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back to article Microsoft's Windows 7 price gamble - and why it's flawed

Microsoft is gambling it can saturate consumers with Home Premium editions of Windows 7, hoping to dislodge Apple and milk customers over the long term. But Microsoft's Windows 7 price strategy is plagued by contradiction. On Friday, Microsoft said it's discounting the list price on Windows 7 again, this time for netbook users …

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Linux

Linux return rates

In a generally interesting article...

it was disappointing that the long since debunked "more Linux netbooks returned" story had been reasserted

similarly with the suggestion that netbooks were insufficiently powerful for Linux. I happily stream video on an Acer Aspire one, I don't edit it, what more power do I need?

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Stop

netbooks and windows

we bought a netbook for our on-call staff, complete with integrated 3G dongle, made by a reputable maker also known for TVs, phones and domestic appliances sold by a Very cOmmon Fone provider.

the first thing we did was wipe windowsXP to install Ubuntu - decided to try Netbook Remix:

http://www.ubuntu.com/GetUbuntu/download-netbook

it was *so* easy to install, we left a chunk of disk there for XP "just in case", but UNR detected the 3G dongle set up the network, detected the wifi and it all worked *perfectly* out of the box, the upshot is that there's no need for XP at all. There's no way we'd waste any money on VistaSP3, er Windows7!

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Grenade

Don't forget Chrome

And before long, Chrome will be hitting the low end.

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A title is required

"and whether customers care to upgrade to Windows 8"

And also, in the shortish term, whether the average man in the street is willing to upgrade from Windows 7 to Windows 7, because that's what upgrading from Starter to Home Premium is likely to mean for most people.

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Gates Horns

Family pack

***"the Family Pack will be priced $149.99, and it will let you install Windows 7 Home Premium on three home PCs."***

Why 3? How did they come up with the idea that a "family" would have 3 PCs?

Personally my family has 4. One each. So this isn't a lot of use to me.

But then I'm using the Ubuntu "family pack". Priced at £0.00 and can be installed on as many computers as I like.

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Paris Hilton

Linux? 'fraid not

I wish it were so - I thought, when I bought my little Acer, that Linux on netbooks was going to cause some ripples - I had fond fantasies of catastrophic, panicked pricing action from Microsoft slowing, yet not stopping, the inevitable decline until XP cost four pounds fifty. Alas. Not to be.

Just google to see how difficult it is to get wi-fi, multi-monitors or sound (a microphone? no way!) working properly on netbooks with Linux. Not advanced stuff, just stuff that Paris would, and should, expect to 'just work'.

Linux on netbooks is a toy, in that it's designed for people that want to play with it. Not to compete with Microsoft for the love of a good woman.

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Jobs Halo

Glad that MS takes Apple seriously

Apple may have a small market share, but it has a big impact on Microsoft. I'm a 100% Windows user so I dread to think how much more expensive and less innovative (!!) Win7 would have been without any competition. Thanks, Apple.

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As long as supplies last?

"This is a limited time offer and will run until supplies run out."

Wow, MS has invented physical software, they produce 1000 copies, they must sell 1000 copies. What will Ballmer think of next?

I very much doubt MS users are going to upgrade in significant numbers since most are scared to death of changing their machines lest they turn into bricks.

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N2

Same old bollox

Even if it was perfect, which it isnt, I wouldnt buy it because I no longer trust Microsoft.

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Anonymous Coward

Rumour has it...

If this pricing strategy isn't perfect, this will surely be the year of Linux on the desktop!

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Nothing to to with apple

I seriously doubt that many apple users are going to be tempted to dump OSX and install WIndows 7 on their intel macs for a $10 price difference. Plus they need to already own an XP or Vista license to even qualify for that price that's a pretty small segment of the market.

Apple is only really a competitor in the new PC market since OSX can only be legally installed on Apple hardware. The $119 price point makes much more sense as an attempt to get all those millions of XP users who skipped Vista up finally upgrade.

