MAY 19, 2011 • Microsoft’s Windows division is using the lure of a free Xbox 360 promotion as an incentive to boost sales of PCs to students. Students buying a new Windows 7-based PC priced at $699 (U.S.) or more will get a free Xbox 360 4GB console. Supplies of Xbox 360s available for the promotion are limited, but Microsoft did not disclose how many of the consoles have been allocated. The promotion will be extended later to Canadian and French students.

Impact:  This type of promotion now makes a great deal of sense.  The hardware cost of the Xbox 360 has come down enough that giving away an Xbox 360 will not cost that much.  Furthermore, Microsoft ahs the ability to upsell products like the Kinect and other accessories, which may even result in a long-term breakeven, or even better, for each Xbox 360 given away.  However, the main goal is to give a boast to Windows 7.  College students in particular are at a particularly susceptible point where they could go to a competing OS, most likely for Apple’s Mac.  Microsoft needs to do its best to get consumers on board at this early point.