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December 17, 2007 1:23 PM

Leopard Is All in the Family



Apple's "family pack" strategy has paid off big time with Mac OS X 10.5, or Leopard. Microsoft should take notes and apply some of the lessons to Windows Vista.

[Editor's Note: This week, we will post several retail sales stories, as part of our end-of-year wrap. This is the second one.]

This morning, NPD provided Leopard sales figures. (I had asked for them very late Friday afternoon.) One data point really stands out: The percentage of family packs sold during Leopard's first month of sales.

Mac OS X 10.5 Family Pack accounted for about one-third of Leopard retail sales during the product's first month in market. Apple released Leopard at the end of October. Apple sells a single desktop version of Mac OS X, which is available for $129; a family pack for up to five PCs in the same home sells for $199.

Chris Swenson, NPD's director of Software Industry Analysis, regards the family pack as Apple's alternative to upgrades. Apple offers no upgrade pricing for new Mac versions. "If one has multiple Macs in their household, the family pack is a very attractive offer for those looking to upgrade," Swenson said.

Apple's approach is quite different from Microsoft's. Windows upgrade pricing encourages many consumers to spend less for the operating system. Apple's approach is to get honest users to pay more. End users get more value—five licenses for the price of two—and Apple gets more money per consumer. Apple's benefit is bigger with Leopard than previous Mac OS X versions.

Ma OS X Family Pack Sales

"The increase in the ratio of family pack sales is having an impact on ASPs [average selling prices]," Swenson said. In November, the ASP for Leopard was $144.30, compared with $128.50 for Tiger about six months earlier. "Also contributing to the growth in ASPs was the apparently smaller number of retailers offering substantial rebates/discounts on the OS during the launch," Swenson added.

Microsoft offered its first real family pack with Windows Vista. Microsoft's idea of discount: The consumer pays for Windows Vista Ultimate and gets up to two more Home Premium versions for $50 each. Microsoft discontinued the family discount in June.

"Given the success that Apple has enjoyed with family packs, I do find it surprising that Microsoft has curtailed its family pack pricing," Swenson said.

I criticized Microsoft's approach from the start. Microsoft's approach failed to realistically account for the number of U.S. multiple-PC households or the large number of home PCs with hardware inadequate to run Vista. A more sensible approach: Offer Windows Basic for free with a higher-priced Home Premium SKU, or even two or three Premium "upgrades" for the price of the full version.

Something else different about Apple's strategy compared with Microsoft's: Trust. Apple uses no activation or validation processes. Apple's anti-piracy mechanism is trust. Maybe that strategy is working for Apple. The family pack has increasingly grown as a percentage of Mac OS X sales, all based on end users' willingness to pay more and do the right thing. There is no compulsion, as they could easily pay for one copy and install it on more than one Mac.

On Friday, my Office 2007 failed validation, meaning that Microsoft marked my copy as counterfeit. Later on, a Microsoft diagnostic utility mysteriously fixed the problem. Fixed or not, the validation failure was a bad customer experience. Microsoft's approach is presumption of guilt. Apple's approach presumes customers will be honest.

Leopard's Big Leap
More broadly, Leopard's retail sales start was much better than Windows Vista's.

When comparing the first full month of sales, "Dollar volume for Leopard is up 32.8 percent and unit volume is up 20.5 when compared to Tiger dollars and units," Swenson said. Leopard's first-month sales was November and Tiger's was May 2005.

As I blogged in February, Vista unit sales decreased 58.9 percent in units compared with Windows XP during their respective launch weeks, while revenue decreased 32.1 percent, according to NPD.

Leopard got off to a much better start than Vista, but there are mitigating factors worth considering:

  • First-month sales comparisons favor Apple. Vista launched during one of the slowest sales periods of the year, while Windows XP launched right before the busy holidays. By comparison, Tiger launched during a slower sales period of the year, while Leopard got out during one of the busiest times.
  • The number of stores carrying Mac software significantly increased between May 2005 and November 2007.
  • The number of people owning Macs also greatly increased during the same time period, meaning there are more people to buy a new Mac OS version.

"It's really stunning to see Apple have one blowout OS launch after another," Swenson said. Maybe, but for our readers that want to lambaste Vista in the comments, Microsoft is by no means down and out. But that's topic for another post.

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Comments (22)

evan :

Joe, you are comparing apples and oranges. If Microsoft offered only DSP/OEM versions of Windows (cause essentialy that's what Leopard is),then you could compare if Apple relies on consumers trust for licensing and Microsoft on Activation software.

As far as Leopard numbers are concerned. The relative percentages do not show the whole picture. In absolute terms Microsoft has sold more Vista copies in a month than the entire Apple installation base.And that is not my statistic...
Family packs are a good idea though...

