Microsoft announced Thursday that it's cutting prices of its Vista OS in retail outlets. The move is expected to coincide with the release of SP1 for Vista.

The priciest Vista versions got the biggest price cuts, so Vista Ultimate dropped to $319 from $399. The price of the upgrade package has also been reduced to $219 from $259. Widows Vista Home Premium, on the other hand. dropped from $159 to $129.

The company plans to stop selling its upgrade packages in emerging markets, as it expects that Vista will be the first genuine Microsoft OS for the majority of consumers in those markets. In other words, they don't have anything legal to upgrade from in the first place.