marketing Vista over the next three years.

“Everybody was happy to see Microsoft throwing money on the table. For the very first time, it’s a way for system builders to get a reduced price on Windows itself,” said one source. “The $7 instant rebate isn’t much, but it’s a start, and the first time they’ve ever done anything like this with the price.”

The overall rebate can save system builders as much as $50 per system, sources said.

As part of the deal, system builders are eligible for an additional $20 price cut on barebones whitebooks verified by Intel and another 7 percent to 21 percent off Seagate drives when all three are purchased on the same distributor invoice by June 30, those sources said. The discount on drives from Seagate varies by capacity.

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System builders typically pay slightly less than $130 for a copy of Windows XP Pro.

Another system builder said the price cut may be historic but will not make him any more competitive against top-tier notebook manufacturers such as Acer, which sells a fully configured Travelmate 4072WLMi notebook for $799.

A fully configured whitebook with the same components—including $519 for the barebones notebook and a $127 copy of Windows XP Pro—costs more than $1,000 to build and even more to support, he added.

The rebate may not be game-changing, but it’s the first concession in a long battle to wreak price cuts from Microsoft. “It took the system builder channel team quite a lot of effort to get what they got,” said one source at the event.