In a significant development, Microsoft India today announced price reductions on retail versions of its Windows Vista operating system.

The price cuts are targeted at home users, self-employed professionals, and small business owners, and are applicable to Windows Vista Home Basic, Windows Vista Home Premium, and Windows Vista Ultimate editions -- with immediate effect, Microsoft said.

Anywhere between 13- and 39- percent, the reduction firmly places the price of Windows Vista Home Edition at Rs 4,000; Windows Vista Home Premium at Rs 5,300; and Windows Vista Ultimate at Rs 11,500. Meanwhile, these are estimated street prices that may vary by city and partner.

Speaking on the occasion, Prasanna Meduri, director (Windows Client Business Group) of Microsoft India, said, "Today, there is a transformation taking place in the way consumers purchase software. With the rise of the retail industry in India, we are witnessing increasing demand for off-the-shelf computer software from the do-it-yourself audience. This reduction in pricing will enable us to reach out to this set of consumers, while at the same time providing our channel partners with a greater opportunity to sell original software."

Importantly, Microsoft said that though revised rates of Windows Vista vary from market to market globally, the price cut in India is commensurate with that in emerging markets.

In a separate development, Amazon, which has been selling copies of Windows Vista sans the service pack (SP) is now advising customers to download the Windows Vista SP1 upgrade for free beginning Tuesday, which is today.

Amazon has also started taking pre-orders for boxed copies of Windows Vista Service Pack 1, which it said it would start shipping from tomorrow (Wednesday).

Microsoft meanwhile has issued a statement saying it is on track to release Vista SP1 in the middle of this month. The company even acknowledged Amazon's claim that its Vista SP1 upgrade would be available for download from Amazon beginning today.

And while several fixes in Windows Vista SP1 have been released by Microsoft as part of its monthly updates since the operating system went on sale to consumers, SP1 promises improvements in terms of reliability, security, and performance. Early testers have said SP1 shows marked improvement in terms of copying files over a network and playing video games not really designed for Vista.

Of course, a handful programs would break down in some way after installing Vista SP1, Microsoft said. Also, SP1 would block several applications from running -- for "reliability" reasons. These include: BitDefender Antivirus and Internet Security, version 10; Fujitsu's Shock Sensor hard drive protection for rugged laptops; two versions of Jiangmin KV Antivirus software, and Check Point Technologies' Zone Alarm Security Suite.