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Whats with...

all this $ crap everywhere? Last time I checked The Registers domain was .co.uk and not .com. At the very least you could use "£x ($x)". Afterall, this is an English IT website is it not? Anyway...

Basic gist of the story: Microsoft want to sell crap, no-one is really interested in crap, crap is forced upon people on new PC's, people wonder why "My PC won't do X?", people look at Apple PCs and see they do X without the need for an "upgrade", more people switch to Apple, Apple make more funny adverts, Microsofts answer is to release 5,000,000 different versions of Windows 8.

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WTF?

This is a limited time offer and will run until supplies run out.

Yep - after 100 copies it's broken & can be copied no more...

How the f@ck can "supplies" of software run out ???

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Paris Hilton

For me, it's not the pricing that's the issue...

I'd pay the asking price. no, for me, it's the activation.

I keep one windows box- the others are all *nix and macs. The windows machine is at home, and used for games. Because it's nice to turn everything up to "11", the hardware gets upgraded pretty regularly.

If this means that I will have to constantly phone Microsoft up for permission to use my own computer after changing the video card, moving the OS to SSDs etc, then I going to damn well use a cracked version.

If it turns out that they have dropped that bullshit, and I can use my windows box the same way as I use my other computers, then fine, I will pony up for one of the more expensive flavours of win 7- as the beta hasn't been too bad

However, if they're set on treating users like naughty children, then I shall make sure that I behave like one, and pirate the damn thing.

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wont undercut osx

Windows 7 will not undercut OSX. Check out how muxh Snow Leopard is going to cost. It is considerably cheaper.

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IT Angle

The bigger story

So lowering the price of Windows 7 is somehow going to hurt Microsoft's market share? Or are you talking about Microsoft's bottom line in quarterly statements? They aren't the same thing, which you mention, but then what's the article about again?

Your final paragraph with your conclusions doesn't seem to follow from any of your pricing analysis. If anything, the article improved my opinion of Microsoft's pricing strategy, not the opposite, heck, the article almost read like a product placement ad! The only thing missing was a "[Buy Family Pack Here]" hyperlink.

And with the performance and security of Win7 looking good in the RTM reviews, even on netbooks, these pricing issues seem trivial. The bigger story, it seems, is how the whole Vista screw-up opened a door for Apple and how netbooks opened another one for Linux, but that these doors are closing with the RTM of Windows 7. You hint at some larger issues in the last sentence, but then all this doesn't have much to do with "pricing contradictions".

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But...

who ever actually *buys* an O/S for a home computer? People buy a computer. It comes with an O/S. They use it until the computer dies or until a nephew turns up with a cracked copy of XP. There's still (nephew-less) people out there running Windows 95.

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Linux

Netbooks with Linux proving fine.

I have two customers with Dell Mini 10v (as recommended by The Register), with Ubuntu Linux netbook remix operating system.

I get few support calls & the customer's netbook gets no viruses or slowdown over time.

Linux on netbooks is proving an ideal marriage IMO.

No need for proprietary lock-in and the associated costs.

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Alert

Half the Number of the Beast in Euro!

"$299.99 for a brand-new version of Windows 7 Professional."

This translates to € 309,90 (incl. 19% VAT) for a brand-new version of Windows 7 Professional E (whatever that is) on my preferred Internet shop. This means that local retail will have a 10% markup on top of that.

Uh ... no thanks.

When Windows is available for € 30 for a full version, a reduction by an order of magnitude in price, then we will be talking. Hey, an OS is supposed to be a commodity these days, right?

Meanwhile, Windows 2K and Linux is the ticket.

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Jobs Halo

Lost the plot

I've thought that Microsoft lost the plot a long time ago. This just confirms it. Do they really think that people will ditch/change operating systems just because of a price difference between them? Microsoft where never really good at innovating, and now they just seem to react to the market or flounder. They seem to be peopled by non people, mindless grinning corporate stuffed shirts, led by that cretin Balmer. I won't call him an ape or Baboon, as its insulting to them. But a buffoon, yes. Windows 7 is there to correct the mistake that is Vista. But if you are happy with XP why change?

