Microsoft says OEMs pay about $50 for Windows on a $1,000 PC
By Donald Melanson 
posted September 16th 2009 7:07PM
posted September 16th 2009 7:07PM
There's been no shortage of rumors and speculation about how much Microsoft charges OEMs for a copy of Windows over the years, but Microsoft itself has stayed fairly mum on the matter -- until this week, that is. Speaking at the Jefferies Annual Technology Conference, Microsoft exec Charles Songhurst revealed for the first time that the company has "always charged about $50" for a copy of Windows on the average $1,000 PC, or about 5% of the total cost. Songhurst also seems to imply that Microsoft is looking to get about 5% across the board for Windows, meaning that it can rake in some impressive profits on high-end PCs while still being able to offer Windows on the cheap for netbooks or $300 desktops. Songhurst even went so far as to say that cheap PCs are a net benefit for Microsoft so long as they are "not cannibalistic to the total PC demand," and he and unsurprisingly further went on to extol the virtues of Windows 7, saying that it is a "compellingly good product," and that "when Windows is executing well, Microsoft is in good shape."
[Thanks, Sammy]
[Thanks, Sammy]
OMFG, that is a grotesque image. He's never going to live that down eh? He'll be 65, and on the day of his retirement, Engadget will cover the story with that image as the banner. So gross, look at that tongue...
In other news... Microsoft makes 100% of the $400 retail price of Microsoft Office Professional.
yeah god damn microshit...i mean soft.
"Specimen" indeed.
IMPOSSIBLE! that's even cheaper than ULTIMATE STEAL!
Excellent. Now wouldn't it be more excellent if OEMs offered their computers without an OS (or a cost free OS of their choice that I can remove) so that people who don't want to use windows can save themselves $50 and not pad microsoft's pockets every time they buy a PC?
And yes, I understand that the answer is no since the OEM could not load the bloatware it gets paid to load. And yes, I understand that people who want this option are the extreme minority. I'm just sick of the microsoft tax.
What the hell are you talking about? They do sell laptops with no OS installed. Just look online for it.
OEMs that do are few and far between and not on every model. I'd love to get an acer timeline 4810 and I'd gladly eat my words if you found a retailer selling a brand new one without an OS.
Per the EULA of Windows (at least this was the case with 98), you are supposed to be able to get a refund for the software if you return it to the manufacturer without using it. Problem is, most OEMs will give you the runaround on this until you have wasted more effort then it is worth.
The Linux community organized a Windows Refund Day back in 99 over this. http://marc.merlins.org/linux/refundday/
Point taken. You will not find 4810 specifically, but you have can find ones that are comparable in specs. On the upside.... it's only $50! It's not that hard to shop around and find one to cover the cost.
yes, they get paid to load it, lowering the cost of the computer by a LOT. im sorry, but without Windows the machine is going to cost a lot more than it is WITH Windows.
they dont sell macs, they sell hackintoshes.
apple has sued them before, but unfortunately its gotten nowhere
apparently the company thought that its the same logic as
"honda telling you which road to drive their cars on"'
i think they were only required to pay about 5000 as of yet though,
but the case is resuming in January?
ahh, that one was my fault, not engadget comment system :(
it was supposed to be in the psystar thread
to make up for it here's an on topic post
i dont think microsoft pays OEMS to put windows,
a company doesnt get 77 billion in assets by giving money away.
dell has tried selling linux before and it just wasnt very profitable for them.
Over here you can get OEM (from big brands too) without windows I understand, but that's the EU.
It's still $100 or more for people building themselves though (unless they have internet of course).
Why would they piss off 95%+ people who buy their computers by making them pay more for Windows? The person who buys a computer, erases Windows, then installs their favorite flavor of Linux is extremely rare.
Our you could just build your own desktop or laptop to some degree. Then you could select ever component that went into the desktop and load what ever flavor of OS you want. If you don't like what the OEMs are building or selling on them, do it yourself or contract a custom builder to do it for you.
If it costs more to have it custom built to the same specs without an OS than it is to buy an off the shelf OEM box with Windows an wipe it, you then have to ask yourself whats more important your pocketbook or your principles?
That picture is pretty funny haha
Nice to know how much the big boys can undercut the corner shop guys.
My costs are more like $89 for Vista Home Premium (No Win7 Upgrade), $146 for Vista Home Premium with Win7 upgrade, and $102 for XP Home. Those are Canadian dollars, but there's not much difference these days.
Mark
Ballmer with a good head of hair - I think he'd approve of this picture
Win 7 FTW!
OEMs pay a ratio? I figured it would be a set amount. I'm sure the 0-1000 PC market is a lot bigger than the 1000+ PC market.
No, it's a flat rate. He was simply observing that for a $1000 PC it's 5% of the cost.
so basically the OEMS are gouging PC buyers....
Seems like a fair deal, especially those who purchase netbooks can get a great OS. It's basically Microsoft setting a sales tax for PCs to use their OS.
