Apple seems to have a plan -- you might even call it a cunning plan -- to put pressure on Microsoft and Windows 8 in the one area that the company doesn't want pressure put -- price.
Image via CrunchBase
Windows doesn't come cheap. The OEMs that build PCs typically pay Microsoft around $50 for every Windows 7 Home Premium PC sold, and when you consider that you can buy a PC for under $300, that makes Windows a very expensive component. But if you think that $50 for Windows is expensive, this is nothing to how much you have to pay if you want to upgrade a PC to run the latest version of Windows.
A quick trip over to NewEgg.com shows that an upgrade copy of Windows 7 Home Premium is $109.99 -- saving you $10 compared to the recommended retail price of $119.99. This is how much Microsoft thinks it should cost you to be able to keep your operating system up to date.
Apple on the other hand has chosen to think differently. Starting with Mac OS X 10.6 'Snow Leopard' the company decided to offer single-user upgrades for $29 and 'Family Packs' which can be installed on five Macs for $49.
That seemed like an incredible deal, and it was. The low price resulted in upgrade sales over the first month hat were double what Apple saw for Mac OS X 10.5 'Leopard' over a similar period following its release.
But now Apple is cutting the price of the upgrade once again. At last week's WWDC 2012 keynote speech it was announced that the OS X 10.8 'Mountain Lion' single user upgrade will retail for $19.99. To put this price into context, I remember a time when Apple used to charge iPod touch owners a whopping $9.99 for iPhone OS updates (back before the operating system was called iOS) -- the exact same updates that all iOS device owners now get or free.
The plan here is hardly subtle. While Microsoft continues to charge customers the earth for upgrades, Apple wants to try to persuade people who, for one reason or another, are dissatisfied with Windows to make the switch to Mac. Low cost operating system upgrades that give owners a way to keep their Macs running the latest version of OS X will appeal to those who like to squeeze as much life as possible from their initial hardware investment.
For those people who don't need Windows -- and there seems to be an increasing number of them -- this lure of cheap upgrades could be compelling.
Another side-effect of what Apple is doing here is that it is devaluing the operating system in preference to looking at the hardware and the operating system that make up a computer as a single product. Apple can afford to virtually give away OS X upgrades because it sold owners the Mac in the first place, and at a handsome 30+ percent profit margin. Microsoft on the other hand is reliant on sales of Windows -- both new licenses and upgrades -- to buoy its bottom line, while OEMs aren't in a position to do anything at all because they're already crushed and barely scraping a profit from selling the PC in the first place.
It wouldn't surprise me if in a few years Apple is offering OSX updates to users for free. Microsoft has yet to detail Windows 8 pricing, but given that Apple has already shot across their bow with Mountain Lion pricing, I would hope that there is some effort on the part of Microsoft to make Windows cheaper for hose people who are loyal to the platform.
