Windows 7 Pricing: The Good, The Bad, And The Interesting

Thursday, June 25th, 2009
By Stephen Baker, Vice President, Industry Analysis

Microsoft released lots of interesting details today on Windows 7 release schedules and pricing. There were three main announcements: First, and one that is pretty good but that has already been widely reported, is that PC upgrades on Vista machines bought between now and the end of October would be free from Microsoft, with any cost (normally S&H) being charged by the PC OEM. This is within expectations and is the good for both the consumers and the OEMs. We should see a very minimal stall from the transition as these very low cost upgrades are offered to consumers. In addition, the excellent timing of the general availability of Win7 (between back-to-school and Black Friday) ensures that student buyers can’t wait until general availability to buy and holiday consumers are taken care of. All-in-all a big A+ for timing, pricing, and for ensuring that this will be the smoothest transition within the industry of any Windows OS upgrade yet.

No discussion about Microsoft ever leaves everyone happy. In this case I am mightily disappointed in a couple of aspects of Microsoft’s upgrade plans for non-PC buyers. First, is the pricing on the Windows 7 Home Premium upgrade. Besides the fact that $119 is a price point that fits nowhere in these economic times, it is still way too much for the software. While I acknowledge that this is down from Vista pricing, that is damning with faint praise. It is in Microsoft’s best interests to erase all vestiges of Vista from consumers’ homes, and by making the upgrade expensive (and a bit painful, more on that in a moment) Microsoft is creating a large disincentive for consumers to move to a far superior platform with a better user experience. Doubling down on the disappointment is the fact that this is only a one user license. In a world (at least in the U.S.) where most homes are moving into a multiple PC environment it would enhance the consumer home experience if they could upgrade all their home PCs at a single low price with a single boxed purchase. Although I don’t think it is exactly equivalent, Apple’s Snow Leopard pricing model ($29 for a one user license and $49 for a five user license) is much more appropriate to driving adoption and raising customer satisfaction levels. This is a direction I would have much preferred to see Microsoft head into.

Finally, what was interesting? The intention of a limited availability sale on Windows 7 (at $49 per copy) fulfilled only through the channel is a boon to the channel and the industry. It certainly addresses at least some of our pricing concerns and adds a few benefits to the marketplace. A program like this will deliver incremental customer traffic at retail, early customer excitement about a new product to the industry, and should prove to be a great early indicator as to customer demand and interest. Maybe some of the learning here could lead to some revisions in the go-to market planning down the road.

6 Comments

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  By computerguy, June 26, 2009 @ 7:38 am

  Good post but I question your comment about multiple computer installations. Unless you have some inside information, I think your assumptions on the EULA for Windows 7 (which hasn’t been published) are pre-mature.

  http://www.microsoft.com/windows/windows-7/eula.aspx

  If you actually read these things, you’d notice that for Office 2007 Home and Student, for example, you can intall on 3 systems. Note that other versions of Office do NOT says this.

  http://www.microsoft.com/downloads/details.aspx?FamilyId=7467D5C4-FA3A-4F9F-82B6-CBCD6108A980&displaylang=en

  As for the price being “way too much for software”, et’s not forget that Apple isn’t by any means being “nice” either. Their hardware costs quite a bit more than a PC and since they are making a killing on the hardware they can afford to sell software at a lower price. In the case of Windows, it is Dell, HP or whoever that is making money on the hardware, not Microsoft. I’m not saying that this price doesn’t seem expensive but rather that it seems expensive perhaps because Apple is selling “agressively” - perhaps even at a loss because they already over price their hardware and everything else.

  Just some food (Apples) for thought…

Other Links to this Post

1. Windows 7 pricing is too expensive, says analyst | Tech Blog — June 26, 2009 @ 8:38 am

2. Techknology’s Blog » NPD Analyst Says Windows 7 Pricing is “Way Too Much” — June 26, 2009 @ 10:23 am

3. Windows 7 pricing is too expensive, says analyst : GadgetsBiz.com: Reports — June 27, 2009 @ 5:11 am

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5. Split-Screen :: The Game-Geek’s Daily Read » NPD Group: “Windows 7 Price Point Fits Nowhere in These Economic Times” — July 2, 2009 @ 11:16 am

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