By releasing its operating system more often and at a slightly higher cost, Apple Computer is better able to maximize its profitability in the OS field compared with its rival, Microsoft. That conclusion is according to a new analysis released Aug. 28 by Gene Munster, a senior researcher at Minneapolis-based Piper Jaffray & Co.
Microsoft, on the other hand, averages a little more than two years between releases of its Windows operating system. The average cost to users for a full upgrade is $114 or $48 for an upgrade.
If I want to buy a retail Windows XP Pro CD it will cost me about 300 € and the last version of windows clients (XP) was released 5 years ago.
(assuming he talks about windows client versions due to the upgrade prices he announces)
That kind of journalism deserves no respect.
Edited 2006-08-28 18:50
“If I want to buy a retail … ”
On the other hand, for the same price you can buy a complete PC with Windows Home on it.
http://www1.euro.dell.com/content/products/features.aspx/dimen_3100…
Edited 2006-08-28 18:52
On the other hand, for the same price you can buy a complete PC with Windows Home on it.
Sure, but the author worte the full retail price of OS X and not the fulle retail price od woindows XP this a bit biased I think.
Since 2001, Apple, of Cupertino, Calif., has released a new version of its operating system about once a year. These new versions cost users either $129 for the full version or $107 for an upgrade.
This makes his argument completely sound as he compares the $107 for the Mac OS X upgrade to the $48 price tag for the average Windows upgrade (from e.g. W2K –> XP)…
You don’t have to be a math wiz to notice the $59 difference…
But then you don’t purchase an upgrade when you buy OS X. There is no “upgrade”. What you are buying is a brand new copy of the OS. You can legally use the old copy on another computer is you desire.
“But then you don’t purchase an upgrade when you buy OS X. There is no “upgrade”. What you are buying is a brand new copy of the OS. You can legally use the old copy on another computer is you desire.
Wrong.
Apple only sells upgrades of its OS. Each shiny box you buy contains an upgrade for an install you already have. Since Mac OS X can only be installed on a Apple computer and all Apple computers are sold with MacOS/Mac OS X pre-installed, your licence is, in effect, an upgrade licence. The same applies pretty much for iLife, since this is pre-installed on all recent Apple computers.
However, the above is pretty much moot, since no registration/activation is required, in any case.
It may be a surprise to you, but each shiny box contains a complete version of OS X. Apple doesn’t sell upgrades, only new full versions of the system, Jaguar, Panther, Tiger. You’ll never see a CD with an intermediary version, like 10.2.3 or 10.4.6, except with a new Mac. Other than that, all upgrades are free and done online.
I don’t know where the author took that figure of $107 for an upgrade. What I have seen is a free new version if you had just bought your Mac when the new version is out, or a discount in certain circumstances.
The same goes for iLife and iWork. No upgrades, only full versions, no intermediary versions.
The policy is different for Mac OS X Server, where you can sign a three years maintenance contract that includes all upgrades, including major upgrades, that is to say new version releases of the system.
You couldn’t be more wrong. If you buy a new Mac you have the latest version of OS X installed. There is no “upgrade” box of OS X. When a new version comes out you pay the same price whether you are installing it over on older installation or as a brand new install. You do not have to have a previous version of OS X on the system and you do not have to prove you own a previous version. All boxed versions of OS X are stand alone disks. You can boot and install it on any Mac capable of running it.
You can upgrade a previous version with the disks, but you do not have to. I repeat, the boxed set you buy is not a “upgrade” disk. With Windows you have either an upgrade or full install set of disks. The former requires proof of a previous version the latter acts the same os the boxed OS X set.
Home is worthless.
Thats an average over the entire life of the OS, not just XP.
OS upgrades are always about cosmetics anyway. Yes, a new OS of the same family may and indeed should have quite a few new features or better performance, but when is it an update, or an upgrade, or really a new OS?
What is called a new OS by one firm might be called an update or “Service Pack” by another. As we lack any standard to determine that, it’s only interesting to the marketing people.
It’s all about finding the perfect balance between squeezing as much money out of people and in the same time letting them feel they bought something new and big enough. A fascinating job for proprietary OS marketeers, in fact.
So Apple is better at that? Or MS is just worse at it, their MediaCenter edition was a failure. XP with support for a TV card and remote control, not enough people cared.
Fedora Core 6 is coming soon, I might upgrade from FC5 if it won’t cost me too much…
time.
“their MediaCenter edition was a failure”
Not in the real world.
Have you been in a store that sells computers these days? Half have Media Center on them.
Admittedly, this is from last year …
http://www.pcworld.com/article/id,122539-page,1/article.html
“As a result, Media Center PCs made up 40 percent of the total retail desktop market in August, up from 32 percent in July and just 15 percent in June”
Edited 2006-08-28 21:22
I’ve been trying to recover the link where I read that for MS, the XP MediaCenter Edition was not a success, financially. So far I couldn’t find it.
But I mean, even if MediaCenter made up 40% or whatever % of the PC market that has Windows installed on it as OEM anyway, then one Windows version would eat market share of another.
So where’s the profit?
