posted by Thom Holwerda on Fri 3rd Jul 2009 11:27 UTC
IconWhenever we talk about Mac clone makers such as Psystar, we all more or less accept as a fact that Apple is selling copies of its Mac OS X operating system at a price lower than it would have been if Apple did not have a hardware business. Even though we treat this statement as fact - recently, I've been wondering: where is the proof?

It seems like the most solid bit of "proof" that we have in this story comes from comparing the price of Mac OS X to that of Windows. In general, a full retail copy of Windows will set you back round and about 200-300 USD, depending on the version (Home Premium vs. Professional), while a full retail copy of Mac OS X will go for 129USD.

From this information, people conclude that therefore, Apple must be subsidising the difference in price between Windows and Mac OS X via sales of its hardware. While this may seem like a logical conclusion, there is absolutely no reason to assume that Windows' pricing is, in fact, the baseline; it could very well be that Mac OS X' price is the baseline, with Microsoft just being really really overpricing Windows in the retail space.

In fact, if you compare the prices of both Windows and Mac OS X to that of other pieces of complicated software, both Windows and Mac OS X are relatively cheap at retail. If you look at the retail pricing for Photohops CS4 in the US, the full version sets you back 699 USD, while the upgrade goes for 199 USD.

The problem here, of course, is that we have no idea how much time and money goes into developing software like Windows, Mac OS X, or Photoshop. You can easily argue that more time and development goes into a typical Windows release, simply because Windows requires a lot (preferably in bold, italics, and underlined) more testing before it goes out the door, because it has to work with infinitely more hardware combinations than Mac OS X. This is just a baseless assumption though, and I'm sure you can make such assumptions going either way.

Another very important point in this discussion is that Windows' retail pricing is relatively irrelevant. What matters are OEM prices, since more than 95% of Windows licenses are sold via OEM. If you look at these prices, Windows is actually cheaper than or as expensive as Mac OS X; volume OEM pricing is reported to lie around 25-30 USD per license, while individual OEM copies go for 100-139 USD, which is similar to that of Mac OS X. With Windows' prime market being OEM, and most of that volume OEM, it makes sense to assume that Microsoft is still making a profit on these lower prices.

Seen in that light, there is absolutely no reason to assume that simply because Mac OS X retail is cheaper than Windows retail, Mac OS X must be subsidised by Apple's hardware sales.

Why is it important to want proof for the subsidy argument? Well, it just so happens that many Apple fanatics claim that Psystar is ripping off Apple by re-selling copies of Mac OS X. They claim that because Apple is subsidising the retail copies of Mac OS X, re-selling them without also buying or having bought Apple hardware, they are ripping off Apple.

This argument from Apple fans could very well be true - don't get me wrong - but I would like to see some proof. Where does this claim originate from? Is it based on anything? Any financial information from Apple? Anything...?

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