Posted on 02/27/2007 11:28:24 AM PST by ShadowAce
Is Windows getting cheaper or more expensive?
The short answer is easy: neither. Roughly speaking, the Microsoft product sells for the same price it has had for years.
The full answer is more complicated. There are all sorts of factors that go into one's sense of whether the leading operating system "feels" more pricey or less expensive--the cost of other PC components and what gets bundled into the operating system are just a couple of them.
Microsoft General Manger Brad Brooks argues that Windows is a bargain, noting that it keeps getting more features for the same price.
| VERSION | Full packaged product | Upgrade version | |
| Windows 98 | $209 | $109 | |
| Windows ME | $209 | $109 | |
| Windows XP Home | $199 | $99 | |
| Vista Home Basic | $199 | $99 | |
| Vista Home Premium | $239 | $159 |
|
Source: Microsoft
"If you break down the cost of the software over the life of the PC, it works out to be less than how much you'd spend on milk for your family over that same period of time," Brooks said.
Now that Windows Vista has been on store shelves for about a month, it makes sense to take stock of how it stacks up from a value perspective.
On the side that makes it feel cheaper, there is more in Windows than ever. Built into Vista are several types of programs that have, until now, cost extra. It has antispyware, voice recognition software included in the box, and other programs, such as Virtual PC, are available as free downloads.
And, while Microsoft has kept prices roughly flat, inflation means that in absolute dollars, the price of Windows has declined somewhat. An upgrade to Windows 98, for example, cost $109 in 1998. But in 2007 dollars, that's $137, according to a Federal Reserve Web site. Today, to buy a copy of Vista Home Basic upgrade would cost $99.
On the other hand, since the prices of other computer parts have dropped substantially over time, Windows has become a relatively more expensive part of the average PC. In 1998, for example, the typical desktop cost around $1,100, compared with $650 today, according figures from NPD Group.
Relative value
The fact that other PC component prices have dropped more than Windows doesn't necessarily mean the operating system is a bad deal, NPD analyst Stephen Baker said.
"While it does appear that the absolute cost of Windows has gone up over time, especially in contrast to the overall price of the PC and the other components, that rise certainly appears higher than it really is," Baker said. "Just like in hardware, we have to account for the increased value that the upgrades to the OS provide."
Over the past decade, Windows has integrated the ability to burn music CDs, make movies, record TV shows and edit photos. Also, those abilities haven't come steadily over time, but rather arrived in a bunch with each new Windows release.
"This is much harder than calculating the value of hardware, but I think there clearly has been increased value from the OS," Baker said.
But not all of that value has been just given away by Microsoft. The software maker has introduced pricier editions of the consumer operating system, such as Windows XP Media Center Edition, Windows Vista Home Premium and Windows Vista Ultimate edition. So, while the price of the entry-level operating system has stayed the same, it costs more to get all of the bells and whistles.
Michael Cherry, an analyst with Directions on Microsoft, pointed out that many people won't really get a sense what they are paying for Vista, since it will come already installed when they buy their next PC. "It's really unknown what they pay for Vista," Cherry said.
He noted that on build-to-order computer sites like Dell's, you can uncheck most components of a PC and see how much they add to the bill--but not always. "You can't just uncheck the operating system," Cherry said. (Dell does sell three machines without an operating system as part of its n-series, but adding Windows is not an option.)
Hidden cost
That means that, in large part, consumers' sense of Windows prices will be guided by the overall price of their computer. As long as that continues to drop, consumers are likely to be oblivious to which actual components inside the PC are actually coming down in cost.
"From the consumers' perspective, they are getting a lot more bang for the buck then they did two years ago," said Samir Bhavnani, research director at Current Analysis.
However, one wrinkle in this trend is that Vista tends to work best on a more capable machine. Although it is too early to tell, there are some indications that Vista will push up average PC prices, or at least slow the price decline, Bhavnani said. He noted that in February 2006, the percentage of sub-$500 desktops and notebooks sold grew, compared with the prior holiday shopping season. But this past February, as Vista hit the market, the market share of sub-$500 PCs dropped significantly from the prior holiday season.
Even still, Bhavnani doesn't think too many consumers are viewing Windows as pricey. He noted how new cars would seem inexpensive if year after year they stayed the same price and offered more horsepower.
The people who think about the price of Windows are those who actually go to a retail store and buy an upgrade copy, Cherry said. So far, sales of boxed copies of Vista have trailed initial sales of Windows XP, according to NPD data.
Cherry anticipates that most people will buy a flavor of Vista that corresponds to the version they have of XP. But some will want to move up to a heftier-featured edition, and that will add further to the perceived cost. That's particularly true if a consumer opts for Vista Ultimate, which sells for $259 as an upgrade and $399 for the full product.
"It is a lot more expensive," Cherry said.
Most enthusiasts and IT groups are not touching it. For good reason -- an overpriced, "abusive", warmed-over XP that is slower and a resource hog. And for what??
Billy, you really blew this one. And you had five years to make it.
"Microsoft General Manger Brad Brooks argues that Windows is a bargain, noting that it keeps getting more features for the same price."
Correction:
More BS for the same price.
I have one XP in my house, because I got a $99 deal with $60 rebate. I have 98SE on four other machines, and it has never bit me or betrayed me...I find it easy to troubleshoot, and have so much time in on that rev that I seem a wizard to my friends. Vista? I would have to spend so much money to upgrade my way to the power needed that it has no interest for me at all.
I have to ask some computer people here this question: I use Nero to copy movies I check out of the library and have heard that there is some copy protection software in Vista that would not allow me to do this anymore. Anyone else familiar with this issue? Thanks
Just look at all the HIDDEN costs!
http://www.cs.auckland.ac.nz/~pgut001/pubs/vista_cost.html
That's not entirely true, at least for XP (never looked into Vista). At my previous job I once had to replace a motherboard & CPU, all it took to activate the same copy of XP was a five-minute phone call. Microsoft assumes that a software pirate would not go to the trouble of phoning for an activation and just gives the codes to any registered user who does.
Almost the entire article is BS.
Windows upgrades have pretty much stayed the same (I have 1 XP pro machine and 1 Windows Vista business), but MS Office upgrades (I use Access, so I have to get Office Pro) are getting more expensive.
I believe the copy protection in Vista applies to Blu-Ray and HD DVDs. Just one more reason to avoid Vista.
Author misses two key factors: total cost of ownership (management, care and feeding of windows) and real value (what features would cause me to pay more, how does vista help increase productivity and/or save money).
Care to elaborate? It seems it is tryig to balance inflation with lowering cost of hardware. What is BS about it?
No offense, but if you have four 98SE machines, then you aren't Microsoft's target audience anyway (because, apparently, you implicitly said the same about ME, 2000, and XP).
DRM is the new wave, so yeah, you're going to have problems copying ANYTHING from Vista to blank media. Lots of stuff on non-DRM-protected hardware that is disabled in Vista. For instance, if you have a disk drive attached to your machine that is not "DRM Approved" or capable of copying over protection schemes, it will be automatically disabled. I read an article on FR about it, I'll have to dig it up.
And oh yeah...
Linux Fedora Core 6 - FREE
So you're upset that Vista doesn't let you break the law?
Which is another reason I've stuck with my copy of Office Pro 2000 through three hardware upgrades.
I've noticed the same thing- the OS's are getting cheaper but the useful apps cost a small fortune. The only MS app that I consider reasonably priced is Streets and Trips- there's better navigation software out there but Streets is half the cost of the nearest competitor.
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