Search results matching tag 'Windows Pricing'

Windows Vista Is About To Get Cheaper

admin — Fri, 29 Feb 2008 04:31:35 GMT

Looks like I'm the first one to catch this. Microsoft put up a Q&A on PressPass with Brad Brooks. He's the CVP of Windows Consumer Product marketing, and he announced that Microsoft is dropping the price of retail-packaged product (RPP) versions of Windows Vista when the SP1 version hits the shelves in a few weeks. From the interview:

PressPass: What did you announce today?

Brooks: Today we announced a variety of price reductions for copies of Windows Vista sold on retail shelves. In developed markets, the price changes will most notably impact upgrade retail versions of the new editions we introduced in 2007 -- Windows Vista Home Premium and Ultimate editions. In emerging markets, we are combining full and upgrade Home Basic and Home Premium versions into full versions of these editions and instituting price changes to meet the demand we see among first-time Windows customers who want more functionality than is available in current Windows XP editions. In addition, we are also adjusting pricing on Windows Vista Ultimate in emerging markets to be comparable to price changes developed market customers will see.

These price changes will take effect globally with the retail release of Windows Vista Service Pack 1 later this year, though some markets will see reduced prices sooner as a result of promotions many of our partners already are driving, such as Amazon.com in the United States.

~~Hopefully soon Microsoft will detail exactly what these changes will be. Maybe~~ ~~Long~~ ~~will dig up a pricing sheet from Microsoft France or something.~~ UPDATE: Ina fried at News.com has the details. Windows Vista Ultimate drops 27% from $299 to $219, and Home Premium drops 19% from $159 to $129. I think this is great news, and will make Vista a bit more accessible. It also makes Vista Home Premium the same price as Apple's OSX 10.5, which might explain that particular price point.

For more, read the whole release.

Microsoft Introduces $3 Windows Bundle for Emerging Markets

admin — Thu, 19 Apr 2007 08:38:00 GMT

Kudos to Microsoft for making the right move.

My good friend Jed Rose, former manager of the Windows Featured Communities team, came out of hiding a few minutes ago and told me a bit about the project he's been working on for the last 8 weeks. Today, Microsoft is announcing that, sometime in the second half of the year, they will be making Windows ~~Vista~~ XP Starter, Office 2007 Home and Student, Windows Live Mail Desktop, Microsoft Math 3.0, and Learning Essentials 2.0 available for a grand total of $3 USD. This won't be available for just anyone to buy, however. Governments would have to pay for at least part of the cost of computers from certain retailers, who would then pass the computers on to students.

The New York Times article had some great information:

There are about a billion PC users worldwide, mainly in developed nations. The initial goal of the Microsoft program, working with many industry partners, would be to add another billion PC users by 2015, Mr. Ayala said.
...
Software piracy is another pressing concern for Microsoft and other software companies in developing nations. Mr. Ayala acknowledged that piracy and the competition from Linux were business issues for Microsoft.
“But this isn’t really about responding to those things, but about finding an economically practical way to put good software and a good computer into these people’s hands and get them going in life,” Mr. Ayala said.
“Certainly,” he added, “for Microsoft this is an investment in the long term. These are the consumers of the future.”
No matter what happens with Microsoft’s effort in developing countries, it is not going to have much impact on the company’s financial performance anytime soon. Its annual sales are running at more than $45 billion a year.
“Microsoft is betting that at least some of the kids from developing nations will turn into buyers of more mainstream products later in life,” said Roger L. Kay, president of Endpoint Technologies Associates, a research firm. “The theory is that if you get them young, you can keep them for life.”

Ina fried of News.com interviewed Will Poole, who had this to say:

"This is a new trend we are trying to embrace," Poole said. "We expect there will be some number of many tens if not single hundreds of thousands of PCs purchased under programs like this over the next 12 months."
Although Microsoft is aiming the PCs at students, it understands that they may get used more broadly by the families who get them.
"We're not going to tell them that the father cannot use it to look for job listings or the mom can't use it to look up health information," Poole said. "Of course it is going to be used however it is that it is used in the household, but the expectation is that it is for the student for education as the primary use."

