OSNews: http://www.osnews.com/story/22174/OEM_Pricing_for_Windows_50_for_a_1000_PC Exploring the Future of Computing en-us Copyright 2001-2013, David Adams adam+nospam@osnews.com Mon, 20 May 2013 03:30:15 GMT http://www.osnews.com/images/osnews.gif OSNews.com http://www.osnews.com What I've seen... http://www.osnews.com/thread?384428 http://www.osnews.com/thread?384428 I've seen Windows sold in the OEM space for as little as $45, but no lower (not saying it doesn't happen). Even on a few of the $400 machines, the cost of Windows did not change much, if at all, until more negotiating with Microsoft occurred.

Microsoft would dictate (somewhat reasonable) terms for an X-count order of X-priced licenses for X PC-configuration. When a key was issued, the hardware configuration was used to determine the charge for Windows based on agreements between the two companies, with Microsoft reserving the right to verify the configuration with Windows Update ( presumably AFTER the customer purchased the machine, probably just the first time would/could be used to assess a fine to the OEM ).

Of course... reserving a right isn't the same as exploiting it... I doubt many, if any, OEMs with licenses would take the chance.

I may be getting something wrong, I wasn't a part of the process - merely an occasional spectator. I just inferred most of the above given what I knew for certain versus what I overheard... but it seems about right.


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And of course, the general market pricing then makes sense... if Microsoft can dictate some terms to the OEMs, they can control their income by just changing the price of Windows - they can also favor one OEM over the other to grow the market strategically.

The retail market price points are high enough that almost no OEM ( or small upstart ) can get very far without begging Microsoft for mercy. And then, of course, for the idiots that buy Windows at retail, Microsoft makes a killing! All the better :-)

--The loon Wed, 16 Sep 2009 18:32:00 GMT donotreply@osnews.com (looncraz) Comments Comment by AaronD http://www.osnews.com/thread?384434 http://www.osnews.com/thread?384434 I read elsewhere that $50 is the going rate when someone goes through the trouble to get their Microsoft tax back.Edited 2009-09-16 18:50 UTC Wed, 16 Sep 2009 18:49:00 GMT donotreply@osnews.com (AaronD) Comments Strange pricing structure? http://www.osnews.com/thread?384437 http://www.osnews.com/thread?384437 I have never seen the price of OEM software fluctuate with the price of hardware before. Is this common?

I thought OEM software pricing was based on volume, not actual retail price. Although it must be elegant for MS to just say to OEM builders, 'give me 5% of your PC hardware revenue'. Wed, 16 Sep 2009 18:57:00 GMT donotreply@osnews.com (kenji) Comments Microsoft Tax http://www.osnews.com/thread?384444 http://www.osnews.com/thread?384444 I'm sure we've all heard the OEM cost of Windows referred to as the "Microsoft Tax" but the statements of this guy really show that that's exactly what it is. The price of a piece of software (or a condition of allowing it to run) should not be dependent on what kind of hardware it will be running on. As it is with other goods (which software is; it's NOT a service unless it runs on someone else's hardware), I could see volume being a factor for determining price. But show me another good where the manufacturer will give you a break (or jack up the price) if you're using it for one purpose or another (other than charities/non-profits). Wed, 16 Sep 2009 19:12:00 GMT donotreply@osnews.com (jasutton) Comments RE: Comment by AaronD http://www.osnews.com/thread?384445 http://www.osnews.com/thread?384445
when someone goes through the trouble to get their Microsoft tax back.


Ah, the Microsoft tax: http://lucky13linux.wordpress.com/2009/04/13/there-is-no-microsoft-... Wed, 16 Sep 2009 19:14:00 GMT donotreply@osnews.com (rockwell) Comments RE: Strange pricing structure? http://www.osnews.com/thread?384449 http://www.osnews.com/thread?384449 I actually find it a very elegant structure, if it really were as simple as that. I also find it perfectly valid: let's face it, these large OEMs would not push as many machine if they could NOT ship Windows.