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Anonymous Coward

Windows 7 pricing

I have a nice tftp display and can upgrade to a very reasonable desktop PC without OS for about £250. I cannot justify spending the same again (or more) on operating system and applications.

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WTF?

Apples and Bananas

How can you compare the software upgrades?

If I want to upgrade the OS on my PC, can I choose between OSX and Windows 7? Nope.

If I want to upgrade the (primary) OS on my Mac, can I choose? Nope.

This article makes it sound like your average punter will be sitting down and saying "Should I upgrade to W7 or OSX". Even when purchasing new hardware, the average punter won't be thinking about which system is cheaper to upgrade the OS in a couple of years time (less for mac).

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Maybe not flawed...Vista ring a bell?

While I think that Steve Balmer is a complete moron, I wouldn't say M$'s new discount pricing is flawed, at least for western (developed) markets. More on that in a minute. Why? Because under Balmer's watch M$ screwed everyone, customers and partners alike, with the Vista abomination and it will take a long time before that fiasco is forgotten. Don't forget, discounting cures a lot of ills. What else could they do, especially in this global recession?

I think the second reason they're having to lower prices is that Windows 7 is only evolutionary and not revolutionary. It does have some nice new features to make mundane chores a bit easier but M$ apparently concentrated on speed and efficiency, not new eye candy nor dazzling new apps. which would surely help sales. The only down side I've noticed so far is Internet Explorer 8. What a POS!!! It just locks up completely periodically. And the ironic thing is that it is a disaster on MSN hosted websites where it is supposed to be the bees knees. Go figure.

Other than Internet Exploder 8 being crappy I think they've learned a little bit since Vista. I've been using Windows 7 for quite a while now, first the beta and now the release candidate. It's even faster than my WinXP installation and runs cooler with less CPU and GPU cycles on the same computer. I don't dual boot, I just swap out hard drive trays to switch between them so the installations are completely independent. And yes, I do monitor temps and CPU/GPU loading to keep my trusty aging laptop running smoothly. Is Windows 7 compelling enough to finally uproot all the diehard WinXP users? Only time will tell.

Let's talk about pricing for emerging or developing nations. I'm an American expat living in Thailand and it is considered a developing nation. Piracy of Windows, movie DVD's, and even pharmceuticals is common because of flawed pricing policies by especially U.S. corporations. The upper end salary for the average Thai is less than $300 U.S. dollars/week but more commonly it is closer to $200. Even if you could buy low end Windows 7 without trade-in for the discounted price of $79.99, much less $119.99, it wouldn't help much. It is just way beyond what these people are willing or able to pay. Of course, Thailand is just one of many emerging nations requiring ultra low prices to gain market share. Is it really worth it?

Ah, the trials and tribulations of global commerce. One suggestion is to get rid of Ballmer. What an idiot!!!!

Jimbo in Thailand

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FAIL

Apple's pricing changes slightly come September

as a Snow Leopard client upgrade from Leopard will be only $29 ($49 for a five-user family licence), while a full version for Tiger hold-outs will run $169 ($229 for five users), in the form of a Mac Box Set with iLife and iWork thrown in.

The most delusional aspect of Microsoft's increasingly bizarre behaviour (particularly over the last week of whack-job prognostications from Monkey Boy) is that it seems to believe it's operating in the same chunk of the market as Apple, and therefore must respond. Does MS have access to some super-secret Apple netbook prototypes that nobody else know about?

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WTF?

Weird analysis

Microsoft is discounting due to Apple, really? Makes no sense at all, from where I stand.

Who's ever bought Apple to save money!?

Or is the whole think based on Hackintoshers, the only people to buy OS X without having paid the substantial premium for the hardware already?

