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Thursday, 02 July 2009 07:45

Microsoft punishes Linux, Mac and white box PC builders

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Now that Microsoft’s Windows 7 pricing has been unveiled, changing very little from Vista pricing (aside from a cut in price for Windows 7 Home Premium), it’s clear that Microsoft’s policy of charging full price to Linux and Mac users has changed very little, too.

If you buy Windows 7 pre-loaded onto a brand new computer, the cost of Windows 7 itself is far, far lower than Microsoft’s retail prices.

Actually, it looks like Microsoft is trying to charge OEMs more for Win 7 licenses, too – which if true is guaranteeing Microsoft a boost in revenue right in the middle of the worst financial crisis since the 1930s Great Depression.

Although Microsoft has enjoyed headlines claiming a drop in price for Windows 7, the truth is that prices really are little changed, with the biggest drop being a discount on Windows 7 Home Premium compared with Windows Vista Home Premium.

It’s great they have dropped prices here, any price drop is always welcome, after all – but in the great scheme of things it is little more than a token gesture.

The other truth is that if you are upgrading an older system, or if you are a Linux or Mac user, you will pay the full upgrade price, or the full retail price, depending on what version of Windows, if any, you already have.

It’s also the case that if you are building or buying your own “white box/yum cha” computer system, this level of OEM pricing seems to be much more expensive than OEM prices paid by Dell, HP or other companies.

In a world of free Linux, much cheaper upgrade and retail prices for Mac OS X, and the availability of ‘family packs’ for Mac OS X, it’s clear that Windows users who aren’t buying a brand name computer system are being right royally ripped off when it comes to Windows!

Why are retail Windows buyers being so unrighteously ripped? Please read on to a ripper page 2!


Seeing as the vast bulk of sales of Windows occur via the brand name OEM channel and via volume licensing deals with organisations and governments, the actual public, who go into stores to buy boxed copies, are being gouged.

Why should retail consumers pay more than OEM box builders? Microsoft should make Windows 7 inexpensive, sub $100, as its temporary US upgrade pricing model follows.

Perhaps Microsoft is curious to see just how successful this discounted price is, perhaps it will roll out cheaper pricing in the future.

But perhaps that’s just wishful thinking. After all, Microsoft is being challenged as never before from all corners, and even virtually, and thus needs as much money as it can get to fight off all its competitors.

Selling Windows cheaply diminishes one of Microsoft’s biggest cash cows, although I still firmly believe it would be far better for Microsoft to make less money from far more individuals, than it is to make more money individually from fewer people.

Indeed, it’s economics 101, but some companies just seem determined to charge more when they could charge less, with the irony being that a lower price would lower piracy, get more legitimate and activated users in the MS tent (and out of the Linux/Mac tent), and give Microsoft an even better opportunity to sell more of its products and services to its own users.

A cheaper Windows price could make Microsoft MORE money!

Taking the greedy, high priced path affects Microsoft’s public image. It adds to Microsoft’s public perception as a greedy monopolist trying to suck us all into its proprietary grip.

Well, from Microsoft’s point of view, this way of doing business has worked to its benefit so far, why stop now?

Because change is good, getting some change from $100 when buying Windows is good (whether alternatives are free or not), and changing people’s perceptions of your company from negative to positive is good, too.

Especially when the vast bulk of money earned from Windows comes not from retail, but OEMs and volume licenses.

Microsoft is punishing its retail customers and gouging their pockets. Sheesh, there really had better be some extra surprises when Windows 7 really launches!

Which brings me to Windows 7 Ultimate. After the debacle of Vista Ultimate, Microsoft has ultra silent on what benefits, if any, Windows 7 Ultimate will bring to the table, beyond unifying features Microsoft purposefully rips out of cheaper versions.

Will the end of 2009, and throughout 2010, be the true birth of the Linux boom promised for so long by Linux proponents?

This time, it may well happen. What a shame Microsoft is doing so little to prevent it.


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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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