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Microsoft Profit and Loss by Business Area
An anonymous submitter writes "The Register is reporting in this article striking new evidence of what in my opinion can only be described as abuse of their monopoly position. A recent SEC filing shows that they lose money in every business area except Windows (86% profit) and Office (79% profit)." Another notes that the Financial Times has a story on the same subject - Dr. No writes "According to the Financial Times, Microsoft's Windows division has a profit margin of 85%. This is the first time this figure has been made public." The full version of Windows XP costs about $300.00. Microsoft could sell it for $45 and still make a profit. The difference between the $45 price and the $300 price is what economists call "monopoly rents".
...of the MS products. You're getting a good deal.
Microsoft could sell it for $45 and still make a profit. Sure they could. Just like the RIAA could sell CDs for $5.95 and still make a profit. These guys make me sick!
At our school, we don't earn a degree when we graduate—we earn pi/180 radians
Red Hat Pro is up there as well, at $150...
thirdpost.test
That one division carries a company is NOT an abuse of their monopoly position. Keeping Netscape off the desktop with the threat of higher Windows licensing costs IS. Just because a company makes a profit in 1 area and loses in another doesn't make it abusive. And stop posting anonymously.
I want to delete my account but Slashdot doesn't allow it.
If they could sell it at $45 and make a profit, then their costs are less than $45, so the margin is ($300-$45)/$45 = 567% by my count. How do you get 85%?
Free Java games for your phone: Tontie, Sokoban
What is the government going to do about it? NOTHING... I think this is proof that they are pigs. This will never make it to the main stream media so no one will ever care. This is just something I can add to my list of why I hate M$.
I didn't use the preview button, so get over it!!!!
Mike
After all, then we wouldnt see these subsidies, and M$ would never be able to use muscle in new markets ... /penhead
Let's hope the Europeans can succeed where our courts have failed. Does MS sell software at a loss in order to wipe out rivals? This document deserves to appear at SmokingGun.com.
Making trouble today for a better tomorrow...
The other $255 pays for IE and WMP
Come on who's posting this stuff? Essentially you're saying that you're okay with the monopoly but they shouldn't abuse it. That's crazy, but I guess that's what a monopoly can do to how people percieve the company. Microsoft can't innovate but they can dominate and they do that well. You try to keep quarter after quarter of growth in a company Microsoft's size and you too will find that you will have to do anything and everything.
http://tinyurl.com/3t236
This shows the potential danger that StarOffice and OpenOffice pose to Microsoft if they ever get off the ground in the way that many would like them to. Especially if OpenOffice gains a large foothold in the business world - it would put serious pressure on all Microsoft divisions to make up the lost Office profits. If Linux ever gains a significant desktop share, this could get good.
where for some reason they needed to compete with linux on the desktop.... how hard would the linux sell be when windows is 45 bucks...
There's nothing Intelligent about Intelligent Design.
The difference between the $45 price and the $300 price is what economists call "monopoly rents"
Oh bullshit.
If MS really had a monopoly, why aren't they charging $1000 a copy then? Just because they have a high profit margin, doesn't make it monopoly rents. Go down to your local jewery shop... those places routinely have 100 - 200% markups on items for sale... now tell me they have a monopoly on jewerly.
DrLunch.com The site that tells you what's for lunch!
because? MS profit on Windows and Office, their cash-cows. They use this profit to do other stuff. The difference between this any any other company would be ... what, exactly?
This is not news, this is not even vaguely interesting.
If MS made more from their mobile phone business than from Windows, that would be "News for Nerds" *and* "Stuff that matters". This is neither. It isn't even news (and hasn't been for at least a decade)
Author, Shell Scripting : Expert Re
we all know that microsoft abuses its monoploy but nothing is going to happen about it. microsoft the antitrust case but avoided any real punishment. until real punishments are enforced this is going to keep comming.
this sig intentionally left blank
Does anybody remember how hard it was for the government to get information on their billing practices from Microsoft during the discovery phase of the trial that just ended?
Microsoft said that their books were too difficult to understand and that they wouldn't let the government have direct access to all of the electronic data, even after a court order on the matter.
Does this new breakout of information have something to do with Microsoft being slapped on the wrist by the SEC for accounting irregularities?