Another aside:

"instead of just browsing the web or checking email"

Will someone then point out to the suckers that they could have saved >$50 (as far as rumors go) off the laptop's price if they could have got a machine with any free OS, any of which more than good enough to "just browse the web" and "check email"? And that they will now have to spend quite some *additional* money to be able to do more (which the free OSs would have been capable of too, considering the capabilities of "netbooks")?

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Grenade

MS Should have hired Rooster Teeth

Microsoft should have hired Rooster Teeth to answer the I'm a Mac ads a loooong time ago:

http://roosterteeth.com/archive/episode.php?id=118

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Jobs Horns

Conversion rates?

A dizzying array of prices, but how will they convert for the UK? Will MS do the same as Vista and use 1 dollar = 1 pound, because of the 'higher cost of doing business'? And carry on stuffing us all over Europe just like they and a lot of American companies always have.

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Badgers

Look who *chooses* Apple over Microsoft

Apple may be insignificant in absolute turnover terms, but look at the people who *choose* Apple over Microsoft: senior people and independent consultants. Look in any Airport lounge.

No mention of VMs as a source of competition for Microsoft; VMs tend to remove the need to upgrade as they're often installed as one-trick-ponies, e.g. for a specific task. Then the OS really isn't significant any longer.

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FAIL

But...

....I already have an OS, and it works just dandy thank you.

Bye

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Dead Vulture

Either...

...it's too early on a Sunday morning or my brain isn't functioning, but I found this article practically unreadable. I understood it fine, but it felt like the whole thing had been written by smashing up some words and numbers with a rubber mallet.

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XP works fine - why spend more?

XP Home came with (and works just fine) on my new, cheap netbook, thanks, which is a major reason why I bought it. Everything is also nicely compatible with XP Pro on my home desktop and on my work PC.

Why should I gamble more of my time, money, and effort "upgrading" to Windows 7? http://www.theregister.co.uk/Design/graphics/icons/comment/thumb_down_32.png

In a slowing global economy, Microsoft needs to play the cards dealt to it by their customers, not the other way 'round.

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Anonymous Coward

Rearranging the deck chairs

I'm happy to see that Steve is busy moving (and not throwing) the deck chairs.

Bon voyage!

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Linux is already well ahead...

...in functionality and is much easier on the hardware in terms of resources.

No extra software is needed to be purchased - it's already there are part of a distro or can be downloaded using the package manager.

It's easier on resources and runs in far less memory - it will run well within 512MB of RAM.

The problem Linux faces is the lack of familiarity people have. Windows is by and large the same across all versions as far as a user experience is concerned. Therefore, people are very familiar with it and tend to struggle with Linux because it's not the same as Windows.

This is what LInux has to overcome. People don't understand that they can't install Windows applications in a Linux system, but neither are they aware that there is also likely to be a Linux alternative that works just as well.

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Looking forward few weeks

While I agree with the analysis of Windows pricing it misses the fact that Apple already announced that Snow Leopard will be priced at $29, with family pack also available when it is released in a few weeks time. So where does that leave the Microsoft strategy?

I suspect we will have XP running on netbooks for a decade or so....

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Stop

Wait, what?

Well, so what if Apple's OS X Family Pack works out cheaper than Windows? It's completely irrelevant, since the ordinary punter is thoroughly dissuaded from purchasing Apple by the mind-bending price tags, and the more informed of us don't see why we should lay out major money on what is, under the pretty facade, nasty odf tat from the notorious Foxconn and similar purveyors of horrible components.

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But what's in it for me ?

W95 gave me a half-way decent screen interface;

W98 gave me easy access to the Interweb;

XP gave me the use of USB (or was it the other way round ?);

Vista gave me...a prettier screen ?

What's the in it for me to migrate to W8 ?

Please will someone (preferably not from MS) tell me ?

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Did I say W8?

If so I meant W7.

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Linux

Lost money...