And I can’t imagine many people acquiring MediaCenter as a retail version to upgrade their XP Home or something. They’d buy it with the PC (which has a TV card and a remote control).
or they would not.
“But I mean, even if MediaCenter made up 40% or whatever % of the PC market that has Windows installed on it as OEM anyway, then one Windows version would eat market share of another.
So where’s the profit?”
I think the 97% market share for Windows is partially explained by the existence of Media Center 2005 which has been a huge success. If Microsoft had left that market alone, others might have filled it.
A good reason to upgrade to Vista is that most versions have the Media Center features in them.
Much like Front Row on my Macbook.
I agree. If I jump on apple.com, OSX is $129. From newegg, an upgrade of XP Pro is $199 – full is $279.
An upgrade of XP Home is still $99, which is double what the article quotes.
Let’s also not forget that you can get 5 licenses of OSX for $199, it’s not unreasonable to have three (or more) computers in a house these days.
Then we have:
“Microsoft, on the other hand, averages a little more than two years between releases of its Windows operating system.”
Well that’s very nice as an average over the past decade or so, but in case they’ve been living under a rock, it’s been FIVE years since the last release. That says a lot more about when you’d expect Vista+1 than the time between Windows 98 & 2000 – they’re not averaging two years _now_.
I don’t know where they’re getting their numbers from, but it must be some sort of strange analyst planet that doesn’t work quite the same as this one.
Windows becomes an even bigger bargain when you factor in support. Apple stopped security support of older versions of OS X already, while XP Pro will be supported for 2 years after Vista is released, with another 3 years of security updates after that.
So, for XP Pro, thats 7 years of support for all updates, and 10 years for security updates.
What a bargain in terms of cost per year for a consumer or business.
Most Linux distros (and OS X) end support after 12-24 months forcing you to upgrade.
Edited 2006-08-28 21:43
Bargain for consumer or business? Is it a bragain when a business factors in Antivirus, antispyware, constant windows technical support and including virus outbreaks (because Norton crapped up yet again)?
I’d wager that owning a Mac is cheaper in the long run, even if you have to upgrade OS once in two years.
10.3 is still supported, and it was released in 2003, which isn’t too bad for a fast moving OS (5 releases in the timespan of Vista), and it’s not yet clear if 10.3 support will stop when Leopard comes out. It might not.
Most Linux distros (…) end support after 12-24 months forcing you to upgrade.
This is just great, the person who wrote the above is using this statement to claim Windows is “a bargain.”
For your information, most Linux users upgrade every year or less anyway because so much great new software’s out and they’d rather have the distromakers compile say, the latest Gnome, instead of doing it themselves.
And what a pain it is indeed to be “forced to upgrade”, especially if you’re part of the majority of Linux users, i.e. the Debian family (Ubuntu). There, a full system upgrade is vrtually automatic. And I’m talking apt-get dist-upgrade here. Unthinkable in any proprietary OS.
For those RPM-distro users who think upgrading every two to three years is a hassle, I admit… they have to download a DVD / a few CDs and then upgrade. That’ll cost them maybe one €1 DVD-R or a couple CDs at €0,50 each, plus a few hours for the download. Hours which they don’t necessarily have to spend staring at their screen.
Boy, will they feel taken for a ride.
Most Linux distros (…) end support after 12-24 months forcing you to upgrade.
This is surprising, since this statement is used to claim Windows is “a bargain.”
For your information, most Linux users upgrade every year or less anyway because so much great new software’s out and they’d rather have the distromakers compile say, the latest Gnome, instead of doing it themselves.
And what a pain it is indeed to be “forced to upgrade”, especially if you’re part of the majority of Linux users, i.e. the Debian family (Ubuntu). There, a full system upgrade is vrtually automatic. And I’m talking apt-get dist-upgrade here. Unthinkable in any proprietary OS.
For those RPM-distro users who think upgrading every two to three years is a hassle, I admit… they have to download a DVD / a few CDs and then upgrade. That’ll cost them maybe one €1 DVD-R or a couple CDs at €0,50 each, plus a few hours for the download. Hours which they don’t necessarily have to spend staring at their screen.
So I think Linux users are much better off.
“For your information, most Linux users upgrade every year or less anyway … ”
Thanks for pointing out an excellent reason why running Linux as a business desktop is a drain on IT department resources.
The K12 organization I work for has about 3000 desktops. I don’t want our techs to have to visit them annually to install a new version!
If you had read on a little, you might have noticed me saying that with Debian, a full system upgrade only requires typing a few words in the terminal, and a connection to Debian’s server.
And I don’t think RHEL or SLED are yearly upgraded by RedHat or Novell, or that such an upgrade will be forced upon anyone. Enterprise Linux has a longer support cycle, obviously, than “home user” free Linux.
No resource drain then, quite the opposite.
If only corporations weren’t so conservative and bureaucratic, they’d be surprised how good the Linux desktop is.
