Microsoft raises prices with Windows 2000

Microsoft Corporation has finally set the pricing for its upcoming family of Windows 2000 products, and it looks like the cost of the upgrade is going to be prohibitively expensive for many users. While the NT 4.0 Workstation to Win2K Professional upgrade will only set you back $150 (the same price as the NT 4.0 Workstation upgrade), upgrading Windows 95 or 98 to Windows 2000 Professional will cost a staggering $220, almost twice as much as the upgrade to NT 4.0 Workstation. Buying the "full" version of Windows 2000 Professional will cost $320.

For Server, things get even more complicated and expensive. Windows 2000 Server with a 10-user Client Access License (CAL) will cost $1200, while the 25-user version will cost $1800. Upgrades from Windows NT 4.0 or Novell Netware will cost $600 and $900 respectively. Windows 2000 Advanced Server will cost $4000 for in 25-user form, or $2000 when upgrading from Windows NT 4.0 Enterprise Edition.

"Typically, Microsoft notifies customers of its pricing at launch, but we are notifying customers and partners well in advance so they will be able to budget for Windows 2000," said Mike Nash, the general manager of product management for the Business Windows Division.

The most obvious new cost, however, revolves around Microsoft's new CAL policy. Microsoft has found that many people that should have been paying for CALs have not been, so they will be stricter with Windows 2000. Beginning with this release, any user that authenticates against a Windows 2000 server will need a CAL. For Internet connections, Microsoft will require a $2000 Internet Connector license, similar to what the company has been offering with SQL Server.

As usual, Microsoft will lower CAL prices for volume sales. The prices announced today are effectively "retail prices only," as Microsoft's closest customers have historically determined specific pricing privately with the software maker. Whether this gets Microsoft is trouble down the road remains to be seen, but what this means to retail buyers is obvious: Microsoft wants Windows 2000 Professional to be prohibitively expensive for consumers. The $220 price point is designed to cut down on the number of non-corporate purchases, further proof that Microsoft wants this OS in the hands of business users only. The rocky upgrade path, combined with a relatively low level of hardware and software compatibility would only confound and confuse Windows 9x users, who expect upgrades to occur effortlessly. For these users, Windows 98 Millennium is waiting in the wings for a late 2000 release.

Aside from the consumer issue, there are disturbing signs that Microsoft is hopelessly out of touch with reality when it comes to pricing. The onslaught of Linux, which can be had for free or next to nothing, has seemingly not affected the software giant's thinking. Retail Linux packages can be had for as little as $20, while versions tied to phone support cost well under $100. If Linux continues to make inroads in the corporate market next year, you can expect Microsoft's high prices for Windows 2000 to be a defining moment in its loss of marketshare

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