Microsoft Plays Tennis Match with Apple on Windows 7 Pricing

One analyst says the main reason Microsoft lowered prices on Windows 7 prices was to stem market share loss to Apple. But in the pricing duel expected to play out between Snow Leopard OS and Windows 7 in the coming months, who'll win?

By Shane O'Neill
Mon, June 29, 2009

CIO — Microsoft announced late last week a slew of news about Windows 7 pricing that enticed buyers with a big pre-order discount, but still left users angry that that the Windows 7 price cuts weren't steeper given the disappointment of Vista and the grim economy.

Slideshow: Windows 7 in Pictures: 10 Cool Desktop Features

The discounted pre-order offer started on June 26 and will last through July 11. Buyers can choose the discounted Windows 7 Home Premium for $49.99 or Windows 7 Professional for $99.99.

The Windows 7 prices that pick up after the pre-order deal ends, though still mostly lower than Vista was at its launch, have been met with some gripes, particularly from users transitioning from the widely-disappointing Vista Ultimate to Windows 7 Ultimate who will see no price reduction.

At the same time, Microsoft is taking deliberate steps to make it easier for users to move to Windows 7. In addition to the pre-order discounts, Microsoft's "Windows 7 Upgrade Option Program" provides free or nearly-free upgrades to Windows 7 for those who purchase a new Vista PC between now and Jan. 31, 2010.

A Perception Game with Apple

Yet with Windows 7 pricing, Microsoft had to face more than a skeptical, cash-strapped public. It was also competing with a previous announcement from an old nemesis: Apple.

Three weeks ago, Apple announced that the next version of its OS X, Snow Leopard, will be available a month before Windows 7 with a $29 upgrade charge for a single-user license, and $49 for a five-license pack. Apple traditionally charges $129 for an operating system upgrade.

Rob Enderle, president of tech consulting firm The Enderle Group, views Microsoft's price cuts as a tennis match with rival Apple.

"Apple came out a few weeks ago and said we're going to be cheaper and earlier," says Enderle. "But Microsoft stole back some momentum with the discounted pre-orders. In this economy, $50 for Windows 7 is a heavy incentive to upgrade. These deals will be a huge driver."

On Friday, the $49.99 upgrade for Windows 7 Home Premium, quickly took over the top spot on Amazon.com's best-seller list and the $99.99 Windows 7 Professional Upgrade was No. 2 in software.

Snow Leopard's Deceptive Pricing

Some industry experts have questioned the true value of Apple's $29 upgrade offer.

A blog post by veteran Microsoft watcher Ed Bott analyzes the Snow Leopard upgrade deal and discovers that getting the $29 upgrade depends on when you bought your Mac.

According to Bott, only those buyers who purchased a Mac between Oct. 2007 and June 2009 qualify for the $29 upgrade. If you bought it before that it will cost you $169 (and that's for Intel-based machines only). If you bought your Mac before Jan 2006, you cannot get Snow Leopard at all.

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