Microsoft’s Beijing office announced today the price of the Windows OS dropped Wednesday by two-thirds for Vista Home Basic and by over half on Vista Premium.

Home Basic was slashed to 499 yuan (US$66) from 1,521 yuan, while Premium fell to 899 yuan from 1,802 yuan, ostensibly “made to meet market demand for the operating system” as per a company representative.

Last month, Microsoft said it sold 60 million Windows Vistas worldwide, including 20 million copies sold since mid-May. It also pledged a billion copies of all Windows variants will be sold by the end of next fiscal year, as we reported in June.

Well, the Chinese market is price sensitive, as this $199 Lenovo PC concept illustrates. But, China has also been frank in its official development of open-source operating systems, and some pundits have suggested Red Flag Linux was a bargaining chip to gain leverage against Redmond. Do you think the possibility of billions of Chinese Linux users drove Vista prices down?