Why Microsoft loves so many flavors?

A lot of people are either perplexed, amused or just totally annoyed with the dozens of flavors of several major Microsoft products. It could be some weird voodoo, a shrewd business strategy or a complicated marketing gimmick, nobody really knows except the guys over at Redmond.

Just look at Microsoft Office 2007 and all of its 8 versions – Basic, Home & Student, Standard, Small Business, Professional, Ultimate, Professional Plus, and Enterprise. The difference between each of these versions vary in the number of included core applications — Word, Excel, Powerpoint, Outlook, Accounting Express, Publisher, Access, InfoPath, Groove, OneNote and Communicator. These editions grew from 2 versions in Office 95 to eight for Office 2007. At this rate, we’re looking at 16 versions by 2019. *heh*

Then look at how Microsoft packaged their new OS, Windows Vista. A world record of six (6) editions – Starter, Home Basic, Home Premium, Business, Enterprise, Ultimate – each one priced accordingly from $199PHP 11,678INR 16,865EUR 190CNY 1,448 to $399PHP 23,416INR 33,815EUR 380CNY 2,904.

Why all these editions? Why can’t they just stick with one? Let me venture into some ideas:

• Huge market share. Microsoft holds the largest market share of all commercial and free operating systems. Apple’s OS X is just 7.3% according to latest stats so they can comfortably settle with just one OS flavor. Microsoft still holds around 91% of the market. A market with varying degrees of users from home users to enterprise users, thus the need to segmentize the captured market.
• Variable pricing. Having a huge market also means that the purchasing capacity of your consumers have a very wide gap. This allows Microsoft to charge double for corporate than for students, and Microsoft knows companies will still buy the more expensive versions.
• Computing power. CPU speeds, memory and drive space are becoming bigger, faster and cheaper. Still, some segments of the market will have the low-end CPU and others the high-end. The various editions can easily adapt to those differences in computing power.
• Productivity needs. This applies more with the Office suites. The variable pricing also means Microsoft can give more features, core applications to its Enterprise users compared to its home users.
• Support levels. Charging the high-end users more allows Microsoft to allocate the extra income to provide enterprise-level support to its high-end users. Basically, the extra price of the more expensive editions already has support cost factored in.
• Partnerships. Microsoft also has to put into consideration their huge list of industry partners — hardware manufacturers, software developers, and others.

I think Microsoft is sticking with its age-old proven formula – bundling. Why sell products or applications separately when you can bundle them and sell them all in one nice basket?