Paul :

It would be nice to see AAPL's family pricing for Vista, but that's really not valid since they [effectively] charge for service packs and you've often already paid a premium for the hardware. Plus, they don't have to worry about channel conflict by underpricing their partners.

My biggest beef isn't the pricing of Vista per se, but the bundle choices. If fax/scan and full backup wasn't omitted from Home Premium, it would be a reasonably-priced choice. But w/o that, you're forced into ridiculously priced retail Ultimate (or OEM for less but locked to a machine), or searching for 3rd party solutions that may or may not add more cost.

repugnant :

I like Joe's idea, as I think Windows will become a less expensive piece of software in the future. Linux is free, so basically, and Operating Software is becoming just another commodity.

Odd. I didnt think Leopard was a DSP/OEM operating system. Nor a service pack. Its a full 64-bit operating system.

Nor do I consider £1200 for a MacBook Pro - the fastest Vista laptop remember - a premium. Especially after being gouged £4500 for a top of the range Dell XPS Gen-2.

Granted £600 is steep for an entry level laptop - but given that the low-level PC superstore £300 specials run Vista, and have (IMHO) questionable build quality - well, you get what you pay for.

Premium ? Old Story. Get a new one

I think the reason that Leopard sold so well is that Apple, whilst considered expensive, puts out quality operating system upgrades on a frequent basis.

Whilst I use the world Quality - some people got burned installing Tiger on the first day, and suffered. Less people got burned with Leopard - I certainly had issues with parallels, but NOTHING in comparison with my previous 20+ years living with Microsoft. So lots of folks - me included - upgraded their machines on day of Leopard. No problems.

Lastly, here in the UK, the Leopard 5-pack was £125 - slightly above exchange rate ($2/£1) - its nowhere near the $400 -> £400 craziness that MS charges for Vista. Lets see. If I had three XP machines, and wanted Vista Ultimae for them all - because lets face it, who wants to buy anything with bits missing - I'd be £1200. Instead of £125. Woops.

Premium ? Apple ? Ah. Think again.

So lets see. I needed a new laptop this year - and after *two months* beating my head against Vista, chose Leopard.

Most of my work revolves around using development tools (C, C++, VB, Java, Web - the whole 9 yards) that are currently windows-only - so I rely on Parallels and VMWare. Does this sound crazy ? Perhaps.

But at the end of the day, I have a new, rock solid, beautiful operating system that didnt cost the earth, and doesnt come infested with the Vista DRM. Nor did I want to buy a new laptop, and install a six year old operating system.

So I got a Mac. Loved it so much, that I got macs for my college-bound daughter and the wife. They all love them.

Note. *love*. Not *tolerate*. "Put up with". "Suffer". Emotions I associate with Windows. Sorry.

Why the surprise ?

MS lost the trust of the development community a long time ago - around the .net fiasco. Sentiment against office - and especially Office 2007 and its huge learning curve - is rising. And MS is now left with Vista - a year on from manufacturing, and deeply mistrusted - even hated - by consumers and IT professionals alike.

Linux is squeezing windows from the bottom, and medium to large scale unix machines are squeezing from the top. The two factors driving this is security and reliablilty.

*dons flame proof garments*

MS have shown themselves time and time again incapable of delivering on either.

(Before we start crowing about 30+ days uptime, remember that mid-range systems stay up for *years*. Hell, I had a novell server that ran for 365+ days at a time - in 1993! And I know of one with 6 *years* continuous uptime. )

Now that IT has been identified as a major greenhouse gas contributor, and companies are put under pressure to consolidate expensive server farms, this trend will accelerate. Where is windows server 2008 ?

Oh. Late beta. So thats not going to get market acceptance till SP1 - sometime in late '08 or '09. Another boat has sailed, leaving MS behind.

What is left for MS ? The Zune ?

Glad I'm not an MS Shareholder anymore.

---* Bill

mgo :

Joe wrote:
"On Friday, my Office 2007 failed validation, meaning that Microsoft marked my copy as counterfeit. Later on, a Microsoft diagnostic utility mysteriously fixed the problem. Fixed or not, the validation failure was a bad customer experience. Microsoft's approach is presumption of guilt. Apple's approach presumes customers will be honest."

Companies like Microsoft and Sony (of the infamous rootkit disaster) need to be verbally and publically flogged by everybody possible when they mistreat their customers.

These companies should also be punished in the most effective way possible; by withholding out dollars until they are humbled to the point that they treat us like customers, rather than suspects.

whatever :

The pragmatic licensing and pricing of OS X, iLife and iWork is very smart. It is very nice to see that Apple's trust with the family pack is paying off more for them...
Remember, Paul, the trust factor there is that you could pay $129 and stick it on every machine in the house rather than $199 for the family pack.

