Vista and Irrational Pricing Strategies

Contrast Microsoft’s approach to Apple. Leopard doesn’t have any machine level enforcement of licensing yet when I was in the Apple store buying my upgrade I still forked over $200 for a 5 machine family pack instead of $100 for the single license and cheating my way to 3 machines. People are basically honest when companies provide them with a reason and an unobstructed path.

Microsoft’s pricing on XP and Vista is screwy. On one hand I can buy Vista for the same price as XP while on the other I could upgrade a pirated version of Vista to a legal version for less than the retail price of either.

Ironically, those prices are significantly better than the retail prices that you’ll find from legitimate Windows resellers. In theory, at least, a consumer could install a copy of Windows Vista without a product key, refuse to activate the system for 30 days, and then purchase a perfectly legal license at a discount using Microsoft’s online offer. [From » With SP1, Microsoft plans to ditch the Vista “kill switch” | Ed Bott’s Microsoft Report |]

Maybe one reason why Vista has not captured the hearts and minds of the masses has nothing to do with the feature set, security, or user interface… maybe it’s simply a matter of irrational pricing being an obstacle.

Not that they care what I think, but reduce the complexity of the product matrix (too many SKUs), drop the price to (a lot), and kill the silly amnesty program because if they price the product right the overwhelming majority of users will, as Apple has demonstrated, buy it legally.

8 thoughts on Vista and Irrational Pricing Strategies

  1. I absolutely agree on MS pricing being a nightmarish carnival of terror, but have one question: I’ve heard the anecdotal “Mac users just pay up for the licenses they need” a fair amount (and I’m one data point in favor of the assertion, too) but I can’t recall seeing any significant data to back it up. Do you know of any?

  2. No data whatsoever, but their results seems to speak for themselves. It’s a closed ecosystem that is easy to correlate the number of computers that Apple sells to the number of licenses for their OS software upgrades. The variable is the number of computers that are now out of service, so look at past 3 year numbers to reduce the impact of that variable.

  3. OS X’s TCO ends up being a lot more for it than Vista. Paying $130 for dot releases (aka Service Packs) is faily high! If you had bought the Mac OS X from the beginning and every “upgrade” including Leopard, you would of spent over $500!

    Vista Ultimate including all subsequent service packe is $320.

    Kudos to Apple for monetizing service packs!

  4. Fair point, even though purchase price is only one component of TCO. Also, I wouldn’t consider Tiger and Leopard service packs, each release included significant new functionality as opposed to SP1 and SP2 in Windows, which fixed things that were supposed to work the first time around or improved performance.

  5. I’d argue that XP SP2 is a very different beast than the original XP. Not just bug fixes but new tools/apps/etc. Yes, not as extensive as OS X updates, but a nice upgrade nonetheless.

    The great thing about Apple is that they can add a feature like desktop search and convince people its worth money. Let’s take OS X’s search (aka Sherlock)… They implement so well and demo it so well that they differentiate it from the 2 or 3 FREE desktop search engines available for Windows. But in reality they all do the same thing and almost in the exact same way!


  6. and despite the fact that there are 2 or 3 desktop search technologies, including open source Copernic, Windows users had to wait until 2007 to get it integrated with the OS.

    MS spends 5 years developing Vista and users can’t find a reason to upgrade. We could credibly call it as XP being good enough but that would be thin.

    You can ding Apple for doing the obvious and selling it as a feature but the fact remains that they have done a bang up job of evolving an OS that does a lot more than provide better security messages. I chucked MS Entourage because Apple Mail, iCal, and Address Book do the job quite well and other applications can take advantage of my messaging, contact, and schedule data. Where is MS with something even close to being equivalent?

    The market for the OS is changing but MS is stuck in 1996.

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