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Doing the Math: At $29.99, Mac OS X Lion was WWDC's most expensive product

Our own Dave Caolo pointed out something that took the rest of the TUAW team aback: at US$29.99, Mac OS X Lion was the most expensive product discussed at WWDC today. It's not as though the next version of the Mac's operating system had a lot of pricing competition at the keynote. iOS 5 will be a free upgrade to users with supported hardware, and iCloud's services -- which used to cost $99/year under MobileMe -- are all completely free. In fact, other than Lion itself, the only thing Apple announced at WWDC that costs anything at all was iTunes Match at $25 a year.

One of the major anti-Apple memes over the lifetime of the Mac has been that Apple's products are far more expensive than those of its competitors. While there are arguments both for and against that line of thinking for Macs and equivalently-configured PCs, the iPad's pricing compared to other tablets' blows that argument out of the water, and Apple's software prices undercut those of Windows by an astonishing margin, as demonstrated in the graphic above.

Windows 7 comes in a spread of flavors, while Mac OS X Lion comes in only two: the standard $29.99 user edition and an upgraded server edition that costs $50 more. Both will be downloads from the Mac App Store, and while there's no official word yet, based on a cursory reading of the current terms and conditions, it seems that both Lion and Lion Server Edition will be installable on up to 10 machines associated with a user's iTunes account.

So our graphic is wrong in one sense: while you could buy multiple copies of Lion for the same price as the equivalent Windows software, you don't actually have to. If anything, this makes Lion an even more economical prospect than Windows. Even if you want to make the argument that it'd take a Server Edition upgrade to put Lion's feature set on parity with Windows 7 Ultimate Edition (an assessment with which we'd politely disagree), Windows 7 is still only installable on one machine. Therefore, even with "Lion Server Edition" costing a total of $80, that's $80 for a 10-machine license under the current terms and conditions versus $220 to install Windows 7 Ultimate Edition on one.

Put another way: for the amount of money you'd pay for a single-machine license for Windows 7 Ultimate Edition, you could install Mac OS X Lion and its server tools on 20 machines and still have 60 bucks left over. If you're like us and you think Lion doesn't need the server tools to be on parity with Windows 7 Ultimate, you could install Lion on 70 machines and buy yourself a six-pack for the same price as one Windows 7 Ultimate license.

Apple charged $129 for Mac OS X Leopard and older iterations of its operating system, which were still considered bargains against the pricing of equivalent Windows packages. But Lion's incredibly low cost compared to that of Windows merely demonstrates what we've known all along: Apple is, at its heart, a hardware company. It makes money off of its hardware, but the only purpose of the software is to make the hardware sing. iTunes? Free. iCloud? Free. iOS? Free. Mac OS X? 30 bucks.

Microsoft, on the other hand, is primarily a software company dependent on hardware makers to run its software. Xbox 360 and some minor pilot projects aside, Microsoft makes an overwhelming majority of its money off licenses of Windows and Office editions. With that in mind, it's little wonder that Microsoft's software costs so much more... or that Apple is currently cleaning Microsoft's clock financially.

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