Microsoft is in talks over discounting Vista, the latest version of Windows, amid fears delays to the operating system will hit PC sales this Christmas and that high costs may push corporate customers to rival products.

A spokesman for the company told Times Online: "We are talking with all of our partners about plans for an offer, but those discussions are ongoing and we have nothing more to share at this time."

Microsoft refused to elaborate on the potential discounts. But Michael Silver, research vice partner at analysts Gartner, said it was likely that the scheme would involve consumers who buy PCs before the holidays being given vouchers that will get money off a Vista upgrade when the software is released next year.

Delays to the next generation of Windows, which accounts for 90 per cent of the market, are expected to hit PC and processor manufacturers as consumers delay buying new computers until the latest software is available.

The voucher system would be designed to mitigate those effects but could also hit Microsoft's bottom line.

"It has become pretty clear that Microsoft was going to have to do something to help out retailers and PC manufacturers over the holiday," Mr Silver said.

It is thought the company had pencilled in a retail price of as much as £400 for the consumer version of Windows, and that an upgrade from a previous version would cost as much £100.

Consumers can expect to pay less if they buy a new machine that has the operating system pre-loaded.

News of the potential Vista discount comes as rivals predict that high costs associated with migrating from Windows XP to Windows Vista will spur companies to switch to rival systems like Linux.

Novell, which builds applications to work on the open source system, would benefit from such a move.

Widespread migration would hit Microsoft's earnings hard. Combined with Office, the suite of office software, Windows accounts for the lion's share of profits at the world's largest software developer.

Vista discounts could also signal the pressure Microsoft is under to maintain its traditional markets and muscle its way into new ones. Rumours have circulated in recent weeks that Microsoft is considering giving away music tracks in a bid to attract users away from Apple’s iTunes to its own online music store.

Vista has already been more than four years in the making and has been postponed several times amid security concerns. The latest delay came earlier this year when quality problems put back the consumer version until early 2007.

Fears were raised again last month when Microsoft said it was dealing with Vista "milestone by milestone" but refused to give a more detailed timetable.

Any further delay would be an embarrassing blow to Microsoft's recently revamped management team, which is facing fierce competition from a pack of rivals across its businesses.

Google, the online advertising giant, has already given notice it intends to compete in the software stakes by buying Writely, an internet-based word processor that competes with Microsoft's Word. Writely was launched by Google earlier this week.

Other competitors include the Mozilla Foundation, the non-profit creator of Firefox, a web browser that has taken market share from Microsoft’s dominant Internet Explorer.

Sony today announced that it has chosen software from Opera – another Internet Explorer rival – to run on mylo, a new personal communication device that will be launched in the US next month.

Mylo itself is likely to compete with Microsoft’s planned Origami device – another handheld games and communications gadget.

Microsoft is seeking to fight back by investing $2 billion in its own internet-based services. Ray Ozzie, Microsoft’s technology guru, recently told analysts that Microsoft is ready to abandon the PC-centric model that it has milked for the past 30 years.

"We’re in a new era, an era in which the internet is at the centre," he said.

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