Personally, I think this is an amazing thing. If Microsoft sees piracy as it's biggest competition, than this is their tried-and-true strategy of out-competing their competitors. Why would you buy an illegal copy for $1 in China when you could buy a legitimate copy for $3? Brilliant! Can you imagine the pitch meeting for this plan though? I bet several Microsoft VPs probably had to change their underwear after the meeting. That couldn't have been an easy pill to swallow.

More Information

Vista Brute Force Crack Steals From Consumers, NOT Microsoft

admin — Fri, 02 Mar 2007 18:47:00 GMT

It seems that people are really desperate NOT to pay for Windows. It seems that someone who was "just testing his VBScripting skills" has posted a routine that attempts to activate a pirated copy of Windows Vista by brute force. That means that the script increments through methodically generated keys, ~~and attempts to pass it on to Microsoft's activation servers for validation~~. If it fails, the generator moves on to the next one, until it finds a valid key. The author says this process can take anywhere from 2 hours to two days. UPDATE: Adrian explains how it works here.

Here's the problem with this, folks. Previous Windows cracks have used leaked corporate activations keys to unlock Windows, which only really hurts Microsoft. This method actively steals a valid Product Key from Microsoft customers, because most keys can only be activated once. Think about that for a second. What if your mom just got home from laying down $150 for Windows Vista Home Premium, only to get it home and install it, and find out that their key has already been activated. Now, Microsoft doesn't get hurt, because the key has been paid for. But now your mom is branded a pirate, and has to go through a giant hassle to get a new legitimate key.

Please, don't be an a$$hole use this method of activating Vista. It's one thing if your target is Microsoft, it's quite another if your target is an unsuspecting consumer who shelled out their hard-earned money to upgrade their home computing experience. And Microsoft, I hope you can shut this one down, for your customers' sakes.

Understanding the True Cost of Windows

admin — Wed, 28 Feb 2007 06:07:00 GMT

Today, CNet's Ina Fried posted a story entitled "Is Windows getting more expensive?" It's a pretty good read, and pretty well-balanced. Unfortunately, it's extremely light on data. She started to really dig into it, but stopped when she should have kept going. Fortunately, I can change all that.

Well, that's all I needed to get me motivated. I've actually been sitting on a much more thorough investigation of this topic for a little while, but haven't gotten around to wrapping it up. I wanted to put it out at Vista's launch, but ultimately decided not to let it get drowned out in the noise. Since then, I've been so busy that I nearly forgot about it.

So how can I claim it's more thorough? You're just going to have to read it to find out. I guarantee you won't be disappointed. :)

Continue to "The True Cost of Windows, Part 1" -->

The True Cost of Windows, Part 1 - Conclusion(s)

admin — Wed, 28 Feb 2007 06:03:00 GMT

Now that we've accumulated all of the data, it's time to see if my hypothesis passes the litmus test.

Interpretations – Basic Home SKUs

The first thing to point out is the fact that, though prices increased pretty dramatically before 1995, they've leveled out since then, and with XP, they actually went down. You can interpret the graph on your own, but I'll point out some highlights:

If you bought Windows 1.0 today, it would be nearly twice as expensive as its original MSRP, and only $16.54 cheaper than the list price for Vista Home Basic. Inflation increased the price by nearly $84, or nearly $4/year.
Windows XP Home was actually $10 cheaper than its predecessor.
The MSRP for Vista Home Basic is the same as Windows XP Home.
Every release since Windows 3.1 is more expensive than Vista Home Basic in today's dollars. In fact, Windows 95 Retail tops out at $74 more expensive than Vista Home Basic, and the Upgrade version is $42 more expensive than Home Basic Upgrade.

Interpretations – Advanced Home SKUs

Based on the data, I can see why Microsoft hasn't tried a midrange SKU in so long. The first one was overpriced. Did anyone actually buy that product? I'd love to see the sales numbers.

According to my research, if you were to buy Windows/386 today, it would cost you a full $100 more than Vista Home Premium. So when asking yourself if Aero Glass is worth it… ask yourself if you consider the banishing of the "Whitewash Drag" a more important advancement to Windows than the 386 processor.

