Are operating systems too expensive at any price?

Now before the penguin brigade jumps in with their typical Linux is free crap let me just say this – STFU. This post as should be obvious from the headline is about those two popular operating systems that people pay money for. So swim back to your icebergs and leave me alone.

With that necessary disclaimer out of the way let’s get to the serious discussion. This summer and fall is going to see the wide spread release of both OS X Snow Leopard and Windows 7. Discounting the obvious fanboy beating of the chest about whose operating system is better than the other I am more interested in the price being paid by the consumer. Or rather if we are approaching a period where there is a break point where the price being charged is too much.

The realistic approach of OS X

As much as Window fans might like to point to the fact that Apple holds a hammerlock on it’s hardware and software which in some ways gives it an unfair advantage when it comes to pricing its operating system the fact is that Apple really just see the OS as an ends to a means. As such it has always priced its OS at a level that would make any Windows user drool.

Yes much of Apple’s profits originate from its hardware sales with the OS being a necessity in order to get their customers to buy their other products which are more realistically priced. The one thing to keep in mind though is that this OS pricing due to the hardware/software lock is only possible because unlike Windows, Apple doesn’t have to expend large development costs in supporting the same depth of hardware.

As a result it is easy to understand how Apple is able to provide Snow Leopard for $29 an upgrade or $129 for the full install. One has to wonder though that while the upgrade price is a real sweet spot, why is there such a difference between it and the full install version. Is there really that much difference to justify the $100 difference?

The hair pulling approach of Windows

Windows has always gotten flack for its pricing of the operating system, as well as for the insanity of the different versions of the same software. After all as it is pointed out in all the discussion that is starting about Windows 7 pricing it is basically the same DVD being sold for all versions. While this might make it nice and easy for upgrading between the various flavors of the OS it definitely makes one scratch one’s head as to why they even need so many versions.

Microsoft has always been known for trying to milk its OS sales for every cent they can. So having as many different versions of Windows has been to their advantage. The only problem is that when they tried this with Windows Vista it came back to bite them hard on the ass. I think that is one of the reasons why Vista failed in the marketplace – people didn’t have a clue as to which version to upgrade to. So since XP was still a rock solid OS why worry about it.

So I think when it came to Windows 7 there was some serious rethinking about this mistake and which is why we are back to seeing three versions being pushed into the pipeline. While this is a good thing to see the same attitude of change hasn’t really been seen when it comes to the pricing. they might be touting an 8% price drop from Vista as a great consumer oriented deal but the fact is Windows is still price heavy.

For example these are the current proposed prices expected when Windows 7 goes live

Upgrade Path:

Home Premium – $119.00 US / $129.95 Cdn
Professional – $199.00 US / $249.95 Cdn
Ultimate – $219.00 US / $279. 95 Cdn

Full Install Path:

Home Premium – $199.00 US / $224.95 Cdn
Professional – $299.00 US / $329.95 Cdn
Ultimate – $319.00 US / $349.95 Cdn

Source: Ars Technica / Canadian prices courtesy of Kris Abel’s Tech Life

As I pointed out in the section about Apple is that Microsoft has an incredible myriad of hardware to support which will obviously add to the cost of developing the OS. That doesn’t mean though that as we more to more of a digital download world that the prices being asked for the Windows OS is entirely justified.

Right off the bat the idea of an Ultimate version makes absolutely no sense in a general, or power user, consumer market. When Vista came out with that I wrote about how it was a waste of money and my opinion hasn’t changed with the Windows 7 version of it either. Once you take that out of the equation you are left with Home Premium and Professional. At what point does the consumer market switch from a premium user to a professional one?

Even though Microsoft might like to point to some minor price drop as their way of making the OS more affordable the fact is it isn’t. Beside confusing consumers as to what version of Windows 7 is best for them the idea that an OS is worth the prices they want to charge is ludicrous especially considering the large majority of their sales will be at the lower OEM prices. We also need to take into consideration the reality that we are very quickly moving into a downloadable distribution channel which means Microsoft’s delivery costs would be miniscule compared to the current retail sales channel.

The changing landscape of consumer usage

While Apple’s pricing of OS X might be more consumer friendly that Windows multi-tier pricing they are both ignoring how the consumer use of computers has changed. Where their prices might be applicable and to a point understandable when most homes, or individuals only had one computer that in a growing number is no longer the case.

Whether they be laptops, media centers, gaming rigs, laptops or even the new netbooks it is no longer uncommon to see multiple computers within one home. In the case of a family chances are that each member has some form computer they are using. Even on an individual level people stand a good chance of having more than one machine.

So instead of only having to purchase one license people are having to buy multiple licenses and there is no denying the expense regardless of OS. Take myself: I have my main desktop, a media machine in the process of being rebuilt, my wife’s laptop and plans for a laptop of my own. That’s for licenses for Windows 7 that I am going to need 4 of which means a cost of $899.80 for the Home Premium or $1,319.80 for the Professional version. Even if I was an Apple user and all those were Macs I would still be looking at $387.00 USD.

And really what is the difference between 1 licensed version and 4?

The serial number is the only difference. So in effect we are paying in excess of anywhere from $500.00 to $1,000 for three sets of numbers.

As much as we bitch about old media being stuck in the mindset of outmoded business models the fact is even supposedly modern tech businesses are stuck in the same mindset.

And they wonder why stuff gets pirated.