Microsoft denies it profits from Vista-to-XP downgrades

Microsoft has denied that it makes money when users "downgrade" Windows Vista to the older XP, as a lawsuit filed last week alleges.

The lawsuit, submitted to a Seattle federal court last Wednesday, stems from the $59.25 fee that a California woman was charged in mid-2008 when she bought a Lenovo laptop and downgraded from Vista to XP.

"Microsoft does not charge or receive any additional royalty if a customer exercises those [downgrade] rights," said Microsoft spokesman David Bowermaster in an e-mail late last week. "Some customers may choose or need to obtain media or installation services from third parties to install the downgrade version."

In fact, it's computer makers, not Microsoft per se, who charge users the additional fees for downgrading a new PC from Vista to XP at the factory. Dell Inc., for example, adds an extra $20 to the price to downgrade a PC.

Microsoft, however, may profit from the way it structures downgrade rights. Only buyers of PCs with pre-installed editions of Vista Business and Vista Ultimate can downgrade, and then only to Windows XP Professional . All three editions are higher-priced versions of their respective lines, a fact that the lawsuit mentioned in passing.

"Customers have been forced to purchase the most expensive version of [Windows XP] in order to 'downgrade' from the Windows Vista operating system," the complaint read.

That was the cause of some confusion last year, when Dell Inc. was accused of gouging customers by charging $150 to downgrade a new computer to XP. Dell, however, countered that although it did charge $20 to install XP on the machine, as well as to cover the cost of the additional media, the bulk -- $120 of the $150 -- was the price of upgrading the PC from the standard Home Premium to the more expensive Business edition.

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