Windows is true value for these OEMs provided by Microsoft (from a business point of view), so seeing this as a sort of 5% "tax" doesn't seem too weird to me. Wed, 16 Sep 2009 19:17:00 GMT donotreply@osnews.com (Thom_Holwerda) Comments RE[2]: Strange pricing structure? http://www.osnews.com/thread?384453 http://www.osnews.com/thread?384453 Not to mention Windows (and/or OS X) is a true value for the person who wants a computer that works without having to recompile their kernel to enable an Nvidia driver, or dick around with software updates that break working configurations (wireless on ubuntu).

Which pretty much covers 98.99% of the computing public. Wed, 16 Sep 2009 19:22:00 GMT donotreply@osnews.com (rockwell) Comments RE: Microsoft Tax http://www.osnews.com/thread?384460 http://www.osnews.com/thread?384460 Agreed.

So the MSFT tax is 5%.

At first that does not sound like much, but when you consider to what length OEMs go to replace parts for other parts that cost like 5 cent less it is enormous.

With the new ARM 2GHz Cortex A9 coming I can see a net centric future were Linux (ChromeOS maybe) will be here to stay on devices. Wed, 16 Sep 2009 19:31:00 GMT donotreply@osnews.com (kragil) Comments RE[2]: Microsoft Tax http://www.osnews.com/thread?384469 http://www.osnews.com/thread?384469 Well that new ARM processor would be good, except for the fact that it wont stand up to the Atom 330. Even then, its not a matter of technical capability, its familiarity. People are going to buy what they know. If Harry Homeowner can't find Internet Explorer on his new Ubuntu netbook, chances are, to him, it doesn't have internet. Wed, 16 Sep 2009 20:24:00 GMT donotreply@osnews.com (kryptonianjorel) Comments RE[3]: Strange pricing structure? http://www.osnews.com/thread?384476 http://www.osnews.com/thread?384476
Not to mention Windows (and/or OS X) is a true value for the person who wants a computer that works without having to recompile their kernel to enable an Nvidia driver, or dick around with software updates that break working configurations (wireless on ubuntu).

Which pretty much covers 98.99% of the computing public.


Exactly the opposite experience on my Lenovo S10e netbook. Wireless drivers still do not work correctly, yet Ubuntu 9.04 just works.
In general, now there is less hassle in Ubuntu about drivers than in Windows. Wed, 16 Sep 2009 20:41:00 GMT donotreply@osnews.com (JAlexoid) Comments RE[4]: Strange pricing structure? http://www.osnews.com/thread?384477 http://www.osnews.com/thread?384477 Cheesh.

Hope for as good luck after six months, if nothing else breaks in-between.

I think everyone has heard enough of these

JustWorks(tm)
WorksForMe(tm)
WorksInUbuntu(tm) Wed, 16 Sep 2009 20:48:00 GMT donotreply@osnews.com (strcpy) Comments RE: Microsoft Tax http://www.osnews.com/thread?384481 http://www.osnews.com/thread?384481
The price of a piece of software (or a condition of allowing it to run) should not be dependent on what kind of hardware it will be running on.


Er, why not?

As we say in Finland (and probably elsewhere too), the one who is selling and asking too much is not stupid; the the one who pays the asked price anyway is. Microsoft is not to blame for their pricing policy, it's their software and it's well within their right to charge $1000 for the license if they feel like it. Wed, 16 Sep 2009 20:56:00 GMT donotreply@osnews.com (vivainio) Comments RE[2]: Microsoft Tax http://www.osnews.com/thread?384484 http://www.osnews.com/thread?384484 It is quite ironic that even if the so-called "tax" would be 15 % or 30 %, people eager to leave Windows behind have money to buy thousand dollar Apples. For a normal customer, the so-called "tax" just adds value to the product.

