Price War: Snow Leopard vs Windows 7

Apple announced at WWDC 2009 that their latest operating system (Snow Leopard) will be released in September.  Exciting right?  It gets better.  What’s the price you ask? $29.  I’m not kidding.  It will be a $29 upgrade from Leopard.  That’s much less than the cost of $129 to upgrade to Leopard from Tiger.  How can Apple afford to price Snow Leopard so low?  It’s quite simple.  Apple isn’t a software company (they really never were).

What do I mean Apple isn’t a software company?  Yes, they have an operating system, but, they are more like Dell or HP than they are Microsoft.  Apple is a computer and electronics company who have developed their own operating system which runs on their devices.  Most of Apple’s revenue doesn’t come from selling software – it comes from selling hardware.  The Mac Pro’s, iMac’s, Macbook’s, Macbook Pro’s, Macbook Air’s, Mac Mini’s, iPhone’s, iPod’s, Time Capsules, Air Ports, and Apple TV’s are where all their revenues come from.

This is where Apple has an advantage on Microsoft (who is a software company).  Microsoft cannot afford to bring their prices that low.  While they are definitely making an attempt to offer an initial low price during a pre-sale there is no way you can expect those prices to remain forever.  You think Apple cares if you run Windows on your Mac?  Not in the slightest.  That’s not where their money is made.  Microsoft on the other hand cannot offer the same option because they may very well lose their main revenue stream (selling software).