Microsoft could face $8.5 billion in damages for "Vista Capable" case

Posted by Samantha Rose Hunt


Redmond (WA) - Due to Microsoft's Vista Capable marketing program, the company could stand to lose as much as $8.5 billion in efforts to settle accounts with those customers affected by the campaign. However, this figure is a drop in the bucket compared to the potentially $100 billion Microsoft has taken in revenue thus far for Vista* (see note below).





Yesterday, U.S. District Court Judge Marsha Pechman released figures from the class-action lawsuit that claims Microsoft mislead its customers in the months before the January 2007 release of their Vista operating system.



Microsoft has said that the estimate is inflated, and that if damages were granted it wouldn't fall anywhere close to this amount.



A University of Washington economist, and an expert witness for the plaintiffs has calculated that it would cost anywhere from $3.92 billion to $8.52 billion to upgrade all of the PCs that were sold as Vista Capable so that they would be able to run the premium versions of Windows Vista.



This number was computed by utilizing data provided by Microsoft, and arrives at how many "Vista upgradeable" PCs had been sold in the United States between April 2006 (when the Vista Capable Campaign began) through to January 2007 (when Vista hit the market and the marketing campaign ended). It was deemed that 13.75 million notebooks and 5.65 million desktop PCs had been classified "Vista Capable" when they were not actually able to meet the harsher "Premium Ready" requirements.



Basically, Microsoft certification branded "Vista Capable PCs" as such without stressing to consumers that the PCs were designed only to run at the barest minimum of Vista Basic - which is the lowest level of the many products of Vista. Unfortunately, some of these PCs weren't capable of running more powerful versions, or were not able to run all of the program features in other versions.



The Vista Home Basic lawsuit alleges that Microsoft's Vista Capable program would inflate the prices of PCs that were only capable of running that edition, thus enticing users to purchase machines that would not be able to upgrade to a better version of Vista at a later date. Individuals and consumers involved in the lawsuit feel that they were cheated, and not given the "real Vista" because it doesn't have the Aero glass user interface.



Microsoft denies false advertising and claims their campaign was fair and honest.



Were Microsoft facing the full $8.5 billion potential ruling, it would cost Microsoft more than 26.6 million copies of Microsoft's $319.95 Ultimate version of Vista to pay for it, or 42 million copies of $199.95 Vista Basic. As of July, 2008, Microsoft announced it had 180 million licenses for Vista, somewhere between $36 billion and $58 billion in revenue - not including the past 6 month's sales.

[* Note: This is a TG Daily extrapolated maximum figure based on possible revenues from published data by Microsoft, and not net profit. It should not be used for anything other than a guideline].