Editorial

Analyzing the right price for Windows 8

Like many of you here on Neowin I’ve been using the Windows 8 Consumer Preview here and there for the past week. Yes, I have been using it on my desktop computer complete with the Metro-infused Start Screen, but I’m not here to discuss the good and bad things about that (perhaps another time?). No, I’m here to discuss what could possibly be the right price for Windows 8.

Windows 8 is a major development for the Windows platform from a sales perspective because it will see the operating system fully compatible with more than just the two usual markets of desktop and notebook PCs. Tablets enter the mix with this version of Windows, and this is no doubt a huge part of Microsoft’s operating system strategy.

When it comes to pricing Windows 8 I think I can safely say that we will not be seeing a version that is priced over US$300. With the high possibility of just one consumer SKU of Windows 8 without any suffix like “Home Premium” I simply can’t see Microsoft getting a huge amount of retail sales if it was priced so high. $319 for the full version of Windows 7 Ultimate was pushing it, and the $399 price for Windows Vista Ultimate was just way too high.

I would estimate that the full on-disc consumer version of Windows 8 will retail for between $150 and $200, with a Professional (read: business) edition coming close to $250. Upgrades I could see going for as low as $75, breaking the all-important $100 price barrier.

Now I’m not going to leave you in the dark over how I came up with these estimates, so I’ll start by explaining the consumer version price. Microsoft will make a boatload of money from the Windows Store and Xbox media services (formerly Zune) in the consumer versions. The two services are so tightly integrated into Windows 8, in the app-store way that we love on smartphones, that it will be a huge success with typical end-users.

The Windows Store plays a big part in the pricing of Windows 8

For applications in the Windows Store, Microsoft will be taking a 30% cut up to the first $25,000 of revenue, and a 20% cut after that. If a user spends just $50 in the store across the lifetime of Windows 8, Microsoft could be making an extra $15 on top of the revenue from the user’s Windows 8 purchase. Say this user is heavy on paid applications/Xbox media and purchases perhaps 10 full games at $50 each, Microsoft is making $100-150 from these purchases in total; even more if the user purchases more.

Pricing Windows 8 around $150 for consumers would be seen as a reasonable enough saving from Windows 7 Home Premium (which cost $199 boxed) that users would make the purchase, while Microsoft could recoup the difference at a later date in the Store and through users’ Xbox media purchases. If the user turns out not to be a major purchaser through Microsoft’s channels, they still have made a decent amount in the sale of the actual operating system.

The Windows 8 upgrade price I could see going under $100 (perhaps around $75) purely from the success of Apple’s $30 Max OS X Snow Leopard update. While Windows 8 is clearly a far huger platform update than Snow Leopard, keeping the price lower than $100 will attract consumers looking for a cheap upgrade with loads of new features. Again, Microsoft would recoup the difference in price through their application and media channels.

Businesses are a different story for Microsoft: I can’t see the Store and Xbox channels being utilized as much in the business market, especially with large enterprise installations that would prefer to bulk license applications outside the Store. As such, Microsoft has less chance of recuperating funds from selling Windows 8 at a lower price.

$250 seems reasonable first of all because it is a discount from Windows 7 Professional, which sold for $300. The discount I believe will be needed because Microsoft could have a hard time marketing the Metro interface to business users, despite the improvements to the business-oriented feature set elsewhere. A $100 price bump over the consumer edition would justify any included business extras as well as the theory that business will not as heavily utilize included Microsoft stores.

What will the Windows 8 OEM price be?

Placing a fair price for the OEM versions of Windows is tricky, mostly because they will have to keep it cheap for tablet manufacturers to keep the overall price of the device as low as possible. With Android in the market offering a tablet OS for no price at all, Windows 8 will need to be cheap to compete. Anything more than $50 for an OEM version of Windows 8 for ARM would be insane, with a price likely to be around the Windows Phone 7 estimates of $20-$30.

For the x86 OEM versions I could envision prices upwards of $50. Windows 7 Home Premium OEM was allegedly around $100 (slightly less than the upgrade version), and with a prediction of $75 for the Windows 8 upgrade edition I could see the same price applying to the OEM version. Again, the theory that Microsoft will make a considerable amount of money from the Store comes in to play meaning the OS will likely be cheaper.

Again, these are just my predictions based on some analysis of previous Windows prices and potential Store revenue, and could end up being way off the actual prices. However, until Microsoft actually announces their prices for Windows 8, an estimate is as good as we’re going to get.