I do not know muchs about United States law, but here we do not allow profits that are not hard for the consumer. Some companies can not make competes, so they allow them to have prices that are level with all companies. Microsoft sells software here, but they do not charge huge rates because of laws, and I can buy Office or others for same costs. It is also laws to not sell products for less than more of cost to make products to sell. Good law to follow for United States.
The full verison of Windows XP costs about $300.00. Microsoft could sell it for $45 and still make a profit. The difference between the $45 price and the $300 price is what economists call "monopoly rents".
And what do they call it when Red Hat could sell it for fifty cents instead of the $300 (or whatever it is) for the server version?
Once again, Michael has absolutely no clue what he's talking about.
Sometimes it's best to just let stupid people be stupid.
The market has a way of working these things out. If MS charges too much, people won't buy the product, and their business model will fail. PEople forget that the consumer determines prices by choosing whether or not to buy. This $300 has been dictated by the consumer, and will only change when the consumer changes, monopolies have no bearing on this fact.
From the Financial Times article: Bill Gates, Microsoft's chairman, speaking yesterday in Las Vegas at Comdex, America's largest information technology conference and show, warned that investors and pundits were becoming too pessimistic about the prospects for innovation in the information technology industry.
Of course we are becoming more pessimistic. When any one company can afford to loose billions of dollars running other companies out of business while creating inferior products, of course we are going to have less innovation.
Visit Jonesblog and say hello.
They can't. It's quite the conundrum for them. They'd have to argue that MS should act like a capitalist instead of a welfare entity, which goes contrary to all OSS dogma and propaganda. Talk about being caught by the ball hairs by MS on this one.
I think MS Bob pulled profit. I mean, it was a bloody work of genies right?
Microsoft OS division has a profit margin of 85%.
That's great.
Microsoft's X-Box division has a profit margin of -300%.
The OS division is where MS gets the cash to pour into products that will never turn a profit, or at best break even; the services they're providing (even for a charge) that are good to have but aren't really marketable, or are only marketed by MS for the sole purpose of having a presence in that market, without hope of actually taking over.
"Do something man. Right now."
Go back 15 years. Microsoft's main revenue drivers were DOS and ummm Word for DOS. Languages contributed more then too (although I'd argue that MS has much more dominant share of DOS/Windows development tools today than they did 15 years ago)
We're not talking monopoly rents. We're talking about how some parts of your business become cash cows and support other parts of your business that they believe are worth investing in and will one day become profitable.
So more evidence they are a monopoly using their profits to clobber new areas ? After what happened with the settlement I have lost any significant hope of legal fix for this. Yeah maybe the EU will get them but somehow I feel microsoft will squirm around it. My only hope of not destroying them but just making them struggle like any other competitive firm, is for linux to start making real headway on the desktop like it seems to be doing in some countries / regions.
Thus, it can subsidise its XBox and kill off the Sony/ Ninetendo et al by slowly strangling rather than producing the games/technology. Skinning us for cash when its got a grip that cant be shaken loose.
Of course, in a country where the Presidents brother can 'gerrymander' an election, and the President cowtows to the OilCorp - where the judiciary is too scared to tackle this behmoth, well, we shouldnt be amazed. We arent, are we?
Gritty.
Annoying, but not suprising. Remind me again why I'm supposed to feel guilty about using the same legally purchased copy of W2K on--GASP--two machines in my own home?
That's what I did.. I know enough people who work at Microsoft that if I need a copy of XP or Win2k or whatever, they can get it for me at the employee store. Last time I checked 2K pro went for $25 and XP went for $35.. Sounds far more reasonable than the $400 or whatever they charge retail :)
Of course, the poster doesn't mention that
;-)
1) The server applications are also strongly in black.
2) These numbers do not reflect the cost of MS Research. MSR is costing Microsoft a hefty sum every year, and they actually do provide many interesting things, especially for Windows internals.
3) All the segments that are in red are relatively new (except MSN). In the tech industry it is very common for new products to produce a loss for the first few years. Why should be any different for MS?
But hey, don't let a few insignificant facts distract you from waging a holy war
When men used to be men
Just post the news michael, leave the reactionary bullshit for the replies.
Take a look at "Exhibit 2: Identifying Monopoly Overcharges."
