Okay, now this is unexpected: Microsoft is slashing the price of some retail versions of Windows Vista, effective when the SP1 version rolls out later this year. Vista Ultimate's full version will go to $319 fro $399 (an upgrade is now $$219, down from $259); Home Premium's upgrade is now $129, down from $159. The Microsoft site has an interview with an exec who talks about the news.

Who will benefit from this development? Basically, folks with Windows XP machines who have chosen not to upgrade to Vista until now because they found it pricey. But it's not as easy as that: Most of those people probably have PCs they bought in 2006 or before, and while some of those aging machines will run Vista well, many won't. (If you bought a Windows XP computer in 2007, I have a hunch you did so specifically to avoid Windows Vista, and therefore today's news means little or nothing to you.)

I certainly hear some grumbling about the cost of Vista--especially Ultimate, which, even at its new price, is pretty expensive compared to Apple's $129 Max OS X 10.5 "Leopard." But I'm curious whether there are really that many people out there who have been itching to buy a Vista upgrade--and have a PC potent enough to run it well--but haven't done so yet.

One also wonders what's motivating Microsoft to cut prices. The company says that research showed that a cheaper Vista would appeal to more computer users beyond early adopters and geeks. Logical enough. But did it misjudge the public's willingness to fork over $300 for a piece of software when it initially priced Vista? And is the price drop a sign of panic, or a confident statement that it thinks Vista has mass appeal?

Today's news doesn't affect the price of new Windows Vista computers. And I have a sneaking suspicion that for every Microsoft customer who's psyched by the prospect of a lower-cost Vista, there are several who'd be far more thrilled if the company undid its announced plans to discontinue Windows XP on June 30th. (I've rarely if ever run into anyone who's told me that he or she thinks Windows Vista is a major argument for buying a new computer--but a lot of folks have worriedly asked me if it's still possible to buy an XP box.)

CNET's Ina Fried has more news and analysis on all this.

Time for one of Techlog's patented Silly Little Polls(tm):