Software

Opinion: Resellers can suffer from Windows 7's high price

By Wayne Small
Oct 28, 2009 6:00 AM
Tags: microsoft

Is Microsoft overcharging Australian customers for Windows 7?

Many people know that I'm a pretty big fan of Microsoft in general. However, one thing that I have never been able to understand nor justify is the massive price differences between Microsoft US pricing and the Australian pricing.

For instance in the US you can get an upgrade to Windows 7 Ultimate for US$229, whereas here in Australia the price is near double that at $430. Sure, there will be discounts around and I've seen them for the mid-$300 mark, but how can Microsoft justify such a massive price difference, particularly when the Aussie dollar is doing so strongly?

I can understand that importing products will need to deal with exchange rates. But the Windows 7 upgrade is downloaded not imported, so why isn't there a direct dollar conversion from the US dollar? Microsoft's outdated attitude stands in contrast to hardware vendors such as HP which adjust their pricing with exchange rate fluctuations. How do we as resellers justify this to our clients?

This has been going on for years now with things like the Microsoft Action Pack. It costs US$299 in the US but here it's $699. The local Microsoft team have recently lowered that price with the option of a digital download, but that was after much blood, sweat and tears exchanged between the community and a few hard working individuals within Microsoft. I certainly give them kudos for that.

I don't blame the local Microsoft people; I'm sure they are doing what they can with the structure they have, but respectfully I think things really need to change.

Read the various blogs and community forums over the past few days and you will see a host
of people in the community asking, "Why should I buy it here in Australia when I can get it cheaper on Amazon?"

Ultimately it is our customers who pay. Or more precisely they choose NOT to pay and defer the purchase of upgrades until the next PC purchase. This has a flow-on effect in deferring valuable services revenues from our business as well.

While the cost of the software is not the only component, it is an important part of the customer's perception. Aussies tend to shy away from corporates that "rip off" the little guy and I've had customers express that concern to me on multiple occasions.

The question is what will Microsoft do about it? What should they do?

By: Wayne Small, SBS MVP, SBSfaq.com

Opinion: Resellers can suffer from Windows 7's high price

18 comments in this discussion

"Hi Mikem, people who bought win 95, 98 [blank] (not Me - we never wanted it) XP, wanted it, it had a low footprint and we could upgrade our O/S based on the min spec of the hardware - xp runs on a ..."

By plhau98

Interview: How to sell Google and Microsoft together

Microsoft call to drop EBS “like a bombshell”

Opinion: “Myopic” Microsoft lost in the cloud

Microsoft targets cloud partners with BPOS incentives

Breaking Stories

SME opportunities in Feds' 15-year data centre plan

Ingram appoints general manager for POS division

Microsoft is desperate, says VMware MD

IBM enlists 200 channel partners for LotusLive

Tandberg adds to desktop telepresence portfolio with EX90

Comments: 18

Thoughts on this article? Add a comment below.

