Microsoft today announced Windows 7 retail pricing, upgrade information, launch details, and a preorder deal. The software giant has reduced the price on its most popular retail Windows product, the Home Premium upgrade version, by approximately 10 percent (this varies based on the market). In the US, this means a drop from $130 to $120, a savings of $10. For the Home Premium full version, the price drops from $240 to $200. Those are the only differences when comparing Windows Vista prices to Windows 7 prices after Microsoft made cuts in in February 2008 (compared to the ones announced in September 2006). The table below summarizes the slow drop in cost for Windows Vista and Windows 7 in the US:

Upgrade retail products

Windows Vista

as of 1/2007

Price Windows Vista

as of 2/2008

Price Windows 7

as of 10/2009

Price Home Premium $159.99 Home Premium $129.99 Home Premium $119.99 Business $199.99 Business $199.99 Professional $199.99 Ultimate $259.99 Ultimate $219.99 Ultimate $219.99

Full retail products

Windows Vista

as of 1/2007

Price Windows Vista

as of 2/2008

price Windows 7

as of 10/2009

Price Home Premium $239.99 Home Premium $239.99 Home Premium $199.99 Business $299.99 Business $299.99 Professional $299.99 Ultimate $399.99 Ultimate $319.99 Ultimate $319.99

Comparing the Windows Vista retail pricing at launch to the Windows 7 retail pricing at launch, the differences are much more notable. The Home Premium upgrade version has dropped $40 and the Ultimate upgrade version has dropped $40. The Home Premium full version has dropped $40 and the Ultimate full version has dropped $80. However, Microsoft has not touched the pricing for the Professional edition (previously called the Business edition). This might be attributed to the fact that in Windows 7, every edition is a superset of the previous one. That means that unlike Windows Vista Business, Windows 7 Professional will contain all the features that the Home Premium edition has, and thus Microsoft cannot justify a price drop.

Upgrading from XP or Vista with a retail copy

While these price changes are positive for consumers (none of the products has increased in price), they are rather disappointing for those hoping for much more aggressive price slashes given the current economic climate. Thankfully, retail pricing is typically used as a starting point; most users will not be buying retail versions anyway. Retail sales account for less than 5 percent of Windows sales, the rest of sales are via OEM. Some consumers will either grab an OEM copy via an online or in-store purchase, but most will be getting a copy of Windows 7 with the next purchase of their PC.

Windows XP users need to know that regardless of which edition they currently have installed (Windows XP Home, Windows XP Professional, or Windows XP Media Center Edition) and regardless of which edition of Windows 7 they are moving to (Home Premium, Professional , or Ultimate), they will need to perform a clean install, whether they buy the upgrade or full version. The hassle of backing up applications and user data will fall on the user; a clean install will not back up anything. Using Windows Easy Transfer, users can copy their important files and settings to an external USB stick, external hard drive, or DVD, and then move the data back after the installation.

The installer will verify that XP is genuine and Windows 7 will have to be installed on the same partition as the XP installation. The good news is that Microsoft is allowing XP users to buy the cheaper upgrade version if they want to (Microsoft typically lets owners of the two previous releases of Windows to do this, in this case XP and Vista).

Windows Vista users can follow multiple upgrade paths to Windows 7. As was the case when upgrading from XP to Vista, you will only need to perform a clean install if you are going to a version that is lower on the food chain. For example, if you are going from Windows Vista Ultimate to Windows 7 Home Premium, you would do a clean install. If you are going from Windows Vista Home Premium to Windows 7 Ultimate, you do not need to do a clean install. When you switch to a higher version, you're adding on the existing functionality, but when you're going to a lesser version, you're taking away functionality, thus the need for a clean install.

Clean installs will also have to be performed when upgrading from a 32-bit version to a 64-bit version, regardless of edition. Unless the user chooses to repartition or format the current partition, Vista's files from C:WINDOWS will be preserved under C:WINDOWS.OLD, just as when upgrading from Windows XP to Windows Vista.

As with Vista, each DVD includes the various editions. Unlike Vista, every edition of Windows 7 is a superset of the previous edition, so you will not lose any features when upgrading. Once you have some edition of Windows 7 on your system, whether you purchased it via an OEM or just upgraded from Windows XP or Windows Vista, you will be able to upgrade to a "more premium" version of Windows 7 by purchasing an upgrade key to unlock additional features, just as with Vista. This is called Windows Anytime Upgrade (WAU). For example, you could start off with Windows Vista Home Premium, upgrade to Windows 7 Home Premium, and then later choose to upgrade to Windows 7 Professional.

Windows 7 E: no upgrades for the EU

Both Windows XP and Windows Vista come with Internet Explorer, and the upgrade editions of Windows 7 were never tested to handle the installation of Windows 7 without Internet Explorer. Mike Ybarra, general manager of product management of Windows, told Ars that Microsoft had three choices for the release of Windows 7 E: delay the whole release of Windows 7 to make sure everyone gets the release of Windows 7 at the same time and without any upgrade problems, delay the release of Windows 7 just in Europe and have this market wait till Windows 7 E passes all upgrade tests, or don't offer upgrade versions at all.

