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The world's largest software maker says it plans to lower retail prices for Vista in 70 countries later this year in tandem with the shipment of SP1.

Click here for PC Pro's review of Vista SP1

Packaged versions of Vista sold at shops and online account for less than 10% of all licences of the dominant OS that sits on more than 90% of the world's personal computers.

In the US, Microsoft will reduce prices for Windows Vista Ultimate, the company's top-end

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operating system, to $319 (£160 pounds) from $399 for the full version and cut the price for an "upgrade" version to $219 from $259.

It will also cut prices for upgrade versions of Vista Home Premium to $129 from $239. The price cuts will vary by country, however.

In emerging markets, Microsoft will stop selling upgrade versions of Vista, because, for many customers, it will be the first purchase of a genuine copy of Windows. The company will instead sell Vista Home Premium and Home Basic, a stripped-down version, at the upgrade prices.

Microsoft has sold more than 100 million licences of Vista since its January 2007 release and its adoption has underpinned strong earnings results at the company in recent quarters.

Nonetheless, some consumers have raised issues with Vista's performance, stringent hardware requirement and lack of support for other software and devices like printers. Microsoft said it would continue to sell Windows XP until June 2008, delaying a scheduled transition to Vista.

Microsoft said the announcement is unrelated to the sales data, which the company said could be a result of inventory build-up after the holiday shopping season.