spook1958 Oct 28, 2009 9:50 AM	What will they do? Nothing. What should they do? Change it. They are one of the quickest suppliers to increase pricing when the Aussie Dollar falls, but when the dollar increases, not a peep. They seem to fail to understand that HOW they do business is part of how they are perceived by resellers and customers alike. They are an easy company to dislike and sometimes they seem to work hard on making sure that happens. If piracy increases many fold, maybe they will then reward it with lowering price like they did with China. Its like Telstra and mobile phones, the people that have to be won across to Telstra get the deals and the existing clients get nothing until they move away, then the Telstra offers come flooding in :) How do you get a company the size of Microsoft to play fair?
BrettWinterford Oct 28, 2009 10:39 AM	A brave column from a man that's had a great career working with Microsoft technologies. If this is how the Microsoft faithful feel about the price, I shudder to think what consumers will think when they weigh up their purchasing decision. I for one will give Microsoft a big shiny medal if they see how senseless this is and drop Windows 7 prices in Australia ASAP.
LAJ Oct 28, 2009 11:45 AM	This is a common question, one which has been asked since NT 4 workstation was released at a similar price. Vista did not help. We had ridiulous market segmentation with arbitary and questionable deliniations between products. For the first time in 18 years I am loosing customers to Apple. Whether you like the product or not, their pricing is better and there are only two products, a desktop and a server version. Windows 7 does to some extent sort out the crappy mess that was Vista but not enough. People will buy Windows 7, they will migrate painfully from XP. They may even put up with the nonsense of having to crossgrade through various versions of Vista to get to the 7 version they want to be on. But because Apple won with the Eyephone and Itunes Store and because the computer is at the point where is it almost a commodity, more people will head of for an Apple Computer Appliance. They don't really care that Apple will treat them badly or design environmentally questionable devices in fact they seem to revel in it. But MS will loose market share. They are the only one from whom share can be gleaned. Whilst it is sad, I am a great fan of MS and not at all a fan of Apple, something needs to kick the behemoth in the behind.
plhau98 Oct 28, 2009 11:54 AM	If you want to buy Microsoft products, you do. The fundamental thing here is that Microsoft is a profit making company. They will charge what the market will bear. The only way they will reduce the price of software is if their sales decline, and their market share is lost. Australia is a very small part of their business. We can complain about the high cost of software, but we can only act by sticking with xp, and let 7 sit on the shelves. No-one will do this. The hype engine has sold 7 to the masses, and they will want it, regardless of cost. The parts of 7 that fix Vista must make it a worthwhile upgrade or new box deployment, and end users will see the benefits of doing it. the mindset of cost being most important will damage a few resellers, I have never worried about the price, as I include the products as a part of the whole solution I am proposing. if you want to stick with commodity selling, you make nothing on product, and someone else is making money on the services you could be providing. Maybe what the channel needs to look at is to change the focus from products, and start looking at services, with product being a required part of the services business, but not the most important part.
chrispro Oct 28, 2009 1:12 PM	I agree with most of what has been said here. Microsoft charge the price because they can - they are a law unto themselves. At the end of the day it can all be summed up quite simply - MS just doesn't care.
cootified Oct 28, 2009 1:32 PM	Can I dare say I think it is time to migrate to a Mac? Microsoft users like whinging alot but the dont really do anything about it. Leaving comments on news articles will not pursuade Microsoft to do anything. On the other hand, not buying their products will.
plhau98 Oct 28, 2009 3:54 PM	cootified wrote: Can I dare say I think it is time to migrate to a Mac? Microsoft users like whinging alot but the dont really do anything about it. Leaving comments on news articles will not pursuade Microsoft to do anything. On the other hand, not buying their products will. what happens when there is a legacy product that you need that isn't covered by the MacOS? you will need to run Bootcamp or parallels, and install, wait for it, windows. and pay the high price for windows 7. and the problems for a win user going to a mac don't stop there, what about office for the mac? the current office is only just caught up to 2007, and, with the upcoming release of 2010, is there a new version for the apple platform? Apple is more expensive than Dell, HP, lenovo, etc. The apple costing model seems to be based on quality, not quantity. the costs associated with dumping the pc platform and migrating aren't a good argument for apple. If the user has specific requirements, speed, ease of use, etc, Apple is great. but their price point isn't.
plhau98 Oct 31, 2009 5:05 AM	The biggest perceived problem that win7 has is the upgrade path. This is the single most problematic issue for resellers. Imagine having to explain to a licensing customer that they will need to buy vista box, not license to sort out the first step in upgrading, from XP. price will factor less in the scheme of things...
BrettWinterford Oct 31, 2009 9:27 AM	A great point plhau98. How are you guys explaining the upgrade situation to customers? What do they respond well to?
natecochrane Nov 4, 2009 5:09 PM	A big issue is the upgrade path from XP to Windows 7. This is the path most will take since Vista was such a non-starter.
