Windows Price Increases
When Microsoft was on trial for monopolizing the PC operating system market, one of Microsoft's claims was that Windows had not really increased in price. Such a claim at that time was true because Windows 95 cost no more than the combined cost of DOS and Windows 3.x. An Original Equipment Manufacturer (OEM) version of Windows 95 can be found for about $40. The Windows Me full OEM version advertised at pricewatch.com runs around $80. OEM versions are sold typically preinstalled on new PCs. The OEM software copyright holders require that hardware (sometimes specific hardware) be purchased with their OEM products. The End User License Agreement is a contract between the user of the software and the copyright holder of the software product. By purchasing OEM software, you assure that you are acquiring any qualifying hardware required by the software copyright holder. To purchase OEM software, you agree to comply with the terms of the End User License Agreement and to purchase (or intend to purchase) any qualifying hardware required.
Retail versions of software have no such hardware restrictions, and may be installed on any hardware. The Windows Me retail version costs about $125 versus Microsoft's $199 list price. The Windows XP Home Edition full retail version costs around $170. The retail XP Home Edition list price is $220. The Windows XP Professional retail version costs $190, which is much less than Microsoft's $320 list price. This comparison just shows that the newer Microsoft Windows operating systems have increased in price. If an annual license fee becomes mandatory, that price increase will become much larger.
Each of these factors by itself does not increase the cost of ownership and operation of Microsoft software significantly. In combination, they are tipping the scales toward competing software and networking products. Let me illustrate.