Interpretations – Pro SKUs

Based on the data, I can see why Microsoft hasn't tried a midrange SKU in so long. The first one was overpriced. Did anyone actually buy that product? I'd love to see the sales numbers.

An interesting piece of data I saw here was that there is only a 36 cent difference between the inflation-adjusted price of Windows 2000 Pro, and the average for all the inflation-adjusted Pro SKU prices to date. I don't know if you can draw any conclusions from that, but it is interesting nonetheless.

By far the most surprising thing in this set is the difference between the inflation-adjusted 200 Pro Upgrade price, and today's Ultimate Upgrade price. It's less than a buck, folks. How can you say that Ultimate is too expensive when the difference after inflation is 58 cents???

So Is Vista Really Cheaper?

Based on the evidence presented, I've shown conclusively that Windows Vista is the most inexpensive operating system they've released to date. After almost 10 years of steep price increases, the MSRP of Windows has been flat for more than a decade, with the cost after inflation steadily decreasing since then. One would expect that the cost of Windows would rise with inflation, but I have shown that simply isn't the case. And while newspapers are quick to trump the (so far) subdued public excitement for the Windows Vista launch compared to Windows 95, purchasing that OS in today's dollars is a VERY tall order.

That answer, however, is VASTLY different from the public perception. According to the poll in this CNET article, 76% of respondents think Windows is actually more expensive than it used to be. That alone screams to me that Microsoft has not done enough to convince people of the value of Windows and how it has improved over time. Hopefully, this exercise, along with CNET's poll data, will be a wakeup call for the Windows Marketing team to start looking at how to address this issue, which may be the most significant issue Microsoft has ever faced. And if they don't, they can always hire me and I'll do it :D.

Wrap Up – Part One

Well, I hope you've enjoyed this exercise as much as I have. But I'm not even close to being finished yet. For the next article in this series, I'll gather some new data about each OS release, and break down the explosive growth of the operating system. In Part 3, I'll tie everything together by showing you how Windows gives many economic theories The Finger.

So stay tuned…

(OK, you can start commenting now.)

Sources

The True Cost of Windows, Part 1 - Evidence

admin — Wed, 28 Feb 2007 05:40:00 GMT

You didn't think I'd go though all this without some rock-solid data, would you?

Basic Home SKUs

Below is the breakdown of the Windows pricing for the entry-level editions.

IMPORTANT: Here's how the table should be interpreted. The first two columns are the MSRPs listed in the press releases. The second two columns are the prices adjusted for inflation in today's dollars. The final two columns are the adjusted prices in relation to Vista. For example, the table lists the retail difference of Windows 1.0 at -$16.54, meaning that "If I bought Windows 1.0 today, it would be is sixteen dollars cheaper than Vista Home Basic." Ergo, if the number is positive, the release is more expensive than the comparable Vista SKU.

Tables are great, but a picture is worth a thousand words.

The light blue & green lines represent the MSRP as announced in the press releases for full retail and upgrade copies, respectively. The darker versions of the same color represent those prices adjusted for inflation in today's dollars. The line adjusted line starts moving to meet the Vista launch price because… well, today's dollars equal today's dollars. And there's no data for Upgrade versions before 1987, well, because you can't upgrade from nothing.

Advanced Home SKUs

Below is the breakdown of the Windows pricing for the midrange editions.

Comparing Windows pricing for the midrange consumer editions was a lot more difficult, namely because there hasn't been a midrange consumer edition for 20 years. The only one prior to that was Windows/386, which was released at the same time as Windows 2.0, and was designed to take advantage of the newer (and considerably more expensive) 80386 processors. For the honor of being the coolest geek in town, you had to throw down twice the cost of Windows 2.0, at $195. Ouch.

I didn't chart this one because I couldn't do a meaningful chart that looked the same as the first one. Historical averages didn't make much sense either.

Professional SKUs

Below is the breakdown of the Windows pricing for the high-end versions.

Unfortunately, the chart for the Pro SKUs is not much more interesting than the Advanced Home SKUs were, so I'm going to omit that chart as well. Maybe after Windows 7 is released, this data will get more interesting.