From my experience of consumer and business purchases of Apple equipment nearly 1/2 of the Apples computers going out the door are sold with a copy or XP/Vista and Parrallels or setup for bootcamp. The business machines go out with an even higher attach of XP than domestic. So I don't think Microsoft are that high when they talk of not loosing money to Apple.

Anyhow I look forward to OS X 10.6 and Windows 7! it should be a good year for all. Linux fanbois I forget you not - but you get your new toys so frequently wrapped and rewrapped that it gets dizzying. Yet that kid with the BSD distro will always be more geeky and faster when the benchamarks roll...

** The black white and yellow one because he wanted in on the action **

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Upgrade

All this about upgrade prices is well and good but who using Windows actually buys an upgrade.

Most people will use what's on the machine they bought and eventually move up when they get a new one. History suggests newer OS's need more power so why would you pay to add something which the perception is will slow them down.

The idea of a killer app making people upgrade is all well and good but not seen one of them in a long time!

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Gold badge

good luck with that

Well, good luck with that.

1) I don't know anyone who's ever bought one of those upgrades.

2) Microsoft plans to sell this crippled version of Windows for netbooks.

3) Ubuntu costs less than any Windows version -- it's about $50 less than XP, which Microsoft already heavily discounts. That's getting up towards 25% the cost of the machine!

4) I think therefore the tides will turn -- people will not get a crippled-Windows netbook and buy a Windows upgrade; they will return it instead and get a Linux netbook.

----

As a further note, the info Microsoft has on high Linux netbook return rates is FUD FUD FUD!!! A Dell rep a while back commented the return rate for the Linux and Windows mini 9s was similar -- what Microsoft says is literally true, the Linux netbook return rate is high, but whatn they omit is the *Windows* netbook return rate is similarly high. People get it and find the keyboard's too small, screen's too small, it's not as fast as they expected, etc. etc. and return them.

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FAIL

clueless

Name one person who upgraded from XP home -> Pro

No one will upgrade , what for ? , 99% of people will just stick to what they bought on the machine.

One single version would have been nice , two at a push . but who here isn't confused already by the 50 versions , did they learn nothing about vi$ta

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WTF?

But why????

Is it so important to keep harping on about the upgrade cost from HP7 to Ultimate7?

Why would folks do this? 99% of home users dont need Ultimate anyway. In fact if most folks that feel they need Ulitmate were honest with themselves...they dont need it either.

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Anonymous Coward

The Microsoft Business Model

Microsoft's entire model is to issue software that is not good enough, so people pay money for the next "improvement".

There. It didn't take me two pages to say what you were trying to!

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FAIL

Please clarify...

How a consumer will steer away from OSX because 7 is 10$ cheaper. I can imaging someone deciding to upgrade XP or vista based on the price, but I don't see someone dumping a Macbook or IMac and buying a new laptop because the OS is 10$ cheaper.

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Happy

Do you need it?

If what you have does the job, why spend money on the latest shiny new model?

My car is 18 years old , but it does what I want and I see no need to spend large amount of money on the latest shape of car that will do the same job.

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Silver badge

I bet

The few who bought a copy of Vista are not happy with the cost of an upgrade to 7 (Vista that works).

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we need 50 dollars windows 7

here in mexico the average person earns 50 to 100 dollars a week, then I need 4 weeks to be without eating, if i want to pay a license for Windows 7. instead the pirated windows costs 5 dollars. therefore there is no comparison if Windows 7 will cost me 50 bucks i will buy the original because it's just a work week and the remaining 3 weeks for my expenses but microsoft would prefer not earn any money that goes to the hands of piracy to gain $ 50 if prices fall http://www.theregister.co.uk/Design/graphics/icons/comment/unhappy_32.png

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Don't think MS is wanting to drive upgrades to win7 pro

... i think they are wanting to drive upgrades from pirated versions to legit. At the discounted prices, I know a lot of people who buy computers as components who are taking the plunge

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