Everyone knows about the federal Cash for Clunkers program that’s done wonders for auto dealers, but we were taken by surprise to receive a press release from Microsoft about its Cash for Clunker Computers rebate program.

We knew that Microsoft was in a world of hurt with declines of 6% to 11% in operating income, net income, and diluted earnings per share (see Microsoft Reports Second-Quarter Results), much of this due to resistance to Windows Vista and the surging netbook market, which is tied to the less costly Windows XP and Vista Home Basic operating systems.

In an effort to stimulate sales of new computers with more expensive versions of Windows, Microsoft has created a program slightly more complex than the Car Allowance Rebate System (CARS). There are minimum hardware requirements for the trade-in computer, which must also fail to meet the minimum requirements for Windows Vista Home Premium.

The amount of the rebate varies depending on processing power, installed RAM, Energy Star rating, the version of Windows purchased, whether Office 2007 is bought at the same time, and whether the new PC is obtained with a Windows 7 upgrade certificate. Rebates range from $100 to $450, and, as far as we can tell, not a single netbook qualifies.

When asked whether non-Windows computers could be traded in, Microsoft told us that any personal computer meeting its trade-in requirements qualifies – even if it’s running Linux, OS/2, or the Mac OS. The goal of the program is to move users to Vista (and later to Windows 7) regardless of what platform they are currently using.

That means that any PowerPC Mac between 100 MHz and 1 GHz should qualify.

We at Low End Mac wish Microsoft well, as it is the only major operating system losing market share these days. We believe this is a clever, innovative way to help grow the installed base for Windows Vista, which sorely needs growing. This will further pave the way for Windows 7, which ships later this year.

– Anne Onymus

Microsoft Announces Computer Allowance Rebate System

REDMOND: Microsoft CEO Steve Ballmer today announced Microsoft’s Computer Allowance Rebate System (CARS). The program is being touted as Microsoft’s way of helping Americans move to new computers in these trying economic times.

In brief, Microsoft is offering rebates of up to $450 for those purchasing a new PC with Windows Vista Home Premium, Business, or Ultimate with trade-in of an older PC that is currently being used and has been owned for at least one year.

The trade-in PC must not meet the minimum hardware requirements for Vista Home Premium: at least one 1 GHz x86 CPU, 1 GB of system memory, 40 GB hard drive, DVD compatible optical drive, 128 MB of graphics memory, and support for DirectX 9 graphics. It must fall short in at least one of these areas.

The trade-in PC must have a 100 MHz CPU or better, at least 64 MB of system memory, a 4 GB hard drive, an optical drive, and 4 MB of graphics memory. It must meet or exceed these specifications while falling short of the requirements for Windows Vista Home Premium.

The new PC must be from a major manufacturer; have a newly licensed copy of Windows Vista Home Premium, Business, or Ultimate installed; have a 1.9 GHz or higher CPU clock speed; have a minimum 1.5 GB of installed system memory; include an optical drive; and have at least 60 GB of hard drive or solid state storage.

The amount of the CARS rebate is based on the new Windows PC purchase:

• Any eligible computer: $100
• If new PC has two or more cores, add $50
• If the number of cores times CPU speed in GHz is greater than 5.0, add $50
• If new PC has 2 GB or more system memory, add $50
• If new PC meets current Energy Star requirements, add $50
• If new PC is purchased with Vista Business, add $25
• If new PC is purchased with Vista Ultimate, add $50
• If new PC is purchased with Microsoft Office 2007, add $50
• If new PC is purchased with Windows 7 upgrade certificate, add $50

You must use the new PC to apply for the CARS rebate online, and you must use Internet Explorer when applying. You will be required to enter a CARS rebate number provided by the dealer, which will be matched with information supplied by the dealer. By applying for the rebate, you give permission to Microsoft to scan your new PC to ascertain its configuration and determine how much you will receive.

Allow 8-12 weeks for processing of your rebate.

CARS Credit

Do I need a voucher or have to sign up in advance?

No, there’s nothing you need do in advance. Participating dealers will provide you with all the information you need to process your rebate claim.

May I receive more than one CARS rebate?

You can only receive one CARS rebate per new computer purchase. You may purchase one computer for every member of your household.

What is the amount of the rebate?

The rebate ranges from $100 for any computer that meets program requirements to $450 for a PC with two or more cores, 5.0 GHz or more of processing power (speed in GHz x number of cores), at least 2 GB of system memory, Energy Star certification, Vista Ultimate, Office 2007, and a Windows 7 upgrade certificate.

Eligibility

Does the rebate apply if I want to lease a new computer?

Yes, the rebate is available with a new computer lease. The lease must be for a minimum two year period, and the rebate will only be paid after payment is made to cover the first 12 months of the lease. However, you may (and should) apply for the rebate immediately, as funding is limited.

What new PCs may be acquired under the CARS program?

The CARS rebate applies only to new Windows PCs. Used computers do not qualify under this program.

The new PC must have a retail price of not more than $2,000 and meet every requirement for Windows Vista Home Premium. In addition, it must have a minimum CPU speed of 1.7 GHz, include at least 1.5 GB of system memory, and have 60 GB or more of hard drive or solid state storage.

Rebates and Incentives

Can I use this credit in combination with manufacturer’s rebates and discounts?

Yes, any rebates and discounts offered by the manufacturer or dealer can be applied to your new computer purchase.

Scrap value

What happens to the computer I trade in?

You may keep the hard drive due to privacy and security concerns. The rest of the computer will be recycled in an environmentally friendly manner. Although parts of it may be salvaged by the entity recycling the hardware, the computer itself cannot be rebuilt or resold.

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