Which price will consumers prove more sensitive to -- the OS price (advantage Apple) or the hardware price (advantage Microsoft)? (The hardware price is generally the larger difference.)
Analyst lavishes both praise and criticism on Microsoft
Microsoft announced its Windows 7 pricing yesterday, and today began accepting preorders for the new OS. The preorder program in the U.S. offers a cheaper OS than Vista or XP, with the Home Premium upgrade only costing $49.99. Yet some analysts are looking at the glass half empty and have gone on the record to publicly reprove Microsoft.
Stephen Baker, Vice President of Industry Analysis for The NPD Group wrote a blog post on Thursday analyzing the release of Windows 7 information. He began with some words of praise for Microsoft, exalting, "A+ for timing pricing, and for ensuring that this will be the smoothest transition within the industry of any Windows OS upgrade yet."
Then he shifted gears, though, and turned to criticism. He chidingly remarked that to praise Windows 7 for being more affordable than Windows Vista would be "damning with faint praise". The key problem, he argues, is that after the two week pre-order program (or when supplies run out), the base price of the OS jumps to $119.99 for a Home Premium upgrade in the U.S.
He remarks, "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."
Mr. Baker also was less than a fan of the fact that Microsoft did not announce whether it would be offering multiple licenses per purchase, or presumably a signle license. He states, "In a world (at least in the U.S.) where most opens 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."
In the end, whether you agree or disagree with Mr. Baker, even the strongest Microsoft proponents must concede that Windows 7 is obviously pricier than Apple's Snow Leopard -- which weighs in at $29.99 compared to Windows 7's $119.99 October base price (or $49.99 preorder). If Apple allowed an open market on hardware, this might indeed be damning to Microsoft, but as the situation stands Apple's hardware (particularly its desktops) generally remains much pricier.
While Apple has its allures -- its lower OS price point, slim form factors, light weight laptops, multiboot, and long battery life -- will that be enough to steal away Microsoft customers and convince them to buy Apple's pricey products? Or will Microsoft's lower hardware prices and strong base user appeal with its Direct X gaming libraries, free antivirus software, strong file system, virtualization, and more convince users to overlook the OS sticker and go PC?
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