Hey can we get spiteful photoshops of Jobs too?
Sure, just not on Engadget is all.
Go crazy http://gizmodo.com/379483/the-steve-jobs-photoshop-gallery-of-good-evil-and-awkwardness
This is no secret, actually big computer companies get most of their profit from selling software and peripherals. I'm a business analyst and I've seen some numbers. But don't worry guys, most of the time when you buy a cheap computer from HP, Acer, etc... the hardware is sold on negative margin, they get most of the profit from windows, office, antivirus, and other services.
Well played, MS. $50 on the $1000 desktop is more than reasonable. Less than $20 on a $300 netbook is much lower than I thought it would be.
YO MICROSOFT I'M HAPPY FOR YOU, IMMA LET YOU FINISH, BUT APPL--
ahhh screw it i can't even finish it.
Of course, the OEM better keep on Microsoft's good side. "Ooh, better not do that. We'd hate for you to ...lose that $50 OEM deal we give you. Why, you'd have so much trouble competing with the other OEMs."
Microsoft Tax
what!?, no there's only an Apple Tax, my ears lie - say it ain't so Uncle Bill
I don't know why some of you guys are bitchin about this. It cost the consumer $200 to purchase a full OS.
Great!
When are they going to stop screwing enthusiasts who build their own PCs with $100+ OEM copy when I am building a $500 PC.
it's called bit torrent or Linux - pick one
"..while still being able to offer Windows on the cheap for netbooks..."
It helps that the Windows XP ULCPC license available to this machines is even less. (Possibly as low as $15)
Does that mean I can pick not to have Windows installed in my next computer???
Of course not. Unless you pick from a limited subset of slightly inferior models or buy a Mac.
Yep, just make one.
You know this is why some people i know pirate windows ...
it isnt right to have to pay 200+ per license when oems can pay 1/4 of that.
now if the retail versions came with some actual support then that would be one thing. but I have 8 full retail copies of xp and I tried to get support about something 1 time and they wanted to charge me 250 just to talk to me. ... BITE me MS.
I don't understand why people are complaining about a $50 license fee, that's pretty fricken cheap IMO...
Then WHY THE H*** do non-OEM's have to pay (@$&*& $199-$319 for a desktop OS.
Don't give me that "because MS has to support it BS.
I don't want ANY support except standard Windows updates and service packs. Can I pay $50 for Windows 7 please?
The $50 is for the basic OS; i.e. Vista Home Premium OEM which you can get from NewEgg for $109. Dell and other OEMs get a break since they buy tens of thousands of copies and pay in one shot. You can get a break too if you agree to purchase, say, 100,000 copies and pay up front.
With a $ sign that low, they should offer all of the units without an OS. Some of us already have a few laying around.
i love the linux and xp kooks that always show up in the microsoft article's comment sections ... both Linux and Win XP after the release of Windows 7 do not matter any more ... netbooks will be windows 7 based going forward ... and only your 486sx in you mom's basement you still live in after 30 years will have your Linux :)
What the hell are you talking about? Apple did have other PC makers out there cloning Mac systems when Jobs was booted from the company. It totally paralyzed the company and Jobs came back from Next and they've havent recovered much ground since. I think what you mean to say is, let Apple try to do what Microsoft does, support 100's of thousands of x86 machines, and own 92% of the OS market. It's extremely easy to do what Apple does, force its choices down our throats.
So thats why OEMs use crappy PSUs and proprietary Mobos, so you have to buy a new one, therefor buying a new windows. Its Microsofts schemes.
Ahh the good old M$ Tax....
$50 would be the majority of the hardware manufactures profit, no wonder the hardrives are full of crapware...
It is easy to see why manufactures are looking to move away from the M$ Windows monopoly tax.
Can't wait for Chrome and Android to give PC buyers OS choice!
the $50 PC tax that I didn't ask for and didn't want
The only downside to this is the control MS has on holding back certain technologies from certain OS platforms.
The reason why netbooks have had crap hardware for the last 2 years was Microsoft's random arbitrary spec saying your netbook cannot be sold with XP if it's processor is > x ect ect.
Remember that Netbook that had hybrid storage? SSD for bootup/swap and HDD for large file storage? Made a big difference in performance, but then MS put the whammy down and threatened to punish the OEM for releasing the netbook. I don't buy into the whole evil empire thing, but the idea that a software manu can influence the hardware offerings of one of it's own distributors is a little scary. I could see if it was being released with specs that didn't meet the minimum, as it would be detrimental the the public image..
But seriously... how can anyone say it's anything else but a move to push higher Vista margin's when MS says "Hey, that netbook is too fast to be using XP, we don't want people to have a perfectly working XP computer, either make it mediocre or put Vista on it."
I don't know, I like MS and their products, but there is no way they should be able to exercise such tight control of the hardware development and release cycles of the OEM computer makers. We have been stuck with junk single core Atoms for so long. The technology is out there, but no one will use it.
Windows 7 cannot come soon enough.