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Exchange Rates Spell High Prices for Windows 7 In the EU
CWmike writes "European customers will pay up to twice as much for Windows 7 compared with US users, even though the new operating system will ship without a browser in Europe. Some of the money Microsoft stands to make on the European editions of Windows 7 comes from the weak dollar. Last week, for instance, the dollar fell against the euro the most in a month, hitting $1.41 per euro. For example, Windows 7 Professional, the key retail edition for businesses, will sport a price tag of 285 euros, or $400.60, and £189.99, or $313.84, at Saturday's exchange rate. In other words, EU customers will pay twice the $199.99 U.S. price; U.K. buyers will pay 57% more. And depending on your view on bundling IE, Europe's customers will be paying more for less, with Microsoft's decision to yank IE8 from Windows 7 in an effort to head off EU antitrust regulators, who may still force the company to take more drastic measures."
If the Euro has more buying power than the dollar (lets say it's double for ease of math), wouldn't the price of something be $10 in the US and €5 in Europe?
Interestingly enough, when the dollar was strong against the Euro (e.g. 1 Euro = 0.8 US$), we did not have the reverse effect. At that time in Europe, Prices of goods from the US were just increased.
If you don't like the price, then don't buy it.
Don't pirate it either. Use something else.
But don't pirate it. If you do, you're doing what Microsoft considers "the next best thing" - ignoring alternatives. Alternatives scare the piss out of Microsoft. Back when Microsoft didn't have a stranglehold on the market, people were happy enough pirating 95 and 98, while ignoring things like BeOS and OS/2 (both competitively priced and more powerful) and it suited Microsoft and Bill Gates just fine.^1 Both OS/2 and BeOS are gone from the market because of piracy's market distortion.
Hopefully Windows 7 will come with an even more strict WGA and OGA to extract more pain from consumers. Maybe they'll wake up.
--
BMO
1. Of course, Microsoft executives prefer that people buy, but theft can build market share more quickly, as company co-founder and Chairman Bill Gates acknowledged in an unguarded moment in 1998.
"Although about 3 million computers get sold every year in China, people don't pay for the software. Someday they will, though," Gates told an audience at the University of Washington. "And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade." http://articles.latimes.com/2006/apr/09/business/fi-micropiracy9
In IT and a few other industries they dont bother with complicated things like exchange rates so :
$199 == £199 == â199
the result of this is that we get really ripped off on some products.
How does that even work? If the USD is low, shouldn't that make american products cheaper?
The usual answer is "customers want a stable price for software, we don't bother tracking the exchange rate on a day by day basis." In the EU they have fixed prices in euros, pounds whatever.
A weak dollar means the nominal dollar price is higher. They could price lower but they are not in the business of selling at cost+n%, they are business of pricing at whatever the local market will bear. That doesn't change much with the exchange rate.
Simple:
How do you think they'll make pay the EU for the fines? By making windows more expensive!
Occam's razor does apply here.
Easy peasy.
Cheers,