Does Windows 7 Really Cost a Fortune?

Robert X. Cringely – the one who doesn’t write for InfoWorld anymore, not the one who still does – has a post up called “Why Windows 7 Costs So Much.” The piece is not without its obvious flaws – most notably, he keeps saying Apple’s Snow Leopard is $49, when it’s really $29 – but it proposes an interesting theory: that Microsoft intentionally prices Windows so high that upgrading an existing PC looks like a bad deal compared to buying a new one. (Even if Microsoft makes less money on a copy of Windows that’s preinstalled on a PC, sales to manufacturers are ultimately far more important to its bottom line than sales of shrinkwrapped copies of the OS.)

I have my doubts about Cringely’s analysis, which is in the tradition of his too-clever-by-half perspective on all sorts of topics. (Remind me again – has Apple bought Adobe yet?) As one of his commenters says, Microsoft presumably charges what it does for Windows because it’s a software company. (Apple, unlike Microsoft, gets to keep the profit from the whole computer – and it sells only highly profitable computers.) Also, Microsoft has repeatedly cut some Windows prices in recent years – a Windows Vista Home Premium upgrade started at $160 and was reduced to $130, and has now been replaced by the $120 Windows 7 Home Premium upgrade.

Oh, and there’s also the fact that when you factor in inflation, Windows costs less than it did a quarter century ago:

Cringely doesn’t mention the one version of Windows 7 that does seem like it might be intentionally priced out of reach of most folks: Ultimate Edition, which sells for $320 in its full version and which Microsoft keeps explaining probably isn’t for you:

"And certainly there is also a small set of customers who want everything Windows 7 has to offer. So we will continue to have Windows 7 Ultimate edition to meet that specialized need. Windows 7 Ultimate edition is designed for PC enthusiasts who “want it all” and customers who want the security features such as BitLocker found in Windows 7 Enterprise edition."

Anyhow, Windows users, what’s your take? Does Windows 7 seem expensive, cheap, or more or less priced as it should be? Here’s a refresher on the prices of the various versions.