A Nonsensical Pricing Model

 
 
By Don Reisinger  |  Posted 2009-07-01 Email Print this article Print
 
 
 
 
 
 
 



What's so bad about making things easy? Perhaps it makes sense to Microsoft, since it spent so much on the development of the operating system. But for everyone else, the company's pricing model is nonsensical. When the average consumer goes to the store looking for a new install of Windows 7, they'll need to come armed with some good information to make that decision. If they don't, they'll be left deciding at the store if they want the upgrade or the full install. Then, they'll need to determine which version they want. If they don't have much knowledge of the differences, that could be a real problem. The same might be said for small companies that don't have dedicated IT staff.

Apple, which is releasing a new version of its operating system in September, made it easy. If you want to upgrade your installation of Leopard to Snow Leopard, you'll only need to pay $29. Those looking for a family five-pack will need to pay $49. Granted, Snow Leopard is more of an iterative update than a full, new operating system like Windows 7, but I still think it proves a point. Much to Apple's credit, it has maintained a pricing strategy with its operating system that will still help it turn a nice profit, while ensuring its customers don't get confused when they want to buy it. Simply go to the store, order a copy of Snow Leopard, and you're all set.

The one thing working in Microsoft's favor is the number of people who actually buy standalone operating systems. In the Windows ecosystem, it's relatively small. For the most part, users both in the enterprise and in the consumer space buy computers from vendors that have already bundled the operating system with the hardware. That has historically helped the company dodge criticisms over its pricing models. And it will probably work again.

Regardless, Microsoft's decision to release so many versions of Windows 7 at so many different price points is a mistake. Instead of offering multiple SKUs with varying degrees of usefulness, Microsoft should simply sell one version of Windows 7 with all the features installed. For Netbooks, it can maintain the Windows 7 Starter edition to ensure it runs well. That way, it can charge a hefty price for Windows, while at the same time, offer users what they really want -- an extremely capable operating system.



 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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