And btw, it is not less ironic that first the devotees rallied for Linux Netbooks, and when consumers did not want those, people started to rally for ARM Netbooks, like those would be somehow more appealing to customers. Wed, 16 Sep 2009 21:02:00 GMT donotreply@osnews.com (strcpy) Comments RE[4]: Strange pricing structure? http://www.osnews.com/thread?384485 http://www.osnews.com/thread?384485

Exactly the opposite experience on my Lenovo S10e netbook. Wireless drivers still do not work correctly, yet Ubuntu 9.04 just works.
In general, now there is less hassle in Ubuntu about drivers than in Windows.


Off topic: it's very annoying that people report success stories with ath5k driver, creating an illusion about it being a decent driver. It's not, it's a piece of cr*p that works quite unreliably (slow, flaky connection) for many users. Probably something to do with noise levels.

I still have to use ndiswrapper on my asus eee 900 / jaunty for this reason. It's nowhere near close enough to motivate me to sell my soul and switch to windows though. Wed, 16 Sep 2009 21:02:00 GMT donotreply@osnews.com (vivainio) Comments RE[3]: Microsoft Tax http://www.osnews.com/thread?384504 http://www.osnews.com/thread?384504
People are going to buy what they know. If Harry Homeowner can't find Internet Explorer on his new Ubuntu netbook, chances are, to him, it doesn't have internet.

I'm sure the advertising will make it clear that you can, in fact, get online. It'll probably say something along the lines of "Firefox for Web browsing." It'll likely have (*GASP!*) an instruction manual or quick-start guide. If Harry Homeowner is really that damn dumb, then hopefully he's smart enough to use a phone and dial tech support, surely he'll find his answer within a decent period of time and be happy.

I know people are idiotic when it comes to computers, but people like you who make a case about IE vs. alternative Web browsers make people look dumber than an old, weathered pile of bricks. In some cases it's true; if so, those people shouldn't even be *buying* a computer in the first place without at least learning the absolute basics. You don't learn to drive a car without also learning such basics as checking/refilling your tires and putting your gas in your tank, do you? Wed, 16 Sep 2009 22:17:00 GMT donotreply@osnews.com (UltraZelda64) Comments RE[3]: Microsoft Tax http://www.osnews.com/thread?384518 http://www.osnews.com/thread?384518
Well that new ARM processor would be good, except for the fact that it wont stand up to the Atom 330. Even then, its not a matter of technical capability, its familiarity. People are going to buy what they know. If Harry Homeowner can't find Internet Explorer on his new Ubuntu netbook, chances are, to him, it doesn't have internet.


However, when Ned Neighbour shows Harry Homeowner a website his new ARM Cortex A9 with Kubuntu bling, Harry will be a bit perplexed and ask ... "but how did you get internet with that thing when it doesn't have the blue e"?

Ned shows Harry the little firefox, and he tells Harry that his ARM Cortex A9 costs half the price, comes with all the software that Harry had to buy as extra, and the battery lasts twice as long per charge.

Harry says "Doh!". Harry buys his wife Wilma a Cortex A9 for her birthday, and she has infintely less trouble with it.

Harry's Windows 7 netbook gets a virus and everything goes wonky, and the store wants $200 to fix it. It was taking five minutes to boot anyway ... so Harry instead buys himself a new ARM netbook with Kubuntu, and gets Wilma to teach him how to use it.Edited 2009-09-16 23:08 UTC Wed, 16 Sep 2009 23:01:00 GMT donotreply@osnews.com (lemur2) Comments RE[4]: Strange pricing structure? http://www.osnews.com/thread?384526 http://www.osnews.com/thread?384526 Yea well the wireless driver in my Vista laptop acts as an anti-virus agent and makes my computer 1000% faster.

Seriously enough with the WorksForME crap. Wireless support isn't as good in Linux as it is in Windows. Unproven, anecdotal forum snipes are not going to change this.

