Robert McLaws: Windows Edition

Blogging about Windows since before Vista became a bad word

The Mechanics of Pricing Additional Vista Licenses Lower

Nick White of the Official Windows Vista Blog asked me about the mechanics of putting additional Windows Vista licenses at a lower price point. He may be playing Devil's Advocate here, but I'll bite anyways. But since I already discussed many of the mechanics, I have some things for you (and the rest of Microsoft) to think about.

So here's the big question: Would you rather have millions of copies sell for less than retail value, or have millions of copies pirated? Microsoft's solution is to sacrifice up the millions of other computers that won't get upgraded because you're worried about the edge cases that might abuse the system? Doesn't that go beyond the 80-20 rule (80% of the people won't abuse the system)? So what if a friend buys it for someone instead. You've sold another copy of Vista that you might not have before, whatever the price. Isn't your goal to get everyone off 95/98/ME/2000 and onto Vista?

Besides, you can install Office Student and Teacher on up to 3 computers... you think the only people buying that version are students? You think OfficeMax checks for valid college IDs at purchase time? You think teachers have to bring their teaching certificate into Staples to get it? (I can buy it online with a lick of proof that I'm enrolled as a student anywhere) You think college students aren't going back to their dorm and installing it on their roommate's PC too? But Office sales went UP after that edition came out... how can that be?!?!?

What about OS X's home pack that lets you install on 5 machines for $199? That strategy doesn't seem to be hurting them at all. It seems like Microsoft's the only OS with a MAJOR piracy problem. And let me tell you... iron-fisted activation schemes aren't going to fix the problem. You think WGA in Vista is ironclad? It will be hacked, it's only a matter of time. This pricing scheme for additional licenses just means it will happen sooner.

A $16 discount? On a $160 product? When I bought one copy already? Ooh, I get 10% off. Big frickin whoop. Target gives me 10% off every week just for the "privilege" of sending me an e-mail. Who do I have to jerk off around here to get a decent discount on another piece of paper allowing me to install this thing?

The Windows Anytime Upgrade infrastructure is already in place. Extend it to allow the purchase of additional licenses. From a programmatic standpoint, it wouldn't be that much bigger of a deal to implement. Look, you guys have some of the smartest minds on the planet working for you. It's not an unsolvable problem. But you have to TRY FIRST. Limit each CD key to 4 additional licenses. Maybe the request is tied to a Windows Live ID account, and maybe they have to all be coming from the same IP address. Maybe the license has to be encrypted on a USB key, and it only has a 24 hour activation window.

I think maybe you guys are busy chasing elusive $100 bills when there is a shitload of $20s right in front of you. Because by your logic, Wal-Mart should have failed because too many people would go there to shop.

Look, Microsoft. I've invested the last 3 years of my life into evangelizing this "Vista" thing. I WANT to see it work. But you just made it infinitely harder for me to convince a family that they need to drop the price of a new computer down to upgrade all of their existing computers to Vista. And this is exactly what I was afraid of two months ago when I brought this up in Redmond. This was argued for the better part of an hour, and it was pretty clear that the Pricing guy we talked to wasn't interested in hearing our opinions anyways, so I'm probably talking to hear myself talk at this point.

I guess Microsoft just doesn't want a piece of that $900 Million in potentially lost revenue after all.

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Comments

  • Rosyna said:
    So much anger....
    August 29, 2006 2:11 AM
  • RevoX said:
    A bit harsh but I do agree with you. Microsoft makes most of their money of Office/Windows sales to companies, consumer market is a small group for them with the highest amount of pirated copies. Dropping the price would mean more sales and less pirated installations it's that simple.
    August 29, 2006 2:47 AM
  • Jason Cox said:
    I have to say I agree as well. Microsoft would of course lose some revenue by dropping the overall price of Windows Vista but in the end they'd make up for it by selling licenses to folks who would normally just pirate Windows or just install it in multiple PCs in violation of the EULA. Making Vista installable on two PCs isnt a bad idea, that'd really shut up the nay-sayers.
    August 29, 2006 8:47 AM
  • davidacoder said:
    I believe the real problem with Windows prices is that MS in all economic terms (maybe not legally) has a monopoly on desktop operating system. So, they set the price and take their monopoly rent home. And that simply sucks.