It says because from 1981 to 1990 the price to OEMs dropped from $40 to $19. Then they assume that the trend should have continued...and based on the chart microsoft should be paying us money to use it, anything more than that is "overcharge." I could do without deceptive little graphs that attempt to skew the numbers.
Its not abuse to use net income from one area of operation to finance another. Its only abuse if it forces out competition.
I don't exactly see Palm making money in the handheld market.
In the gaming market, it is a well-known practice to sell your hardware at a discount. It takes a while for a company to actually start seeing net income, and perhaps never from the hardware.
I'm sorry, but you can't begrudge microsoft because they have lots of money. Every company entering new markets loses money. That is why so many startups have negative EPSs. Microsoft aggresively targets new markets, but they have the money to offset their losses.
Microsoft see their 'window' of opportunity, and take it...and take it...and take it..and keep taking...
The Mothership
I'm curious to see what this will do to the MS stock price. Right now I'm thinking nothing, as I'm sure there are numerous companies of similar constitution who also run a few extremely profitable divisions and few to many money-losing operations. As much as I hate to say it, Microsoft being "evil" probably has nothing to do with this practice.
It is interesting, though, to think about what would happen if their major revenue streams were to be threatened somehow... I have suspiscions that some of the books at MS have been, how you say, grilled to perfection?
Probably the best thing to remember is this: Developers, Devel... oops, Diversify, Diversify, Diversify!
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we could drive M$ to bankruptcy by buying BULK xboxes and using them as Linux servers?
In the free world the media isn't government run; the government is media run.
That killing people was so expensive? But I guess those sacrifices to Satan pay off... keeping Bill the richest man in the world and all.
Their business concepts are mainly this - Find some companies to steal market share from and then throw enough money at the project to make it happen - ie XBox! MS is getting too large and bloated like their software products they make. In the future, for their company to grow, they will need to branch off into separate entities. If they do this, they stand to win in the long run, if they don't they will continue to fail.
-pez
pezzor at yahoo dot com
[...] Microsoft could sell it for $45 and still make a profit.[...] ...
Well, could they?
Even then, many would not be willing to pay the price, I guess.
If you can get something so much better for free
Since we have a site license here,
I could have all the crap MS produces for free,
but even with that, I don't feel like it.
Interesting reading on the goodwill figures. Goodwill increased from $1,426,000,000 to $2,855,000,000 in just 3 months. (Page 2 of the financial statements). Ohhh... but it's unaudited. Never mind then.
We need a new mod classification ... "Stupid, but I'm glad somebody asked"
.. looks bad heh.
Sometimes you wanna mod up stupid posts because the reponse deserves high billing, but modding up a stupid post
I have a problem with this for 2 reasons:
1) Profitability in something like software is tough to gauge from looking at a balance sheet. Productivity is notoriously hard to quantify and the cumulative R&D costs that represent Windows are probably not represented in the same sense as sales and profit for a given year. It's no surprise they lose money on other products, but the fact that Windows in profitable allows them to do so. I suspect the same economics govern other R&D heavy companies: like Intel, Motorola, IBM etc.
2) Even in non-R&D heavy companies, many products have massive profits. How much do you think a cup of coffee costs for Starbucks to brew? There are plenty of products that produce well in excess of 100% profit margin. Why should Microsoft be criticized for margins over 70% on two products?
In general I find it pretty repulsive when people bash Microsoft for making money. If you don't like it, buy a Mac or use Linux. It's really not hard to Microsoft free. It's your choice.
When you're a monopoly, yes it is.
Again, when your entire multi-billion-dollar monopoly which has widespread penetration in many markets is being supported by two out of thousands of products... that's abuse.
The key is that this isn't just any company. Sure, a normal company might choose to try their hand at a new market, supporting it with profits from another. But this is a monopoly, and they're using their monopoly to gain marketshare in other markets. All the other markets! This is the definition of such abuse.
Summary: do not compare this to "any other company". Whey we're dealing with a monopoly, the rules are different.
Don't think of it as a flame---it's more like an argument that does 3d6 fire damage
I'd like to purpose one possible interpretation of this data: They are doomed, and they know it.
