Shooting at Bubbles

Since the accidental (ya right) publishing of the Vista price listing on the Microsoft Canada website everyone has been bitching about the $399.00 price tag that is being quoted as the final price.

Well get a grip of your shorts and calm down a minute and realize that this price is 1- still months away from final release and as such could very well change and 2 – this is for the Vista Ultimate build release which really will only be of interest to maybe 5% of actual purchasers.

I stress actual for a very good reason and this is where the sanity comes in.

What we have to do first is breakdown the future buyers into two main groups; well three if you count OEMs, and they are:

• Corporate
• Personal Use

Now right off the bat we can ignore the corporate sales as you can be sure that as with all previous versions of Windows they will have a totally separate pricing scheme that has already probably been agreed upon.

So we are left with the personal user segment and this too can be separated into two distinct groups:

• I bought a computer and I just want it to run
• Tweaker geek’s  – don’t touch anything I will build it myself

The first group as always will make up the majority of this demographic and as far as they are concerned that since the operating system comes with the computer it didn’t cost them anything. This sense of it being free is regardless of the fact that the OEMs incorporate what Vista will cost them; and you can be assured that there is no way in hell that it is the same as retail, into the retail cost of the computer.

Now if you accept the fact that the possible percentage of the first groups will be in the range of 80 to 90% of all possible personal users that leaves the second group sitting at 10 to 20% that will have to pay retail prices for Vista. After all tweaker’s and power users really do make up an extremely small percentage of users – even if we don’t like to think so.

As far as Microsoft is concerned this small minority is really only a blip on their sales radar and there will be enough sales and eBay deals that they can be kept happy once they get past  the first blush of release.

And really if you look at the version that are going to be available for Vista and then compare them against their XP counterparts the prices really aren’t that much different that what we were paying for XP (a good article on the comparison can be found here).

The only difference is that with Vista we have the new Ultimate version; which is the price that everyone is focusing on. As I stated earlier though this version will only appeal to an even smaller percentage of that 10 or 20% market.

So in reality; and once you have gotten your panties unbunched, the prices as they have been leaked really aren’t as heart pounding end of the earth and computing as we know it.

Now comes the stupidity part – the price of Windows; or any software for that matter, itself.

At one time this type of pricing scheme could be justified as there were actual manuals to have printed, cardboard boxes to be made and truckloads of floppies to be formatted. So there were a lot of real costs associated with releasing a software package.

Today in the age of high speed Internet connections and the total decline in brick and mortar type sales of software this archaic method amounts to nothing more than wallet robbing.

When was the last time you even purchased a software package from a store let alone get any real manuals other than an Internet website address to download a PDF file from.

You don’t think that the sale of Vista would be possible as an download only – think again and just look at the popularity of the Vista RC2 release. They met their self imposed limit of 200,000 downloads in a matter of days; and what did it cost them – their bandwidth; which is a write-off as a business expense so really it didn’t cost them a thing.

Now lets say they had decided to charge 10.00 to download Vista RC2. Sure it might have taken a day or two longer to reach the 200,000 due to people bitching about paying for beta product but they still would have made it and on top of that made 2 million dollars in the process … not bad for under a week.

The day of needing a brick and mortar release of software is fast fading and so is the whole basis of pricing your product based on an antiquated distribution model.

So here’s an idea Microsoft and I won’t charge you a cent for it.

At some point shortly after the official release to the public of Vista in all its flavors Microsoft has a sale for a 24hr period where a person could purchase a licence for Vista Home for $25.00 with a maximum of 5 licenses per person (with a similar stepped price for other versions of Vista) and then they could download at their leisure a copy of Vista to burn at home.

In one fell swoop Microsoft would have the greatest marketing coup and establish an extremely strong foothold for the new operating system.

At the same time I would really suggest a true re-evaluation of their whole pricing scheme for the home users and one that isn’t based on an old and fading hard copy distribution system and its costs.

Would they do this … not likely but I think they would be stupid not to at least entertain the possibility given the massive PR boost and goodwill it would bring them. Not to mention the solidification of the Windows home users desktop against a growing alternative OS marketplace.