January 23, 2009
Microsoft may have to cough up as much as $8.5 billion to settle a lawsuit that charges Microsoft allowed PC makers to slap "Windows Vista Capable" stickers on PCs that, in fact, could run only the most bare-bones version of the operating system.
Class action lawyers estimate there are 15 million consumers eligible to participate in a settlement.
The $8.5 billion figure comes from a report prepared by Keith Leffler, a University of Washington economist and expert witness for the plaintiffs in the case.
Leffler estimated it would cost at least $3.9 billion and possibly as much as $8.5 billion to upgrade the 19.4 million PCs that were sold at "Vista Capable" but were in fact not able to run premium versions of Windows Vista.
Leffler said he used data provided by Microsoft to figure out how many PCs were sold as "Vista Capable" from April 2006 through January 2007, when Vista finally hit retail shelves and the promotion ended.
The class action lawsuit charges that the "Vista Capable" program inflated the prices of PCs that could run only the most basic Vista program, Vista Home Basic. The plaintiffs charge that Home Basic is not the "real" Vista because it lacks the Aero user interface.
In reaching his estimates, Leffler calculated that a PC needs at least 1GB of memory and an Aero-capable graphics card to run premium versions of Vista. He estimate it would cost a maximum of $155 to upgrade each affected desktop and between $245 and $590 to upgrade laptops.
Microsoft has denied that it misled consumers and argues that Home Basic is a legitimate version of Vista. The company also called Leffler's estimates "absurd."