Microsoft chose the last solution, and it's actually a pretty good one, for both Microsoft and consumers. Windows 7 E editions will be sold only in full versions: there will be no upgrade versions available in the European Union. The good news is that the full versions will be available at the upgrade price, though if history is any indication, they'll likely still be higher than the US upgrade prices shown above. Microsoft announced two weeks ago that it was shipping Windows 7 in Europe without Internet Explorer 8 installed in response to the EU's antitrust investigation of its browser with Windows.

Preorder Windows 7 cheaply

In select markets, Microsoft is offering its customers the ability to preorder Windows 7 upgrade versions at a significantly reduced price. This is easily the most aggressive pricing Microsoft has ever offered for Windows. The low preorder price will vary per country:

US: Windows 7 Home Premium ($49.99) and Windows 7 Professional ($99.99)

Canada: Windows 7 Home Premium ($64.99) and Windows 7 Professional ($124.99)

Japan: Windows 7 Home Premium (�7,407) and Windows 7 Professional (�14,073)

UK: Windows 7 Home Premium (�49.99) and Windows 7 Professional (�99.99)

France and Germany: Windows 7 Home Premium (�49.99) and Windows 7 Professional (�109.99)

The deal includes select retail partners, such as Best Buy and Amazon, as well as the online Microsoft Store. This program begins Friday, June 26 in the US, Canada, and Japan. It goes on while supplies last or until July 11 in the US and Canada, and until July 5 in Japan. For the UK, France, and Germany, the preorder starts July 15 and runs while supplies last or until August 14. Microsoft was not willing to discuss the limits of the supplies, but a spokesperson did confirm to Ars that the reduced prices for the European countries will simply apply to the full version (as noted above), as upgrade versions will not exist in Europe. In short, these preorders will allow those in the UK, Germany, and France to purchase full versions of Home Premium or Professional, except without IE8, for a very low price.

Windows 7 Upgrade Option Program

Waiting to buy a PC until Windows 7 is released can be frustrating (especially given the upcoming back-to-school season), so Microsoft is making an upgrade offer similar to what it did for consumers buying XP but who wanted to secure a copy Vista: buy a Windows Vista PC as of June 26 and receive the equivalent edition of Windows 7 when it comes out. If the June 26 date sounds familiar, that's because it was rumored earlier this month via a leaked Best Buy memo (contra the rumor pointing to July 1 being the date). Microsoft will be offering the program globally until January 31, 2010 but OEMs can cut it off early if they choose to.

The offer will be available only from participating OEMs or retailers and encompasses Windows Vista Home Premium, Windows Vista Business, and Windows Vista Ultimate. For example, if you purchase a computer with Windows Vista Home Premium on it, once it is available, you will get a copy of Windows 7 Home Premium to upgrade to. Further details will be available soon at windows.com/upgradeoffer and windows7upgradeoption.com.

Ybarra told Ars that Microsoft would not charge consumers for Windows 7 if they purchased a Vista PC between tomorrow and the day of general availability. He did admit, however, that OEMs can choose the price of the upgrade, possibly charging for shipping and handling fees. Furthermore, it will be up to OEMs to decide which computers the upgrade offer will be available on, so it's unlikely that low-end computers like netbooks or PCs on sale will have this offer.

Windows 7 in your language

Microsoft is promising that all major OEMs will have PCs with Windows 7 shipping in all language versions beginning on the day of general availability, October 22, 2009. However, the same cannot be said for the Windows 7 retail versions. On October 22, they will be available in 14 languages: English, Spanish, Japanese, German, French, Italian, Dutch, Russian, Polish, Brazilian Portuguese, Korean, Simplified Chinese, Traditional Chinese, and Chinese (Hong Kong).

On October 31, the remaining 21 languages will become available: Turkish, Czech, Portuguese, Hungarian, Swedish, Danish, Norwegian, Finnish, Greek, Ukrainian, Romanian, Arabic, Lithuanian, Bulgarian, Estonian, Slovenian, Hebrew, Thai, Croatian, Serbian Latin, and Latvian. This wait of just over one week is a big improvement over Windows Vista's launch: the wait between the initial launch in the US and all the languages becoming available was about three months.

This theme of "better than Vista" that we're seeing with Windows 7 is apparent in today's announcement as well: the release has better pricing and will be more rapidly broadly available. However, whether "better than Vista" will be good enough for consumers to switch away from their current operating system is up to the market to decide. That said, we're optimistic, as Microsoft is quite obviously listening intently this time around.

Update

A few readers have asked in the comments and via e-mail about retail pricing in other countries. While we begged for pricing in every country, a Microsoft spokesperson told Ars that only pricing for the EU and the UK were available: