Mac OS X upgrade doesn't come cheap

The Cupertino, Calif.-based company will not offer a discounted upgrade version of Mac OS X version 10.2, code-named Jaguar, to current users of the operating system. To get Jaguar, current OS X users will have to buy a new Macintosh or an entirely new version of the operating system for the retail price of US$129.

Consumers who buy a boxed copy of Mac OS X will also not qualify for a Jaguar upgrade, to be released Aug. 24. Only those who purchase a Mac on or after July 17 will qualify for a free upgrade from Mac OS X to Jaguar, although they will have to pay Apple US$19.95 to ship a CD.

Apple's decision not to sell a less-expensive upgrade version lay in the qualitative difference between version 10.1 and 10.2, the company said. Although the versions share the same core technology, Jaguar includes several new features and services, such as search tool Sherlock 3 and Internet address finder Rendezvous, which arguably classify it as an entirely new piece of software.

Consumers, though, may not agree. Discounts on upgrades have a long tradition in the software market. A new copy of Windows XP Home Edition, for instance, sells for US$199. An upgrade version for people who already own Windows 98 or ME sells for US$99.

Mac OS X was released in March 2001, roughly 18 months ahead of Jaguar. It took Apple seven years to release the 10th edition of its operating system.

The company released an incremental upgrade, called Mac OS X 10.1, in September 2001. The upgrade, which mostly included tweaks to fix problems associated with DVD authoring and overall performance, was free, but to get it consumers had to spend US$19.95 for shipping and handling, or pick up a copy at an Apple store or authorized retailer.

Asked Wednesday why Apple didn't offer a cheaper price for existing OS X users, Apple CEO Steve Jobs told reporters: "US$129 is pretty low cost. It's cheaper than Windows."

While Jobs did not say so specifically, his comments were clearly directed at the full version of Windows, as the Windows XP upgrade costs US$30 less than Jaguar.

Apple also has more than 1,000 software engineers working on the operating system and what is calls iApps. "This costs a lot of money," he said.

Similarly, Apple said it will begin to charge US$100 a year for its previously free iTools services.

Apple customers had a mixed reaction to the upgrade cost.

"It's pretty crazy," said Tolga Morawski, an IT worker at Brooklyn College who paid US$99 for Version 10.1 earlier this year. "It's like twice in one year that you have to do an upgrade."

Considering the features Apple added, "It's not outrageous," countered Richard Scillia of the Long Island Macintosh Users Group. "The company has to survive, (the OS is) what it makes money on and it's not just a minor little speed bump."

"There really are costs associated with software," added Richard Doherty, principal analyst at The Envisioneering Group, a consulting firm.

Apple has charged full prices for upgrades before, but between entirely different generations of software, such as when the company moved from Mac OS 9 to OS X.

Still, the company will likely have to lie low for a bit and not spring any sudden new upgrades on users.

"There is some expectation that there will be a couple of quarters, if not a few years, of relief," Doherty said.

CNET News.com's Ian Fried contributed to this report.