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39 Comments

Commenting is disabled on this article.

After using the web installer to upgrade two of my systems to the CP, i can say if they offer me a $99CAD medialess upgrade, I'm all over it.

What a great experience!

Why does every screenshot of metro show a jumbled list of tiles? I know its the default but once you group your tiles its pretty nice and functional.

I think the editorial makes a fair point that Microsoft can afford to charge a much lower price and make money back through the App Store. It would also help to head-off the criticism over the interface. Whether Microsoft will actually do this remains to be seen, though I hope they offer a discount to those testing Windows 8 like they did with Windows 7 - I picked up Windows 7 cheaper than an OEM copy because of that.

At long as the OEM version isn't too expensive I'll be upgrading when it's released. The improvements made to file copying, task manager, migrating between computers, performance, touch interfaces and multi-monitor support more than make up for the faults and inconsistencies I've come across. Storage Spaces alone is a killer feature, as data security is very important to me.

That's what they say anyways. I would like them to show an example of software not running correctly if the version number was too different …

I Really Do not think Windows 8 Should cost much at all if upgrading from Windows 7. you look at the product versions according to winver.exe : Windows 8 is Microsoft Windows 6.2 This is the smallest version increment yet. Windows 7 Was 6.1 Windows Vista was 6.0 WindowsXP 5.1 Windows 2000 5.0 . Looking at Windows 8, the only new thing is that start. I think this is the first time MS has come out with a OS version that was a .2 increment 20 bucks to upgrade from windows 7. That would seem reasonable enough..

jonmcco said,
I Really Do not think Windows 8 Should cost much at all if upgrading from Windows 7. you look at the product versions according to winver.exe : Windows 8 is Microsoft Windows 6.2 This is the smallest version increment yet. Windows 7 Was 6.1 Windows Vista was 6.0 WindowsXP 5.1 Windows 2000 5.0 . Looking at Windows 8, the only new thing is that start. I think this is the first time MS has come out with a OS version that was a .2 increment 20 bucks to upgrade from windows 7. That would seem reasonable enough..

If I remember correctly the incremental update was used in 7 in order to keep compatibility with a lot of software; it should be the same for Windows 8, it has nothing to do with major or minor releases. Correct me if I'm wrong

Zoddino said,

If I remember correctly the incremental update was used in 7 in order to keep compatibility with a lot of software; it should be the same for Windows 8, it has nothing to do with major or minor releases. Correct me if I'm wrong

I think you are right.

Zoddino said,
If I remember correctly the incremental update was used in 7 in order to keep compatibility with a lot of software; it should be the same for Windows 8, it has nothing to do with major or minor releases. Correct me if I'm wrong

You are incorrect.

Although that was Microsoft's excuse for going with 6.1 instead of 7.0 it didn't make any technical sense since Applications already had to consider the major version change from 5 to 6 that same code would have accounted for other major version changes.

Just as there is no technical reason why Windows Phone 7.5 is Windows Phone 7.1.

Hell, they could have called Windows 8 Windows 6.5 if major version was a real problem if it wasn't a made up issue.

I think they should have one "basic" version of Windows that has most features bundled in for a reasonable price (e.g. $100-$150), with a "pay-as-you-go" feature that let's you buy additional features from the Microsoft Store. There shouldn't be 2832382434 editions of Windows anymore; it's an obsolete and unnecessary business model.

It is time from Microsoft to break the obsolete pricing model and strategy.
They should aim for a single consumer SKU priced at a level where people won't need to wonder whether or not they want to jump into the badwagon: around $69.

It is important to remember that with the "Store" addition, there will be additional revenues that would compensate for the retail price reduction.

Let's hope Microsoft will enter into a more modern pricing strategy.

Also, with the increasing pressure from the competition, aiming for a lower price would help keep the consumer base and, possibly, decrease piracy.

I would say at this point Microsoft doesnt NEED to sell the OS at a high price. Perhaps as a method to get more people on board, they can reduce the price or maybe bundle it with some other extras.

Most Manufacturer ship Their PC with windows 8 Pre-installed so most new PC will have Windows 8 and consumer will fail to notice the price that is already included with their hardware.

b_roca said,
Will you be changing your name to "theoldtechguy77"?

No need for it. Windows 8 doesn't bring anything over Windows 7, has no selling point. We will see what Windows 9 brings.

