Microsoft has revealed that, for a $1000 PC, it has always charged the OEM about $50, or five percent, for Windows.
At the Jefferies Annual Technology Conference, Charles Songhurst, general manager of Corporate Strategy at Microsoft, answered a rather long onslaught of questions about where Redmond is heading. At one point, Songhurst started talking about how investors were asking Microsoft what its standpoint was on the “skewing PC price point” (i.e. “the netbook effect”). Songhurst explained that it was more interesting to look at “the growth merchandise volume of all PCs sold” despite the “emergence of a lot more segmented SKUs.” In other words, he believes that although the price range for the PC is widening, the market is still growing, and that’s all that matters to Microsoft.
Songhurst went on to reveal a number that Microsoft has made a point not to disclose to the general public: how much it charges OEMs for Windows. “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.
“So that’s five percent. 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,” Songhurst continued. At first, we asked ourselves if Microsoft would really be happy to get $5 for Windows on a $100 PC but of course we quickly remembered that there really aren’t $100 PCs yet, so that really wasn’t a fair number to work with. Given that a PC can easily range between $300 to $3,000 nowadays, the five percent of $15 to $150 easily covers all the lower-end price speculation that we’ve seen in recent years. Next >>
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