Analyst Compares Windows, OS X Costs [UPDATED]

Piper Jaffray analyst Gene Munster on Monday issued a research report in which he compared Microsoft and Appleis OS strategies, concluding: "Appleis OS pricing strategy in line with the companyis overall strategy: Apple users are willing to pay a premium for hardware and software built for the Apple platform, enabling Apple to expand profit margins."

Mr. Munster noted that his comparison showed that Mac OS X costs users US$129 per year for the full version, or $107.50 on average to upgrade, given the fact that Mac OS X v10.1 was a free upgrade. In contrast, Microsoft has averaged 2.25 years between major Windows releases, with an average cost of $114 per year for the full version, or $48 annually to keep up with upgrades.

Gene Munsteris chart of OS upgrades

"Appleis strategy assumes that users are more inclined to buy cheaper versions more frequently," the analyst wrote, "which results in higher costs per year for Apple users when compared to Windows users. Given Appleis ability to drive greater revenue per customer versus its competitors through sales of peripherals and frequent OS updates, Mac market share gains will mean more to the company than simply increasing Mac revenue. Most analyses of the impact of Mac market share gains exclude the positive potential impact on the companyis peripherals and software segments, which account for 12% of revenue.

"We believe it is important to keep this added benefit in mind, as a growing number of Macs in consumeris hands will lift these segments as well."

Mr. Munster retained his "Outperform" rating on Appleis stock, with a $99 price target. At 1:43 PM EST on Monday, the companyis shares were selling for $67.41, down 1.95% for the day.

<!--#include virtual="/includes/newsite/series/stockwatch.shtml"-->

3:41 PM EST: Updated article with chart.