Dell Mini 9 wireless broken from 9.04 update
http://ubuntuforums.org/showthread.php?t=1152063 Wed, 16 Sep 2009 23:38:00 GMT donotreply@osnews.com (nt_jerkface) Comments RE[3]: Microsoft Tax http://www.osnews.com/thread?384527 http://www.osnews.com/thread?384527 It should also be noted that the trialware installed on Windows PCs brings down the OEM license cost.

A lot of anti-virus companies make deals with OEMs whereby they get a cut of any future subscription fees that the customer purchases.

Yea I hate uninstalling all the junk but it does bring the cost down. Wed, 16 Sep 2009 23:42:00 GMT donotreply@osnews.com (nt_jerkface) Comments RE[4]: Microsoft Tax http://www.osnews.com/thread?384532 http://www.osnews.com/thread?384532
However, when Ned Neighbour shows Harry Homeowner a website his new ARM Cortex A9 with Kubuntu bling


Where did Kubuntu come from? Canonical has been pushing Ubuntu for netbooks.

So this is closer to reality:

Ned goes to Best Buy and sees 2 netbooks, one with the new Windows and one with an OS that looks like it is from 1998. And brown.

Ned decides that saving $50 is not worth picking the computer with the unfamiliar interface, especially since it looks dated. Ned decides that he won't go to Chili's later as a way of saving that $50.

Slashdot and OSNews forum posters all come up with theories as to how M|$ is at fault.Edited 2009-09-16 23:58 UTC Wed, 16 Sep 2009 23:57:00 GMT donotreply@osnews.com (nt_jerkface) Comments RE[5]: Microsoft Tax http://www.osnews.com/thread?384535 http://www.osnews.com/thread?384535
Ned goes to Best Buy and sees 2 netbooks, one with the new Windows and one with an OS that looks like it is from 1998. And brown.

Ned decides that saving $50 is not worth picking the computer with the unfamiliar interface, especially since it looks dated. Ned decides that he won't go to Chili's later as a way of saving that $50.


Ned has already got Kubuntu, remember? He was the one who showed it to Harry HomeOwner.

Ned was just about to do as you say, and spend the extra $50 on the Windows 7 netbook, but luckily as he was just about to walk out the store he ran into his geeky friend Garry. Garry geek told him that watch out! that netbook you are about to buy doesn't include any actual applications, its just a shell. It will cost you as much again to get software for it, it isn't just a matter of $50 bucks at all. Garry said that in the little store down the road Ned could get the Cortex A9 with nice Kubuntu bling (not the horrible brown) for $50 bucks less but all software included!

Garry told Ned not to worry about the interface, it was all just clicking on menus and icons exactly like he was used to ... although Ned would have to get used to the new names for things, but what they did was actually listed right there on the menu so it wasn't hard.

Evil Eric, the store owner, wanted to kick geeky Garry out.Edited 2009-09-17 00:41 UTC Thu, 17 Sep 2009 00:38:00 GMT donotreply@osnews.com (lemur2) Comments Comment by smallmj http://www.osnews.com/thread?384536 http://www.osnews.com/thread?384536 I don't think that $50 or 5% is at all unreasonable.

What offends me is that the big boys pay so much less than the corner shops. XP Home costs me more than $100 CDN, and Vista Home Premium with a Windows 7 Upgrade is more than $145.

That is a huge competitive disadvantage for the little guys. Thu, 17 Sep 2009 00:40:00 GMT donotreply@osnews.com (smallmj) Comments RE[4]: Strange pricing structure? http://www.osnews.com/thread?384538 http://www.osnews.com/thread?384538 On some machines that has proven to be very true.

My computer runs BeOS and Ubuntu flawlessly, but Windows XP or Vista have hell getting going ( Windows 7 works as well as Ubuntu, though ).

Haiku also runs very well - though not with my sound card ( without some effort, that is ).

--The loon Thu, 17 Sep 2009 01:09:00 GMT donotreply@osnews.com (looncraz) Comments RE[2]: Comment by AaronD http://www.osnews.com/thread?384549 http://www.osnews.com/thread?384549 Well, that post just basically said that windows is good, not paying retail price for it is good, and you can buy some hardware without an OS, therefore a Microsoft tax is a myth.

