Saturday, September 02, 2006

Leaked Vista Pricing vs. OS X pricing

Robert McLaws at the Longhorn blog posted Windows Vista US Pricing and Launch Date Revealed! He has a nice table that summarizes all the leaked info, from, but the leak train started with Microsoft Canada’s site. Amazon reveals the launch date:

January 30th, 2007

Comparing this to OS X pricing is a simple exercise in the simple case. Windows Vista Home Basic Upgrade (brilliant up-sell marketing, do I really want to buy something that is called Basic) is cheaper at $100 than buying a license to OS X Tiger at $130. If you only have two computers that need upgrading to Home Basic, OS X is more expensive by $9 because you would buy the $199 family pack, but with Vista Home Basic you would buy any additional license at $90 for a grand total of $190.

But those are the only cases when Windows Vista pricing comes out cheaper than OS X Tiger pricing. If you need to pay the regular price on any version of Vista, Home Basic starts at $199, OS X is still $129. If you need to upgrade Windows XP Pro, you would start with Vista Business and that upgrade is $199, again OS X is $129.

It is hard to call MS restrained with pricing because they are playing a shell game. The equivalents of XP Home and XP Pro are Vista Home Basic and Vista Business, and the pricing is exactly the same for the Vista equivalents to the XP versions. MS knows though that a majority of users, whether they are home users or not, simply buy the most expensive version of Windows because they don’t know what they don’t need when they buy a computer and they don’t want to get left out in the cold buying a completely new Windows license. Vista has addressed this with the Anytime Upgrade functionality, where you can buy the next level of functionality by being up-sold while you are using Vista! I don’t think pricing has been revealed to do an intra-Vista upgrade, but I think a good baseline is the difference between each retail and upgrade price.
Installed Edition Target Edition Installed Upgrade Cost Target Upgrade Cost Intra-Vista Upgrade Cost
Home Basic Home Premium $99 $159 $60
Home Premium Ultimate $159 $259 $100
Business Ultimate $199 $259 $60

I skipped Home Premium to Business because I think this upgrade path is restricted. I also think it a relatively good bet that there will be some kind of penalty baked into the pricing for buying a cheap version and moving up to more expensive version instead of buying expensive versions earlier, that’s money MS could have had in the bank! Here are the differences if they go with the retail pricing.
Installed Edition Target Edition Installed Retail Cost Target Retail Cost Intra-Vista Upgrade Cost
Home Basic Home Premium $199 $239 $40
Home Premium Ultimate $239 $399 $160
Business Ultimate $299 $399 $100

I have a hard time believing that many people will have to pay full retail prices. I mean doesn’t everybody already have 2 or more Windows licenses to upgrade from.

Food or Windows Vista Upgrades

I posted Windows Licensing: The Price of Greed in response to McLaw’s Windows Licensing: The Price of Success. I kindly pointed out that Apple has figured out how to create Family Pack pricing at $199 that doesn’t feel like a rip-off. Robert McLaw’s Longhorn blog has a follow-up post to the leaked Vista pricing called The Mechanics of Pricing Additional Vista Licenses Lower. Robert really gets it with respect to families, and this time he specifically mentions and links to the OS X Family Pack. I actually feel bad for Robert because he wants to love Vista, wants it to eliminate all the pain XP caused, but faced with the hard numbers of upgrade pricing, his faith is shaken and he knows it is going to be hard a very hard sell to families. I have spent the last 3 years of my life trying to convince people to move to Macs and OS X whenever it makes sense for them to avoid all the problems with XP that Vista purports to solve (I lost me faith in MS promises 3 years ago), so I think Robert and I are more alike than different.

While a multiple computer house may not be the 80% case, more and more families have 1 to 1 ratio of computers to people, and some might even have 1.25 to 1 computers to people if you have computers for dedicated purposes.  This is where Microsoft is nearly at an insane pricing level. If I have three computers (the minimum family scenario in my opinion) to upgrade to Home Basic (upgrade + 2 additional licenses), the price is $280 + tax. If you are in the same situation with OS X, the price is just $199 + tax. The OS X Family Pack is $199 for up to 5 computers in one house, which covers the 1.25 to 1 ratio problem, or even the 1.66 to 1 (e.g. 3 desktops + 2 notebooks for 3 people) issue. It is actually pretty easy to get to a 5 PC house with 2 Media Center PCs, a gaming PC, and a couple laptops. You can run scenarios all day long because of the number of Vista editions and additional licenses. But you hit $1191 plus tax ($1274 total in NJ) to upgrade a 5 computer house to Vista Ultimate!

It is nearly impossible to give families an estimate on what their Vista upgrade costs can be without going over the edition matrix with a fine tooth comb and asking users a lot of questions about their usage patterns. It’s clear though, Vista upgrades for families will neither be cheap nor easy for users to decide on. I don’t  know about other families, but $1274 is more than a month of food for fine, and I have a tremendously hard time choosing a software upgrade over food.