spook1958 Nov 10, 2009 1:10 PM	I want to sell a client a notebook. Pretty basic stuff for a retailer. It gets hairy when the client wants Windows 7 on it. Okay, no problem, Windows 7 is now the OS of choice and it has been released. Client chooses an MSI Notebook, no problem until I try and get that notebook with Windows 7. There is an upgrade path which has to be followed. It takes a week and involves sending the barcode to MSI. Okay, I don't have a week, s I get the distributor to send the barcode to MSI to reduce the time. 2 weeks later, multiple phone calls, the barcode still hasn't been processed by MSI. Now I have been sent a link of the steps the End User has to go through to get a Disc of the upgrade from Microsoft. Its too hard for them. They want to buy a notebook with Windows 7 on it, not jump through stupid hoops. Months of preperation for the release of Windows 7 and it comes down to making the client jump through hoops instead of selling what the client wants to buy.
plhau98 Nov 10, 2009 3:09 PM	we all know that the end users expect everything to be rosy when they buy a computer, and it isn't the vendor who gets the blame, it is the reseller. It is not unreasonable to expect the latest OS on a new system, but we are seeing multiple instances where the end user is very disappointed. and they don't get win 7 for a couple of weeks.
spook1958 Nov 11, 2009 11:55 AM	We are told MSI is still several weeks away from supplying notebooks with Windows 7 natively installed, why? We all knew clients would not want Vista the day the alternative was released. A lot of the logjam over these upgrades has been Microsoft apparently, but some manufacturers have handled it better than others. The other item I don't understand is that the same model notebook when released with Windows 7 native, will cost $150.00 more than the same model with Vista, makes no sense. I had to take the only option available for me that comes close to customer service, I had to buy an OEM Windows 7 to install on the Notebook for the client. MS wins as usual, selling 2 OSs for designing a poor upgrade path, I do twice the work for less return and the poor client gets his notebook with Windows 7, but 2 weeks later than he wanted. Fortunately I don't deal in low margins, so I can put the client first.
pmc777 Nov 16, 2009 10:53 AM	spook1958 Microsoft always has much to answer for but I don't think it is fair to blame them for this unfortunate situation. I believe some manufacturers have been caught out with too much vista stock hence they have been slow to release their Win7 systems and perhaps are going to convert some Vista built systems to Win7 which might explain the extra charge.
spook1958 Nov 16, 2009 5:18 PM	I agree pmc777 with the cost increase and the lack of availability, that makes sense. But MS has made the decision that the upgrade CD has to come direct from them and that is what is creating the worst delays for the end user. Previous upgrades, that hasn't been the case. Ian
plhau98 Nov 19, 2009 11:29 AM	this is why we are seeing a resurgence in the use of linux or Mac in the enterprise. these O/S's are stable, and you can pay far less for the commercial version with 12-months subscription for maintenance than you do for win7. the mac OS is cheaper. why? because with the expansion of these other platforms, the vendors can gain better share, and margin creep on other required products, virtualisation, productivity and entertainment. It is an example of a rush to market to gain marketshare. Win7 is worth having, it covers off some issues that vista introduced, including better memory and resource management, but as there is a greater number of people "out in the wild" using XP, there is limited paths for upgrade, buy a new PC / Notebook with win7 preinstalled, or a full version of 7 for the upgrade path... not cheap, and impossible to ensure file and data integrity when you do a vanilla install.
mikem Nov 20, 2009 9:09 AM	plhau98 - i think you are wrong ("If you want to buy Microsoft products, you do. ") I have about 20 workstations / laptops at the business and home, all on xp except for 2 Vista. XP is a 7 year old OS. I would like to upgrade the newer hardware to Windows 7 BUT I won't pay the ridiculous price MS want in Australia for an upgrade. (Compare with Apple's upgrade price) A couple of users only use their PC for email and web interface to a database application. I tried them out with Ubuntu (after changing the screen colour to blue etc to make it look more familiar), and after a short time they seem just as happy with it as they were with Windows. For me, MS have priced themselves out of the market. I would sooner buy Apple now.
plhau98 Nov 24, 2009 5:48 PM	Hi Mikem, people who bought win 95, 98 [blank] (not Me - we never wanted it) XP, wanted it, it had a low footprint and we could upgrade our O/S based on the min spec of the hardware - xp runs on a duron 850, with 384mb ram, and a 20gbh hdd. I know, as that is the spec of my oldest system. Vista killed the market - it was expensive, in some cases, more than the apps we wanted to run on it. So people stuck with XP. I did. I had no Vista systems, I was appalled to have to upgrade my hardware to cope with min spec for vista. When win 7 came out, Microsoft had the chance to claw back all of the market they lost to linux and mac. But with a difficult upgrade path from XP, the momentum was lost. it will run on low specs, but how do you keep all of your settings, especially with a vanilla (formatted drive ) install? it is a shame. win 7 is a nice os, there are features tailored to each segment. re linux flavors, SuSe or openSuSe from Novell looks and feels like win. Redhat does the same... The idea of pcs running win or linux in a business environment is great if you want the overheads of hardware, perhaps a refresh to thin client terminals and a server to handle them would be a better solution for some small businesses? Now I am the proud owner of a MacBook Pro, with Bootcamp, with win7 and mac OS X Snow leopard... it is grunty, it is fast, and I can do all I need on it. and it will probably last for another 7 years.