Ed Bott continues the debate over Microsoft’s SKU strategy with Windows today. Adrian Kingsley-Hughes yesterday made mention of reducing the complexity in Windows 7 to two or just one. Ed disagrees and believes the current strategy is working but is flawed in its marketing.
“Currently, Microsoft has a tiered pricing system for Windows. For OEM copies sold with a new PC (and remember, that’s how 9 out of 10 copies are sold), that price is buried in the cost of the system and isn’t broken out. But for the sake of argument, here are my best estimates of how much each Windows Vista edition adds to the cost of a new PC:
- Home Basic $20
- Home Premium $60
- Business $130
- Ultimate $190
Microsoft brings in a steady stream of revenue from this current mix, revenue that is the biggest part of its bottom line. If you were to replace those four editions with a single edition for a single price, my back-of-the-envelope calculation says the new price would have to be in the neighborhood of $90. That would add $70 to the cost of entry-level PCs, many of which are currently being sold to budget -conscious businesses with Vista Home Basic. For a $400 bare-bones PC, that’s a 17.5% price increase. Yikes!”
Read the entire article here
There was never a problem when there was just two SKUs (XP), now it is? In fact it worked so well, Microsoft is having hard time getting rid of XP, with the two stand out SKU’s still number one on desktops – XP Home and Professional. A lot of what Ed Bott says seems to be defending Microsoft’s huge bottom line, not consumers sanity or small businesses focus on delivering value. I have had my frustrations with this new matrix, I realize Microsoft wants to make it easy for end users to obtain the OS they want with the features they really need. But when you have a features like ‘Complete PC Backup’ that is not standard across all SKU’s, it shows Microsoft is only doing this SKU thing for up sell ‘Anytime Upgrade’ anyone?
Still waiting for that Exclusive Experience
Lets not forget Vista Ultimate and its Ultimate Extras. You might say anyone investing in Ultimate just for Extras deserve what they got. But I remember this feature being touted as exclusive only to ‘licensed’ Ultimate customers. The premise was to deliver value beyond box. Cutting-edge programs, innovative services, unique publications. I don’t consider a bunch of animated wallpapers, a few games and encryption utility to be real value beyond the box. You can read my suggested solution to this issue here