As for the lack of activation, it's of course a lot easier to not include these mechanisms when the software and hardware are bound together; but that's one of the perks of their strategy.

Personally Apple have done the right thing by me so far, so i feel compelled to do the right thing by them.

Wes McGee :

I'd go more dramatic. Just get rid of WGA completely, and sell the full retail package as though it was a family license... allow multiple installs with a key. (Only flag it if say 100 or more computers try to activate with one key in a very short time span.) Obviously, Microsoft hasn't been able to get WGA to work, nor do they even care to make it "fail-safe".

Marco :

The 15 Biggest Tech Disappointments of 2007
#1. No Wow, No How: Windows Vista
No wonder so many users are clinging to XP like shipwrecked sailors to a life raft, while others who made the upgrade are switching back. And when the fastest Vista notebook PC World has ever tested is an Apple MacBook Pro, there's something deeply wrong with the universe.

We have no doubt Vista will come to dominate the PC landscape, if only because it will become increasingly hard to buy a new machine that doesn't have it pre-installed. And that's disappointing in its own right.
ww.pcworld.com/article/id,140583-page,5-c,techindustrytrends/article.html
-----------
We have no doubt.....
Maybe,but something is beginning.

George :

"And when the fastest Vista notebook PC World has ever tested is an Apple MacBook Pro, there's something deeply wrong with the universe."

I'd say something is finally right with the Universe. And Mr Buchan, thanks for correctly pointing out the truly unbelievable cost difference when upgrading a multi computer family.

If more businesses would apply critical thinking to their OS choice, true needs and costs, Assurance and it's associated costs could be a thing of the past.

Neil :

I got this from neowin.
"Apple Incorporated has released 31 new security-related fixes for both Tiger and Leopard; most of them were geared toward Mac OS X 10.4 as 10.5 was not always affected by the vulnerabilities. The flaws ranged from serious (meaning remote attackers could execute malicious code on an unpatched Mac) to mild (visiting a certain website could crash a given application). Mac programs affected include Address Book, iChat, Mail, Safari, among others."

I think that Apple's OSX just got caught out, and this shows how good Apple is, all those people saying that OSX was better than Windows, well this shows that it isn't !
It's the same as any other OS, and I await the time when Linux shows it's weaknesses as well.
No OS is completely safe as it is made by man, therefore there will always be something wrong with all of them.
It will not be totally secure until an OS is made by computers itself ! With no intervention by man then all access to the OS is secured.
Surely the "Super Computers" like "Big Blue" can do this.

whatever :

Hi again Neil,
Absolutely agree! Anyone who chooses OS X or Linux because of a supposed lack of vulns is kidding themselves.
As for a lack or lesser amount of viruses, that's a bonus that comes along with the reduced choice in software apps in general... either way I wouldn't recommend anyone make a buying decision based on that.

MS is as good or better at addressing sec issues these days as Apple is. As for Linux I really don't know enough to judge but would imagine MS performs comparably well.

Beyond perceived security there's plenty of other factors to make a decision on, where each respective platform is measurably better than the other. Performance, scalability, security architecture (eg trusted extensions, general granularity, etc), usability, power management, portability, centalised management, configurability/flexibility, and another thousand things that don't come to mind.

If someone has the spare time to map the big OSes out measurably on those type of mostly tangible factors I'd be VERY interested... :-)

chips :

Quote;
Neil;
"!
It's the same as any other OS, and I await the time when Linux shows it's weaknesses as well."
---------------------------------------------------
You been waiting a long time already Neil. Why not admit you don't know what you are talking about, just like your linux antivirus program for servers that scanned for windows email viruses?

Also, vulnerabilities are not the actual exploit. It take some sort of a malware program to be written and released into the wild to exploit the vulnerability, before you have the problem. Mac releases patches before this happens. While patches are not a great thing, as many people will not patch their OS (take windows for example). Mac come out with an OS at closer intervals than Microsoft does. 5 years between XP and Vista. Linux is even closer, about a 6 month cycles for many distros.

ger :

Humm let me see I want to write malware. Do I target billions of people (windows) millions of people (mac) or maybe few thousands?
I wonder if malware writers are like other software writers. If I want someone to use it or if I want to get my name on the blogs then I target the biggest animal and get the biggest game.
If I hit a few thousand will I get a press release compared to hitting millions and to hit the target no one likes to begin with? Everyone likes to see the press release when MS gets more pie in the face.

ger :

Tell me where the reward is for wasting time on writing a Linux malware compared to writing on for Windows.
en.wikipedia.org/wiki/List_of_Linux_computer_viruses

Neil. Come on.

