Microsoft has been very protective over its OEM pricing, and while various figures float around the web, the company has never really confirmed or denied any of them. At the Jefferies Annual Technology Conference, however, Charles Songhurst, general manager of Corporate Strategy, revealed some of the pricing details for OEMs.
According to Songhurst, the 1000 USD PC price point has been more or less the benchmark forthe past decade, and at that price point, Microsoft charges about 50 USD per Windows copy. “If you think of the $1,000 PC, which has kind of been the benchmark for the last decade or so, then we’ve always charged about $50 for the copy of Windows for that PC,” Songhurst revealed.
He further detailed that the 5% price point is what Microsoft is striving for. “So that’s five percent,” he states, “So if you think about charging $100, $200 or if you think about a super high-end PC, you know the Sony Vaios or anything that’s there for around the $1000 mark, or the Alienware PCs that are even higher, if we can get that constant percentage then we should be indifferent to the number five points in the market.”
If we look at the numbers, Windows PCs probably cover a price spectrum with 300 USD at the low end, and 3000 at the top end. This means that Microsoft charges anywhere between 15 and 150 USD for an OEM copy of Windows, and even with netbooks becoming more popular, this price range should cover the company well enough. More than 95% of Windows licenses come pre-installed, so they make up more than the bulk of Window sales.
It also reveals that Windows pricing is far less insane than we sometimes think it is. While I still believe that the retail pricing of Windows 7 is nothing short of insane, it is somewhat good to know that 95% of the people get Windows at a saner price point.
Songhurst specifically addressed netbooks too, and how they possibly impact Microsoft’s bottom line. He argues that netbooks are generally bought by people who already own other computers, and that people who only buy a netbook probably weren’t going to buy a “full” PC anyway. “So as long as they [cheap PCs] are not cannibalistic to the total PC demand. We don’t think they will be because we don’t think the value of the PC is decreasing. We think that the net’s beneficial to us,” he explains.