Microsoft should follow Apple lead on Windows 7 pricing

Editor’s Note: The following article is reprinted from the Net Work blog at PCWorld.com.

Apple’s upcoming Snow Leopard upgrade currently occupies two of the three top spots on Amazon’s software top seller list. The pre-sale prices are $29 for a single computer and $49 for a 5-user family pack.

Microsoft occupied the same two spots last month when it was pre-selling the Windows 7 Home Premium edition upgrade for $50 and the Professional edition for $100.

There’s a profound difference between the $29 Apple is charging, and Microsoft’s $50 offer: Apple’s price won’t expire.

That same Windows 7 Home Premium upgrade will now set you back a solid $120. While one might ask why Microsoft would need to lower its prices when its current prices are more aggressive than what they asked for Vista. I have the answer; Consumers’ expectations have changed.

People now expect to be able to buy netbooks for $300, notebooks for $500 and premium desktops for a few hundred more.

For the person running XP on a $300 netbook, spending an additional $120 for Windows 7 is exorbitant. Ditto for the person who bought a laptop running Vista two years ago. Many people would rather put that money toward their next computer purchase that will be much more powerful than they already have.

A person could argue that regardless of whether people buy Windows 7 upgrade or just buy a new computer, Microsoft sells an OS. This is technically true, but MS has to be much more aggressive with its pricing for OEMs than consumers. It is much happier to sell you an upgrade to your existing computer where they pocket more cash.

Microsoft is smart to sell a family pack for $150. This allows users to update up to three computers to Windows 7 Home Premium. This makes sense for households and small businesses that actually own three computers. However, there is a huge market for people that only own a single computer that is powerful enough to run Windows 7.

For the chunk of change that Microsoft is asking, these folks might just continue using XP or Vista, which still work fine for the overwhelming majority of computing tasks.

[Michael Scalisi is an IT manager based in Alameda, Calif.]

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