Continue to The Conclusion(s) -->[NoSharing:True]

The True Cost of Windows, Part 1 - Introduction

admin — Wed, 28 Feb 2007 05:19:00 GMT

Now that Vista is out in the wild, lots of people are pontificating on whether or not it is worth upgrading to Vista. Ina Fried posted about this subject just yesterday. Sure, over the last few months, I've laid out my own reasons as well. But instead of having a psychological debate over security improvements, usability, et cetera ad infinitum… I wanted to take a different approach, and make the argument in the only way that matters to most people: money.

During all these discussions, the more I thought about it, the more I started to realize that Vista might not cost all that much more that other versions of Windows had in the past. Sure, the MSRP had gone up over the years, but how much had it changed based on inflation? So I decided to take emotion completely out of the picture, and embark on a scientific endeavor to uncover the truth about the cost of Windows.

So I've explained what this report is… here's what it's not:

A discussion of Windows v. Mac v. Linux. That discussion has been had to death, and I don't care to interject anything on that subject. Most people don't use either, they've been using Windows. This discussion is targeted at those people.
It's not another discussion about TCO. Besides being closely related to reason number one, Microsoft pays companies thousands of dollars to do TCO studies. If you want a TCO discussion, read one of those studies.
It's not a discussion about OEM v. Consumer pricing. I understand that most people are introduced to new Windows versions through purchasing new computers. While OEM pricing has an effect on the purchase price, the damage is obfuscated by the overall cost of the machine. Besides, I don't have access to OEM pricing. I'll let Ed Bott cover that discussion.
Finally, since we're not talking about OEM stuff, we're not talking about Tablet PC or Media Center SKUs. Prior to Vista, they were only available to OEM channels, and therefore outside the scope of this discussion.

Now that the discussion has been properly framed, let's get right to it. Every scientific study starts with a hypothesis. This allows the researcher to test their conclusions against a predetermined conclusion to see if the researcher's theory is right or wrong. Here's mine:

Hypothesis

22 years of inflation has made Windows Vista cheaper than previous versions of Windows.

Methodology

In order to test this hypothesis effectively, I must dig up the launch price of each major Windows release and find the cost in today's dollars.

The problem with this approach is there isn't any information on the Internet about any version of Windows prior to 1995. That's because Microsoft was unfashionably late to the Internet party, showing up a year later. Anything before that is consigned to some fallout shelter deep under Bill's house or something. I had to find another way to get that information.

I e-mailed a friend over at Waggoner Edstrom, and asked if she knew of any way I could get that information. She was able to get the Microsoft Archive to send me the press releases for every launch of Windows in Microsoft's history. You can check them out here (they'll also be listed under the "Sources" sectio at the end.)

The problem at this point is there have been a lot of different flavors of each release over the years. So how can I make each comparison as similar as possible?

In the end, I decided to group the releases into three categories: Basic Home SKUs, Advanced Home SKUs, and Pro SKUs. That way I could accurately plot the data without skewing the results, and I could make apples-to-apples comparisons. Now, some people may have issue with the way I grouped the SKUs, and that's fine. Keep in mind that SKU grouping doesn't really change the results of the raw data, only the way it is comparatively analyzed.

Home SKUs
- Windows 1.0
- Windows 2.0
- Windows 3.0
- Windows 3.1
- Windows 95
- Windows 98
- Windows ME
- Windows XP Home
- Windows Vista Basic
Advanced Home SKUs
- Windows 2.0 for 386
- Windows Vista Home Premium
Pro SKUs
- Windows 2000 Pro
- Windows XP Pro
- Windows Vista Ultimate

NOTE: Microsoft Marketing would have placed Vista Ultimate alone in the high end, and normally I would agree with them. However, this list is organized by the way SKUs were perceived to consumers at the time of release. This means that, to the consumer, XP Home would have been the low end, and XP Pro would have been the high end. Now, that would arguably put Windows 2.0 for 386 in the upper echelon, except that the only differences from the 286 counterpart were related to the processors… which IMO that makes it a midrange model. Also, Windows 2000 Pro is included because it was the beginning of the NT kernel on the desktop,and because it was available for purchase by consumers. Since it was available to consumers at retail, I'm including it. I won't be including Vista Business or Enterprise, however, because they are targeted at business customers, and therefore outside the scope of this discussion (yes, even though Vista Business is available for consumers).

