The Inquirer would have you think so (Microsoft admits Vista failure). Dell has bowed to the lack of consumer enthusiasm about Vista (especially those laptop users dismayed at power management issues, but people whose applications suddenly break won’t be amused either), reinstating Windows XP availability on their customer line-ups. This is, at best, a grace period of one year, since Microsoft currently plans to stop XP sales entirely in 2008.
They have a point there. I have a problem with their assertion that the $3 Windows edition is another admission of failure. True, the stronger anti-piracy controls on Vista means that Microsoft’s closing one eye on piracy no longer reduces Linux’s price advantage as much. But there’s the point of government tie-in: to be eligible for the cheap Windows licenses, governments have to step in and subsidize the hardware!
So Microsoft might have a weakened hold on its current OEMs, but it is hoping to gain entire countries as new clients. In which case the price drop cannot be compared against the full price of Windows, but what Dell, HP etc. gets charged (less than $50 a piece, I’m sure). An order of magnitude less. Which is a side issue — Microsoft is not currently gaining anything from those pirated copies anyway (apart from mindshare). The main worry is that another generation will be locked into Microsoft products, and want to bet there’s a clause in the fine print promoting the so-called Open XML over Open Doc?