Following lukewarm sales of its Vista operating system, Microsoft Australia is hoping to retrieve lost ground _ and maybe widen its horizons _ by slashing up to 40 per cent from the price of boxed retail versions. The price cut is bigger in percentage terms than those in the US (CDN, Monday), where cuts have averaged 20pc, but lower than than the 47pc UK/EU cuts.

In Australia, Vista Ultimate (full edition), previously selling for A$751, is now $302 cheaper at $449. Other full-edition prices, with the old in brackets are: Home Basic $299 ($385); Premium $349 ($455); and Business $449 ($565). There are similar cuts for upgrades, which now cost from $149-399, compared with $199-495.

The move comes one year after Vista was launched in Australia and the software giant hopes that the new prices will turn customers who had complained about pre-installed Vista PCs, which some downgraded to Windows XP.

However, Microsoft denies the major reductions are specifically targeting those users.

“Windows Vista has been on the market for more than a year now and has been doing well, with more than 100 million licences sold in its first year,” a company spokesman said.

He says the vast majority of Windows licenses were sold with PCs and retail stand-alone sales, in contrast, were mostly from customers who valued being early adopters. “While this is rewarding, we see an opportunity to grow our business even more with some of the new editions we introduced with Windows Vista,” he said.

“The changes to our pricing structures will allow us to reach a broader range of consumers worldwide.

“The changes will also provide greater opportunity for our retail partners to sell more standalone copies.”