Redmond, Start Your Pricing Guns

One of the most exciting aspects of the WWDC keynote announcements was the pricing of Snow Leopard at $29 and a five-pack family pricing of $49. I’ve purchased every version of Mac OS X for $129 since the original 10.0 (except 10.1 obviously), only occasionally catching a break due to buying new Macintoshes.

Every version was worth it, mind you, but it still felt like an ongoing cost of owning a Mac. (I must here disclaim any sense of entitlement: I know that previous versions of Mac OS X continue to work after the new ones come out and I have taken that route for non-essential computers. This feeling arose from my inner cheapskate more than any sense of deserving something for nothing.) Every new version required a careful calculation of benefits and review of features for ancillary machines.

But I don’t have to think twice at a $29 (or $49) price point. On this point, David Pogue has it right. But his reasons for the pricing barely scratch the surface. I paraphrase his four listed reasons as follows:

  1. This release doesn’t have enough features to justify $129.
  2. They want to get this out to a lot of people.
  3. They want to embarrass Microsoft with this ridiculous value of the release.
  4. The lower the price, the likelihood that people won’t even blink at upgrading.

There’s a lot more to it than that, though. 10.6 requires an Intel machine. If you’ve got an Intel machine already, it’s likely that you’ve running 10.5 and that you’d gladly pay $29 to recover 6 GB of space much less for a slew of new features. If you’re running Tiger on an Intel machine, you have to shell out $169 for the Mac OS X Box Set. And if you’re not using an Intel machine, you cannot upgrade to 10.6 (and presumably any future releases either). So this release cycle effectively communicates to those still on Tiger or the PowerPC platform that their days of being supported by Apple are nearly over.

Finally, if 10.6 is truly laying the groundwork for future plans, then Apple has an interest in having as many developers making use of its new technologies as possible. But historically developers will not migrate to these new systems until a critical mass of users have made the move: supporting two disparate versions of a feature is expensive for small developers and they won’t do it unless there’s a absolutely compelling reason. Pricing 10.6 at this level will induce a substantial number of consumers to upgrade. On the iPhone, I can imagine that 3.0-only applications will come about soon because the upgrade friction is minimal there.

With a solid base of applications using 10.6 features, Apple can sell future hardware in a way that Microsoft-based vendors cannot. With the gigahertz arms race faded, hardware vendors are competing on multiple cores, multiple CPUs, and RAM. But consumers quickly discover that all of this extra hardware encounters diminishing returns on the software that they use—either the software can’t make use of memory above 4GB or these extra cores are mostly idle. 10.6’s promise is that it makes using these hardware features seamless to the developer through mechanisms like Grand Central Dispatch, OpenCL, and completing the transition to 64-bit.

These strike me as more substantive reasons for the pricing than Pogue’s facile ones. I believe 10.7 will resume the $129 price cycle as people catch up to the Intel/Leopard transition and Apple wants the third-party applications to be there waiting to sell the hardware’s value.

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