CW: Vista Price Cut a Puzzle, Can't Compare to Mac OS X

by , 1:55 PM EST, March 4th, 2008

Microsoft cut its prices for Vista across all versions, but the cuts don't seem to make any competitive sense, and the price still pales compared to Mac OS X, according to ComputerWorld on Tuesday.

"In the United States, Microsoft will make price cuts that are largely symbolic gestures. It will cut the price of the full retail version of Vista Ultimate from US$399 to $319, and the retail upgrade from US$259 to $219. It also reduced the Vista Home Premium upgrade from US$159 to $129, Mr. DeJean noted in his blog.

The problem is that only a small fraction of Vista sales, perhaps 5 to 10 percent, are coming from off-the-shelf sales. The vast majority comes from pre-installations on PCs, and the prices to OEMs hasn't been cut. So the question remains as to why Microsoft would do that other than for symbolic purposes and bragging rights. Of course, due to the small fraction of off-the-shelf sales, the price cut won't hurt Microsoft's bottom line.

In addition, "What are the chances the cuts will set off a stampede of PC users who've just been waiting for Vista prices to hit the magic number?" Mr. Dejean asked. "Slim to none, actually. Nobody's been waiting."

The comparison to Leopard is startling. "Value pricing is a much easier argument to make with Apple's [Mac] OS X. Today I can buy the 'family pack' retail upgrade of Leopard from Amazon.com for $171.49 and install it on up to five computers. That's $34.30 a copy," the author noted."

Despite that, there are ins and outs. The Vista upgrade is more substantial than Tiger to Leopard. And during the six years that it took to ship Vista, Apple users were paying for incremental upgrades. "But then, the Apple side will say, you weren't waiting for six years for better security, either," the author added.

The author's conclusion, however, was that most of the arguments work in Apple's favor, especially thanks to the licensing of Leopard's Family Pack. In retrospect, the whole affair left the author at a loss: "But I'm still puzzled. Why did Microsoft even open up this can of worms if it wasn't going to make a serious competitive move?"