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Microsoft keeps customers in the dark over Windows 8 prices

Gregg Keizer | Aug. 28, 2012
With just two months to go before the retail launch of Windows 8, Microsoft has yet to price the new OS.

Al Hilwa, a colleague of Gillen at IDC, echoed Moorhead's take on the pricing lag.

"Most vendors follow a motto of not ever making a decision ahead of when they actually have to," Hilwa said in an email. "Things may well be in flux right up to the last minute. Having to straddle the tablet and PC worlds, Windows 8 may be under unique pricing challenges given that tablet OSes have historically been free." Moorhead also cited tablets as a likely reason why Microsoft hasn't announced prices. "[Microsoft has] a lot to incorporate [in pricing], and maybe they don't like what they see when they run their pricing scenarios," Moorhead said. "What has them most challenged is how to help tablets."

Implicit in both Moorhead's and Hilwa's speculation is a tug between wanting to set higher prices for desktop copies of Windows 8, and the need to go lower for OEMs building Windows 8-powered tablets so that they can sell devices competitive with Apple's iPad. Also unspoken is the connection between Windows retail and Windows OEM pricing; the former must fit into the price spectrum.

Pricing desktop upgrades and System Builder at a low price could alienate tablet OEMs unless their traditionally-less-expensive licenses were also greatly reduced. Using existing pricing models, like Windows 7's, would mean retaining revenue from desktop OEMs, yet make it difficult for tablet OEMs.

Apple, being both the developer of iOS and the iPad's OEM, does not have to pay anyone (except possibly itself via behind-the-scenes accounting) for a software license.

"I expect Windows 8 to be priced the same as Windows 7 but [that Microsoft will] provide some special discounts to OEMs for tablet and convertible devices," said Moorhead, referring to the hybrid hardware that combines features from notebooks and tablets.

If Moorhead's right, that would mean a Windows 8 upgrade will cost $120, the current price of Windows 7 Home Premium. Under his model, Windows 8 Pro would run $200, the same as Windows 7 Professional.

Other long-time Microsoft watchers are counting on lower prices. Last week, for instance, ZDNet blogger Ed Bott said, "There is strong evidence to suggest that Windows 8 will cost less than corresponding versions of Windows 7."

But there is another explanation for the pricing announcement delay, said Moorhead.

"Microsoft has significantly changed their communications strategy, deciding to keep most of their customers, developers, press and analysts in the dark until the very end of an execution cycle," Moorhead said. "This is the Apple approach, but the difference is, unlike Apple, Microsoft has a huge ecosystem of PC makers, hardware partners, and retail partners."

Gillen of IDC had similar thoughts, that for whatever reason, Microsoft simply doesn't want to discuss retail prices at this point.

 

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