    I fully agree with you though that even with their monopoly they seem to make a mistake here. Office, on the other hand has learned their lesson. If I understand it correctly, Office 2007 will have a home version that is sort of equivalent to the former student version that just anyone can buy. They don't even pretend that they were only selling it to students.

    I am just wondering whether the problem here is that Vista will mostly be sold as bundled OEM versions. It would indeed be strange if we ended in a situation where someone is buying two new computers and would in that situation not get the discount on the second Vista license... Just wondering. Not sure this is the case, though. Haven't thought through it really :)

    Cheers,
    David
    August 29, 2006 9:03 AM
  • Rosyna & RevoX: Dang right I'm mad! I'm pissed at the fact that it will be unnecessarily harder for working families to upgrade all of their computers to Windows Vista. I'm pissed that the Pricing guy had all these people telling him it was a big problem, and he blew us off cause "it wasn't on his radar." And I'm mad that MS completely blew a clear opportunity to win MAJOR pr points for Vista, as a multi-computer license option would have made huge waves in the mainstream press.

    That, and the fact that a $16 discount is almost insulting when you consider the fact that it's only another piece of paper.
    August 29, 2006 9:07 AM
  • Robert White said:
    so if i pre-buy vista home basic for 199 and get an additional license for 179, totalling 378, i can install vista in february for two computers at home. however, if i buy xp now for 189, and pre-buy the upgrade (99.95) with an additional license (89.95), i pay only .90 more... what a deal!

    and why should the additional license cost more if i pay the regular price instead of the upgrade price? is it to reward all the loyal customers for upgrading to vista despite the fact the new wfs won't be available until after the first service pack? and is their going to be a ntfs to wfs conversion tool, or are they going to send the service pack on a bootable cd?
    August 30, 2006 9:40 AM
  • OpenSource said:
    Microsoft's confusing versioning and expensive licensing scheme is making those of us in the open source community quite happy though.

    People will not be lining up at midnight for Vista. Most users will get it with the purchase of a new computer. In fact, you almost have to wonder if Microsoft priced the OS this way to encourage people to buy it preinstalled on new hardware.

    This looks like quite an opportunity for Open Source and the Mac cult. But having said that I don't expect a massive overnight erosion of marketshare for Microsoft.

    Disclaimer: I didn't intend for this to be flamebait. Really.
    August 30, 2006 2:52 PM
  • Joe Wilcox has a thoughtful version of my "Additional Vista Licenses" rant, minus the "colorful...
    August 31, 2006 11:47 AM
  • Well, Microsoft announced their retail pricing for Windows Vista today (boo to Microsoft for not making...
    September 5, 2006 12:27 PM
  • Well, Microsoft announced their retail pricing for Windows Vista today (boo to Microsoft for not making...
    September 5, 2006 12:28 PM
  • Well, Microsoft announced their retail pricing for Windows Vista today (boo to Microsoft for not making
    September 6, 2006 7:52 AM
  • Well, Microsoft announced their retail pricing for Windows Vista today (boo to Microsoft for not making
    September 8, 2006 6:37 PM
  • Joe Wilcox has a thoughtful version of my " Additional Vista Licenses " rant, minus the " colorful language
    September 8, 2006 6:37 PM
  • Joe Wilcox has a long and interesting post about Windows juxtaposed against the offerings of Web 2.0

    October 8, 2006 3:28 AM
  • Joe Wilcox has a long and interesting post about Windows juxtaposed against the offerings of Web 2.0

    October 8, 2006 4:44 PM
  • holmwood said:

    I totally agree with this. I am amazed that in the 5 years since XP Microsoft has not managed to get their enormous marketing department to figure out that the multiple PC family is a big issue. Personally, my family has 4 PCs. With a good deal from Microsoft I would have upgraded all 4 more or less immediately. Without any support for the family of PCs I'll keep three of them on XP and run them to end of life. I MIGHT upgrade the other one. I'll get Vista when I renew the hardware. MIcrosoft revenue will therefore come to them much later. Then again, when I do replace the hardware I may just consider Macs instead.

    November 7, 2006 6:44 AM