When Windows 7 came out Tesco was selling copies of Home Premium for £49.99 ($79) - at that point it was an impulse purchase and they sold like hot cakes. As Windows 8 is a radical upgrade (I mean the Metro interface side of things) people might put off purchasing it and stay with the familar Windows 7, so they'd do as well to sell them cheap as chips and create a quick user base. Knock-on effect would also be that people will be more comfortable upgrading to WP8 when their contracts run out.

The whole article is an editorial suggestion. There could be one consumer SKU that offers the possibility to purchase additional features to beef it right up to the equivalent of the "Ultimate" Edition.

It would make more sense than offering a bunch of different consumer retail versions.

Neobond said,
The whole article is an editorial suggestion. There could be one consumer SKU that offers the possibility to purchase additional features to beef it right up to the equivalent of the "Ultimate" Edition.

It would make more sense than offering a bunch of different consumer retail versions.

I realize its an editorial, but the article states

With the high possibility of just one consumer SKU

That is not him editorializing. That statement infers 'facts' that point to something. The facts from the Consumer Preview show that there are 8 versions plus an Enterprise Evaluation version.

Problem there is though Windows Server 2003 had a "Windows 2003 Professional" SKU whilst in development, it was even in official Microsoft KB articles and we reported on it as well. Unfortunately it never happened and Microsoft stated to us that it was merely a PLACEHOLDER SKU

So my point is, things can change while Microsoft hasn't yet made an official statement.

Neobond said,
Problem there is though Windows Server 2003 had a "Windows 2003 Professional" SKU whilst in development, it was even in official Microsoft KB articles and we reported on it as well. Unfortunately it never happened and Microsoft stated to us that it was merely a PLACEHOLDER SKU

Windows XP 64bit was Windows Server 2003 64bit with a few reg tweaks and bitmap swaps. Otherwise it was basiclly Server 2003. So that might be were your getting that from.

Windows XP shipped well before Windows Server 2003? If anything Windows XP was based off Windows 2000 Professional, I remember installing Windows Neptune Dev Preview (predecessor to XP) when it leaked shortly after W2K shipped

episode said,
Where did you get this 'One consumer SKU' idea? Your imagination? There are no less than 8 versions of Win 8.

From the leak about there being only four SKUs: the normal one, Professional, Enterprise and WOA.

Neobond said,
The whole article is an editorial suggestion. There could be one consumer SKU that offers the possibility to purchase additional features to beef it right up to the equivalent of the "Ultimate" Edition.

It would make more sense than offering a bunch of different consumer retail versions.

The Apple Server App model.

Neobond said,
Windows XP shipped well before Windows Server 2003? If anything Windows XP was based off Windows 2000 Professional, I remember installing Windows Neptune Dev Preview (predecessor to XP) when it leaked shortly after W2K shipped

XP 64 is NT5.2

Neobond said,
Windows XP shipped well before Windows Server 2003? If anything Windows XP was based off Windows 2000 Professional, I remember installing Windows Neptune Dev Preview (predecessor to XP) when it leaked shortly after W2K shipped

Windows Server 2003 was based off Windows XP, but Windows XP 64bit (x86-64) came almost 4 years after original Windows XP and was based off Windows Server 2003 SP1...
http://en.wikipedia.org/wiki/W...XP_Professional_x64_Edition

Neobond said,
Windows XP shipped well before Windows Server 2003? If anything Windows XP was based off Windows 2000 Professional, I remember installing Windows Neptune Dev Preview (predecessor to XP) when it leaked shortly after W2K shipped

Windows Server 2003 was based off Windows XP, but Windows XP 64bit (x86-64) came almost 4 years after original Windows XP and was based off Windows Server 2003 SP1...
http://en.wikipedia.org/wiki/W...XP_Professional_x64_Edition

Neobond said,
Windows XP shipped well before Windows Server 2003? If anything Windows XP was based off Windows 2000 Professional, I remember installing Windows Neptune Dev Preview (predecessor to XP) when it leaked shortly after W2K shipped

Yes it did, but not in x64 form the guy is right XPx64 is Server2003x64 with some tweeks.

Many people like to have the latest software available. But if you don't have a tablet PC, why would anyone pay the price of a tablet (say, $250,00) only for an OS?
I wouldn't...

WAT?
What does buying an OS have to do with buying a tablet?

Also, do you really think Win8 tablets will only be $250???

ahhell said,
WAT?
What does buying an OS have to do with buying a tablet?

Also, do you really think Win8 tablets will only be $250???

WUAT?