While the effort required to upgrade a Debian distribution is minimal, it is important to many (especially companies) to know that they don’t “have” to upgrade unless “they” want to. Because, every once in a while, the upgrade goes wrong and you end up either with some third party software not working or some hardware failing. This is one of the reasons, Windows has been more acceptable in many companies. Which is also why, Canonical has LTS (Long Term Support) attached prominently to the Ubuntu 6.06. Companies do not necessarily need to the latest Gnome features. Rather they often dread that if they roll out the latest Gnome, they will need to re-train people about where is what, for instance. Also, in many places, e.g. our university, the IT dept spends a few months testing each upgrade to see if all internal softwares are compatible with upgrades. Constant upgrades does add to the workload and we were to shift to the regular six month Ubuntu cycle, we will never reccomend an upgrade because by the time we finished testing one, the next version would be out. Not the same for my home system, I need the latest KDE every six months to Kubuntu it is. 🙂
Owns and advocates the purchase of AAPL shares. It has a target of 103 (currently AAPL is at 66.98) for the end of the year. They frequently bring out predictions of the iPhone, a media center Mac, and of course the “one terabyte iPod” by 2015. They also frequently play down Microsoft’s competitiveness, with a practical dismissal of Zune because the iPod will obtain wireless functionality in the fall of 2006, and that Leopard “will be seen as superior to Windows Vista and boost Apple’s growing market share.”
The portrayal of the analysis in this article is vague, since it isn’t clear what “averages a little more than two years between releases of its Windows operating system” and “average cost to users for a full upgrade is $114 or $48 for an upgrade” actually refer to. What are we talking, Windows 1.0 to Windows Media Center Edition 2005? And what “cost per user” are we referring to, retail prices or are we including the cost per unit preinstalled on the computers people purchase? It’s gibberish and neither figure is especially useful for determining who is better-capitalizing on their operating system. Apple sells more updates of its operating system, and Microsoft sells a vastly greater volume of copies of its operating systems. Apple’s May filing shows that “software, service, and other sales” amount to 7.4% of their net sales. This figure includes sales due to AppleCare, OS X, .Mac, and its other software. If we wanted to say anything meaningful about the value of OS X we would consider that it sells all of the hardware Apple ships, but that doesn’t really do anything to bolster the claim that Apple’s frequent updates result in a better showing than Microsoft’s performance with its operating system.
(For the sake of disclosure, though I am not offering any sort of investment advice, I should mention that I currently own shares of AAPL)
Microsoft is a lot better value than Apple, especially if you consider what application each provide access to. I own a second hand Apple and although it’s nice, I don’t think it’s worth the premium.
Linux beats both. More new features, quicker release cycles and lower cost, with a near complete application coverage for home users. OK that was off topic.
Edited 2006-08-28 23:14
>Microsoft is a lot better value than Apple, especially if you consider what application each provide access to. I own a second hand Apple and although it’s nice, I don’t think it’s worth the premium.
Linux beats both. More new features, quicker release cycles and lower cost, with a near complete application coverage for home users. OK that was off topic.<
I think it is really a preference thing, I thought the same thing as you till very recently, and that was even as an apple owner. I run linux and FreeBSD on all my home desktops and have a Macbook Pro that runs OS-X.
There are tons of nice apps for OS-X but the most known ones are expensive. I am here to tell you all that there are tons of really fricking sweet free apps (not beer) for OS-X. Check out http://coolosxapps.net/ , you will find all sorts of useful and really cool apps, and most of them are free for unlimited use.
I
Linux beats both. More new features, quicker release cycles and lower cost, with a near complete application coverage for home users.
Very funny to see this kind of comment. How can linux have more new features and quickly as they are all ripped from Windows and Mac OS X …
“Microsoft is a lot better value than Apple, especially if you consider what application each provide access to.”
I just don’t know how you figure that. I run both OS X and XP Pro here and I have to tell you that you can’t be very productive with XP unless you spend a lot of money for applications. The included software that MS provides is about as basic as it gets.
OTH the software that comes with OS X allows you to do most everything the average home user needs to do. And as another poster mentioned there is a lot of free software and also a lot of inexpensive software for OS X.
If you want low cost then you run Linux where if you have a little knowledge you can get by very cheaply.
Sorry, I was not talking about bundled applications. But XP opens the door to 100% of possible PC software in existence. Not saying that that software is free or even cheap.
OSX and Linux (more so for linux) have gaps in the home and (let alone pro) user coverage for niche use.
Obviously this guy missed the article about Vista prices being posted for a short time in Canada. I would also have to say he did not do his homework.
How about: “Microsoft Better than Apple at Maximizing OS Marketshare?”
By maximizing marketshare, instead of profit margin, msft now controls the entire desktop market. Because msft sets the standard, msft always wins.
The only reason msft lets apple exist, is so msft can say that msft is not a monolopy. Why do you think msft loaned apple all that money seven or eight years ago?
They already have so many guaranteed unit sales thanks to preloads that they can afford to be a little slack on the price. Look at the company’s cash flow over the past 10 years…
If they are only counting ‘home use’ then it might make sense but if they are talking about profitability across the entire line then they really haven’t researched anything.
Claiming that one company has better profitability based purely on how often releases come out is only one part of the picture, what about enterprise licensing and new system sales which also drive that profitability?
Seems like a pretty short article without much thought behind the reasoning.