Can Microsoft really afford to raise prices in a down economy? That’s the question facing the software giant as it prepares to launch Windows 7 later this year. According to remarks attributed to a Dell marketing executive, Microsoft’s planned Windows 7 prices are generally higher than price points for Windows Vista and Windows XP releases.
Hey, The VAR Guy is all for free enterprise. Microsoft certainly should sell Windows 7 at prices that the market is willing to pay. And yes, software companies — closed source, open source, whatever source — deserve to seek profits from their hard work.
But, um: A pricing faux pas is the last thing Microsoft needs amid Windows 7’s launch. Surely, lots of folks still feel burned after paying for Windows Vista upgrades that didn’t perform well on low-end PCs. And the IT channel is increasingly open to Windows alternatives — hence Synnex’s decision to introduce a range of open source applications to the distributor’s 15,000 resellers. (Check out the Open Source Channel Alliance for more info.)
The Pricing Debate
The Windows 7 pricing debate started (or accelerated…) when Darrel Ward, director of product management for Dell’s business client product group, told CNet:
“If there’s one thing that may influence adoption, make things slower or cause customers to pause, it’s that generally the ASPs (average selling price) of the [Windows 7] operating systems are higher than they were for Vista and XP. In tough economic times, I think it’s naive to believe that you can increase your prices on average and then still see a strong swell than if you held prices flat or even lowered them. I can tell you that the licensing tiers at retail are more expensive than they were for Vista.”
Hmmm. Ward is either raising a critical issue or trying to negotiate better Windows 7 pricing for Dell — or both.
Either way, if consumers and businesses consider Windows 7 expensive it could open the door of opportunity slightly wider to the usual suspects: Apple and the Linux crowd, especially Linux running on NetBooks, The VAR Guy believes.
The VAR Guy has dispatched an email to Microsoft for comment. Our resident blogger will let you know what he hears.
The VAR Guy is updated multiple times daily. Follow him via RSS, Facebook and Twitter. And subscribe to his newsletter, webcasts and Resource Center.
Read More About This Topic
Share This Post
Tags: Dell Windows 7 | Windows 7 Prices | Windows 7 Pricing | Windows 7 vs. Apple | Windows 7 vs. Linux | Windows 7 vs. Mac OS X | Windows 7 vs. Windows Vista | Windows 7 vs. Windows XP | Windows Prices
Interact: Add a Comment | Trackback Link | Permalink
Subscribe: RSS Feed
VARGuy, I wrote in my blog yesterday something totally unrelated but had to get my shots in on our industry and the influence a popcorn guy opened my eyes to.
You know the computer industry is the only industry that expects to survive on free software and no one making profit.
Saying that though, pricing must be competitive to ensure adoption by the market. I for one believe that Windows 7 is worth the price tag, it is the best OS that Microsoft has released in it’s life time, it is rock solid throughout the beta process. However, they do have a huge hill to climb especially in our “I want it for free” mindset that it sweeping our beloved industry – that eventually no one will be able to make a living in, except for those who understand the top two levels of the pyramid that HTG members get.
The debate on closed vs. open source will go on forever
I play in the top part of the pyramid, let’s get busy!
Cheers
Stuart Crawford
Calgary, AB
http://stuart.calgarybloggers.ca
Stuart: The VAR Guy realizes that the open source crowd sometimes attacks your views on MSFT. But your views will always be welcome, especially since you provide reality checks for Microsoft solution providers on a regular basis.
Keep us posted on your Windows 7-related engagements once the OS reaches market.
Stuart: I make more money from Free Open Source software, than closed. And IT is definitely not the only industry facing the “I Want It Free”, look at the music industry (very soon the movie industry). It’s called, evolving.
Carlos: Keep us posted. Let us know where you’re specializing in the open source market, and why. The VAR Guy wants to hear more…
Carlos…good point, totally missed the music and movie industries. Trust me, I get the evolution thing. That is why I don’t worry too much on the sale of products any longer. I specialize in process, workflow and people skills. Computer Guys as we know it or used to know it are slowly dying off.
Stuart: Kill off the Computer Guys. But please don’t fire The VAR Guy
Best
-TVG
Not to worry…I think you are safe TVG
VAR Guy: Most of my money comes from building or customising Intranet web applications. There is just no better platform to build web apps on than a LAMP stack. All free and open source, because of this there is TONS of open source/free products I can grab and configure for my clients. Mostly SugarCRM or building web apps on CakePHP. I couldn’t imagine building all these apps on IIS with .Net as I would not have the same free resources (I actually started with building ASP Intranet sites years ago.) The plus is that free software allows me to do my job for a lot cheaper (for the client). Save hundreds of dollars on my custom built servers just cutting out Windows Server licenses alone.
Also I do the basic “computer guy” stuff in my Uncles store, where people, usually lower income, come by and drop off computers. I save big on not renting space (pay my Uncle a commission), and I just call to check in if anybody dropped anything off. By installing Ubuntu I save myself the risk that a few other ‘computer guys’ are risking by installing pirated versions of Windows XP on every computer or laptop that the person lost the disk for. Installs quicker, all software is ready to go and the only drivers I usually have to install is the b43 firmware. Also I can safely offer 6 months guaranteed no viruses or spy-ware. Charge a little extra for a Windows re-install, because I have to manually go in and install AVG, OpenOffice and a few others. A lot more if they don’t have the disks, because then its $99 for a new Windows Home (and no 6 month guarantee).
I think your wrong about the death of the computer guy, regardless of how easy they make it – computers will always mess up and unless they’re only $20 for a new one, they’re going to bring it in to see if it can be fixed before they go to buy the new one. They will also come to you for advice, lawyers will have me go to a store with them just to pick out a laptop. Just because I can go online and fill out a few forms and get back some legal documents does not mean lawyers are dead though.
If ALL you do is vend software though (no cloud services, etc.), you’re completely right – if your not dead now, you soon will be. It’s like a musician only still only selling music and doing no shows (which is kind of their version of service.)
:-/ Sorry for being so long winded.
… and for the typos
Carlos: You never need to apologize for sharing lots of wisdom on TheVARguy.com. Our resident blogger thanks you for stopping by and offering your perspectives.
My IT department installed the RC on a few internal computers and figured out it was pretty much a UI nightmare. Font rendering is some weird anti-aliased crap that looks horrible on CRTs and there’s no way to remove it. We’re skipping Win 7 completely, and I’m going to try to get them to try switching to Kubuntu. ;O