I'll be he doesn't believe actual taxes exist as the government uses its revenue collected from citizens to do good things, other countries charge more, and you can move to your own private island to avoid them, therefore taxes are a myth. Thu, 17 Sep 2009 03:26:00 GMT donotreply@osnews.com (Bill Shooter of Bul) Comments Hmmm... http://www.osnews.com/thread?384570 http://www.osnews.com/thread?384570 95% of Windows sales are bundles with new PCs. And Microsoft charges $50 for a $1000 PC bundle.

So why am I asked to pay $200 for the same Windows for my $1000 homebuilt PC?

This -- not Linux being better (which, in some ways, it is, others not), not me railing against The Man (Ballmer) -- is why I'm still running Linux and XP. And will be unless I can get Win7 Pro or better for Thu, 17 Sep 2009 05:53:00 GMT donotreply@osnews.com (coreyography) Comments RE[2]: Microsoft Tax http://www.osnews.com/thread?384601 http://www.osnews.com/thread?384601
Agreed.

So the MSFT tax is 5%.

At first that does not sound like much, but when you consider to what length OEMs go to replace parts for other parts that cost like 5 cent less it is enormous.

With the new ARM 2GHz Cortex A9 coming I can see a net centric future were Linux (ChromeOS maybe) will be here to stay on devices.


And sometimes the decisions are based purely on stupidity too - case in point, why do all the Netbooks either come with Atheros or Broadcom wireless? why isn't there a complete Intel solution which includes Intel wireless which has the best support across the board when it comes to drivers and reliability? What I'd like to see from Intel is them pushing complete Intel solutions (chipset, graphics, wireless, ethernet, processor etc) to OEMs.

Maybe when it is Intel everything then Linux on the netbook will become viable - because right now the ath5k/ath9k are crap and the developers haven't done a single damn thing in the last year to bring it to the same level of feature completeness as the old proprietary hybrid driver. Thu, 17 Sep 2009 09:20:00 GMT donotreply@osnews.com (kaiwai) Comments Users can buy OEM versions too http://www.osnews.com/thread?384628 http://www.osnews.com/thread?384628 I'm not sure how many people realize that. They are sold to system builders but literally anyone can be a system builder. The only difference is that there's absolutely no end user support from Microsoft.

For example in single pack/license + media, Vista Home Premium is $99 at newegg.com and other places. Volume licensing pushes that down toward the cited $50 range. Most people I know and most users at hardware sites never buy the retail version (again, there's no difference besides support). Windows 7 will be priced the same. So I myself will be paying that $100 for the OEM version rather than $200 - $250 for retail. Or opt in to a group buy or contact some local shops who purchase volume licenses for less.

And this funny pricing structure sometimes applies to other software as well. Walk into a retail store and you'd have a choice of a single user license MS Office 2007 Home for about $130 or Pro for about $300.

Yet, you can buy a 3 PC license version online for $109. This used to be relegated to the OEM version of Office but for some reason MS shifted it to the retail version now.Edited 2009-09-17 12:40 UTC Thu, 17 Sep 2009 12:36:00 GMT donotreply@osnews.com (npcomplete) Comments OEM differences http://www.osnews.com/thread?384824 http://www.osnews.com/thread?384824 50$ on a $1000 machine is nothing. But bear in mind small system builders pay significantly more than the big boys.

In the UK, prior to Vista's release, a single OEM copy of XP Home was available from distributors at approx £43+VAT with XP Pro about £10-15 dearer. I think XP Home is currently about £53+VAT; it's still available if you know where to look.

So add in your markup, and you probably want to sell it about £75, which on a £200-£250 base unit, makes it extremely hard to compete with the big boys.

Small wonder that so many rogue outfits existed loading PCs with one dodgy corporate licence. Fri, 18 Sep 2009 13:49:00 GMT donotreply@osnews.com (gavin.mccord) Comments