OS/x, linux, AIX, Solaris, HP/ux. What do they have in common ? A decent BSD/Linux/System 5 style kernel, and protected memory spaces. A *secure* kernel. One where a rogue process cannot affect other processes.

(Fourth year CS students at Edinburgh University had to write a pre-emtive multi-tasking operating system that could deal with this as part of their course. In 1985... 27 years ago...)

Something that XP failed miserably on. And judging by the anti-virus industry - still fails miserably.

(I still recall with some horror the Nimda/d virus sweeping through a bank in the City, and the only remedy to stop it leaping from machine to machine was to switch off the network routers. I sincerely hope its got better since *then*. Nor do I recall ever having to do that with Macs, Linux, or recent [Morris's worm aside] Unix machines)

For instance - multiple instances of a server product in any other operating systems than windows - no worries. One server can crash, nothing else is affected. Windows-land ? No. Shared DLL space, etc. Nasty. And you want me to consolidate servers on *that*? Perhaps server 2008 will be better. Lets talk about it in 2010.

Now granted windows has got better. Now for instance, MS has got into the anti-spyware game, and will merrily charge you money for protecting their leaky operating system. So who gets paid for writing bugs ? Is it good enough ?

Put it this way. Would you run windows machines without virus scanning ? Would you risk your career on that ? No ?

Still not good enough then, is it.

Still. Here's a test. Get a bare, unprotected non-firewalled ADSL Line. Connect a linux machine - say Ubuntu 7.10, OS/X leopard, and windows XP. You might even try Vista. See how long before they're infected... No service packs, just straight out of the box default settings. Pretend your Mom+Pop user just back from the computer store.

XP - about 20 minutes ? Ouch.

OS/X ? Never ? Ubunto ? Perhaps never ? Vista ? I dunno.

So theres some crowing over some security fixes on Leopard. Oh behave. All software manufacturers release software and security updates. No doubt youd crow if Apple *didnt* release any.

Attempting to take pot shots any any non-microsoft operating system over security really doesnt work.

Get back to fighting on 'We have more users than you' or 'Bill Gates has great taste in haircuts'. Or just parrot the MS press releases.

---* Bill

Neil :

Talking about weaknesses....
Another News report from Neowin says...
"Canonical has disclosed a security vulnerability that affects various versions, including the latest version 7.10, of its Linux distribution, as well as corresponding versions of Kubuntu, Edubuntu, and Xubuntu. The flaw occurs because Samba, an application which provides seamless file and print services to SMB/CIFS clients, does not correctly check the size of reply packets to mailslot requests. It is therefore possible for a remote attacker to execute malicious code by sending a specially crafted domain logon packet, assuming that domain logon is enabled on the server. Thankfully, it is disabled by default in Ubuntu and upgrading libsmbclient as well as samba to the latest versions for the OS fixes the issue.

Update: Several members have noted in the comments that this is, in fact, not a vulnerability limited to Ubuntu, but is a problem with samba itself. We recommend keeping up to date, no matter what distribution you are using."

Hello HACKERS !!!

whatever :

Bill,

Just to be anal - Windows' kernel generally does separate processes very well and has protected memory that works as safely as BSD, XNU, Linux.

Something where windows is "unique" as far as i understand is that windows is somewhat inefficient in swapping between processes; hence the use of the generic svchost helper process with multiple threads per what should actually be individual processes which of course means they share memory and all sorts of whacky problems can ensue.

Secondly windows allowed an option of "process can interact with the desktop", which is/was a spectacularly bad idea... :)

Please correct me if i'm wrong or if there's other significant differences that i've overlooked.

whatever :

self-correction - i meant "service can interact with the desktop" rather than process...

Thomas :

The first poster is also comparing apples and oranges. Yes, on paper, Vista sales totally overshadow Leopard sales. But this is because Vista ships pre-loaded on new PCs, often whether the purchaser wants it or not.

People are buying Leopard because they WANT to.

whatever :

Leopard ships pre-loaded on all new Macs whether someone wants it or would prefer Tiger..

That said i'd hazard a guess and say lots of people want Leopard. I've used it for a little while now and personally i *love* it!

Pierre M :

Another anti-piracy feature of Mac Leopard, iLife or iWork is price. At 79$ (iWork, iLife) or 129$ (Leopard, good for one or two years!) you don't cheat, you just get it and pay. At 200$+ Vista upgrade, or 300$+ Office upgrade for zillion of features I don't use, I don't buy, you switch.

Steve :

Joe,

I am a Leopard family pack buyer and you are right on target. I'll pay extra even though I could get away with installing Leopard on the extra machines. Microsoft on the other hand leaves me feeling raped every time I buy their product. I am a long time MS user who is transitioning to Mac.

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