Now that I had the editions grouped, and I had an accurate price list, I now had to calculate the inflation-adjusted prices in today's dollars. There are many schools of thought about how this is done, as well as some cheesy applets that do the calculating. In the end, I settled for the one from the Austin Genealogical Society. Why? Well they basically stole the one from NASA, and added in projections that go all the way back to 1665, from an Oregon State University professor who is referenced often on the subject. Seems legit enough to me, so we'll roll with it.

Ok, enough yakking. On to the data.

Continue to The Evidence -->[NoSharing:True]

Microsoft and Customers: The Story Behind The Family Discount

admin — Fri, 19 Jan 2007 00:23:00 GMT

Think that Microsoft doesn't listen to customers? The Windows Vista Family Discount proves otherwise. Here's how it came to be.

Last year, I ranted several times about the price of Windows and how it becomes extraordinarily difficult for multiple-PC families to upgrade all of their computers to the next version. I didn't talk about it at the time, but the reason I was so upset about it is because last year I was briefed about pricing plans for Vista, along with other Windows Featured Community leaders. When we told Microsoft reps that Vista was going to be too expensive for families, we were told we didn't know what we were talking about. Having never really been blown off by Microsoft like that before, I made it my own personal mission to inform the powers that Microsoft be that multiple PC pricing was a problem.

After getting an extremely positive response from my posts, I felt the need to take further action. I was initially going to set up an online petition, but as I was wrapping all of that up, I received an invitation to interview Jim Allchin in Redmond. I figured it would be better to pursue it privately than publicly shame Microsoft into doing it.

So last August I traveled to Redmond to interview Jim Allchin. After our fantastic on-air discussion, I brought up the need for specific family pricing. I told him that he had won, and most families have more than one computer. I also explained that Windows pricing turns families into unintentional pirates, and that households would delay moving to Vista because of the pricing combined with the reinforced WGA system. I pitched him on the idea that Windows Anytime Upgrade could dole out new keys at $50 a pop. Finally, I told him about the need to position Vista against Mac OS X, which offers a five license Family Pack for $199 (the first time in my history that I've ever linked to Apple.com... and the last).

He said he'd look into it, thanked me, and then walked out of the room. The next day I stayed on campus for the Vista TechBeta Tour, and I was shocked to find out that he was the keynote speaker. During the Q&A session, out of nowhere he asked the crowd of devoted testers, "Do you think there should be a Family Pack for Windows?" After a few seconds of stunned silence, the testers all agreed, nearly in unison. Jim responded "I think I'm going to look into a Family Pack for Vista", to thunderous applause and my own personal satisfaction.

That was the last I heard about it. Then last weekend before CES, the Featured Community leaders were briefed by the same person who briefed us on pricing at the previous Lab. This time, he had very good news, and we were the first people outside Microsoft to get the details on the Family plan (which turned out to be almost exactly what I pitched to Jim). When I asked him privately afterwards if Jim had anything to do with it, he told me that Jim was one of the only people with the authority to make the change.

So Microsoft does, in fact, listen to their customers... Windows Vista itself is a huge testament to that. Sometimes, you just have to talk to the right people to make change happen.

Speaking of the Family Discount, I've heard a lot of talk today about how Vista pricing is too high. I'm prepping a series of posts that dissects the real cost of Windows over the last two decades. It may change your mind about how expensive it is.

Understanding the Windows Vista Family Discount

admin — Thu, 18 Jan 2007 16:55:00 GMT

On Tuesday, Mary Jo broke the news about the Windows Vista Family Discount. Today, Microsoft made the formal announcement, and Joe Wilcox immediately lambasted it as a bad idea (no surprise there). The problem is that Joe based his analysis on incomplete information. Fortunately for you, dear readers, I have all the facts (for reasons I discuss in my next post).

Before I delve into how the plan works, here's how the existing upgrade pricing works for a family of 3:

Upgrading 3 computers to Vista Home Basic will cost you $99 for the first copy, and $89 for each additional copy, for a grand total of $279. If your computer is more than 2 years old, this is the way to go.
Upgrading 3 computers to Home Premium would cost $159 for the first copy, and $143 each additional copy, for a grand total of $445. This is where it starts to get hairy. Most families would rather buy one new computer than spend this kind of money upgrading all three.
Upgrading 3 computers to Vista Ultimate would cost $259 for the first version, and $233 for each additional copy, for a grand total of $725. While it may be relatively unlikely that a family has 3 computers that should be running Ultimate, the price makes it even less likely that they would.

It should be noted that most people aren't really going to know about the additional license packs, so most people would end up just buying 3 boxed copies.

So the target position is really the 3 upgrades to Vista Home Premium. Now, Microsoft has a few additional problems to combat in positioning this program. One is that they don't want the system to be abused by people who would buy a crapload of Home Premium upgrade boxes, and then use the Anytime Upgrade system to get discounted keys that they can turn around and sell for full price. They know it's going to happen, but they need to minimize the damage.

The second is that they need to consider the scenarios where this will actually make sense. They want as many people as possible to move to Vista, because it's far more secure than XP. So the scenario that they miss in their pricing is the family that purchased a computer in late 2006-early 2006, and has a couple older computers in the house. The new computer is still relatively fast, but the older ones are slowing down and constantly infested with spyware. Since even the upgrade editions of Vista wipe the system clean, these machines will perform better than on XP, even if they might not be able to support Windows Aero.

So here's how the Windows Vista Family Discount works. NOTE: All prices are Microsoft's MSRP. Amazon.com is offering most copies at a $10-20 discount.

Purchase a Retail Box Copy of Windows Vista Ultimate. Since we're talking about upgrades, most people will get the $259 Upgrade version (and not the $399 Full version that Joe used in his analysis).
You'll have the option to acquire two additional product keys for Windows Vista Home Premium at $49 per key.
Grand Total (Upgrade): $357
Total Savings: $220 (if you buy the same SKUs)
Total Savings (vs 3 Home Premium): $120 (if 3 upgrade copies are purchased) or $88 (with additional license packs)

Under this plan, the new computer would get Ultimate, and the older but still capable systems would get Home Premium. By using Ultimate as the "barrier to entry", Microsoft can blunt some of the effects of people abusing the system, while at the same time introducing more people to the Ultimate experience.

Joe's wrong about OEMs being the ones that hurt in this equation. It's actually the Retail channel that will have the most issue with it, because the $49 in pure profit goes directly to Microsoft. CompUSA, Circuit City, Best Buy, etc don't want this to work, because they want people to grab boxes off shelves. Whuch is why I doubt you'll see signs touting the plan in any retail store come February.

So while people like Joe Wilcox will berate the decision, and say that "The choice of nothing would be better than the Family Discount", I completely disagree. This is an experiment to see how the market will respond. If it responds well, you may see better multi-computer bundles in the future, that may be less complicated than the current incarnation. And instead of criticizing Microsoft, Joe should be praising Microsoft for FINALLY listening to the needs of the market, and doing something that he himself has argued for in the past. It may not be perfect, but at least they're taking a risk and trying something different. And that can only be a very good thing.

OTG for the Holidays

admin — Sat, 23 Dec 2006 19:51:07 GMT

I'm headed to Colorado to visit my family for Christmas (was supposed to go on the 20th, but the blizzard screwed with those plans), so I'll be Off The Grid for most of the rest of the year. Before I leave, I just wanted to wish everyone a Merry Christahanukwanzakah (how's THAT for all inclusive?) and Good Riddance to 2006! Lets hope that 2007 bring better days.

Speaking of 2007, I'll be headed to CES in Vegas from January 5 - 10, and I'll be at the Vista Launch in Phoenix on the 17th. In between CES and the Official Vista Launch, I've got a series of posts I've been working on that will blow the lid off Windows Pricing. It's been a lot of fun to research, and I hope you'll enjoy it.

Thanks for reading!

-Robert :)