Why are they doomed? If a majority of there profits come from the OS and the Office suite, what happens when there is a major competitor, like Linux / Open Office?
The fact that they are trying to hard to break into new markets, indicates to me that they feel the cow has a limited life span.
No matter how much cash a company has, they cannot continue to spend money on failing venturers, share-holders don't like that...
Anyway, spin it how you like. I've felt this way for a while. I don't see them as having a real monopoly, there are alternatives, people just find the MS assurance worth the price, for now. It's not as if they have or infrastructure, real capital that no one else can match (like railroads, or telephone poles). They make software, and they make a lot of money making some of it, if suddnely the world doesn't want it anymore, they have nothing.
--
Matt
striking new evidence of what in my opinion can only be described as abuse of their monopoly position
Every piece of proprietary software that makes a profit is in exactly the same position. So why pick on just Microsoft? The monopoly isn't limited to Microsoft, but available to anyone that has a copyright.
I know it's fun picking on Microsoft, especially after some of the stupid stunts they've been pulling, but before you start waving evidence around, stop to think about what it means.
One example: Ximian Connector. Proprietary software. Currently selling for $69 single user. If Ximian can sell this piece of non-free software for $39 instead of $69 and still make a profit, then Ximian is a monopoly!
A Government Is a Body of People, Usually Notably Ungoverned
That's just an outright lie. Do you know what a monopoly is? It is one company selling one product that has absolutely no close alternatives. Is that to say that nobody on Slashdot uses Linux, or MacOS?
Honestly, your inflammatory editorializing and FUD are giving the Open Source community a bad name. Most of the rest of us, as you may have noticed, are not a bunch of whining, ill-informed teenagers.
--sdem
On top of that, most people get windows with a new computer. If you look at the $300 pricetag for Windows XP Pro full retail version, it strongly encourages you to just get a new Dell for $550. You get XP Pro, and a computer too. Unfortunately you get the lame-ass "system recovery" disk but with the most recent Dells I've seen that CD is just a Windows XP Pro CD without the fancy hologram. You can, for example, copy the I386 folder onto a blank hard drive and set up XP that way.
Personally, I just pirate the stuff. Or should I say, I set my system clock ahead to 2104 when installing Windows, and now the 30-day trial won't expire any time soon. (in XP there's a similar deal to make the activation clock get reset, though it's less elegant.)
By the way, I leared that system clock trick from contractors who were working at Microsoft. Apparently they had to do this on their test systems because they only had the trial versions of MS product. Go figure.
What about soda fountains at McDonalds (or wherever you buy your greasy fat)? They charge you $1.25 for seventeen cents of syrup and some essentially free carbonated water. It's the highest profit margin in the food industry, but it's merely a simultaneous choice by EVERY restaurant to do it.
What if people just EXPECT windows to cost more?
I know, it's faulty logic on MS's part; I recently bought licenses to all my illegal MS software because the university was selling them cheap. Before, I couldn't afford office and windows XP and vis-studio.net, so I stole them. Then I paid about 50 bucks and got licenses.
If they would just acknowledge that lower prices = less piracy and greater market penetration (esp. in poorer countries), then we'd all live in a happier world, wouldn't we?
Austin is more fun than Dallas.
It's a "will consumers ever grow a spine and tell Microsoft to take a flying leap" issue. I realize the alternatives may entail an initial cost outlay over and above the current licensing (for businesses, anyway), but it is my opinion that this will yield significant benefits over the long term. I personally wouldn't mind seeing Bill Gates in a position where he's asking what Microsoft can do to be of greater value to consumers, and hopefully stay in business. But until the spine issue is resolved, this will remain little more than wishful thinking.
Most employees at MS think that the project they work on is successful. Even the ones that are total losers. This is because the orgs are always mixed up so that everyone works in profitable division, and exact profits from each product are never given out. Just praise.
It was always embarrassing to here people talk about how great their product was doing according the the VPs. Anyone who'd been there long enough knows the truth, but dont rub it in peoples faces. Bad for moral.
What is the difference between what MS is doing, and some venture capital company investing $1 Billion dollars in an on line grocery store that goes belly up???? Absolutely NOTHING!
If Microsoft's shareholders are OK with Microsoft blowing money on "ventures", then there is no problem. Perfectly legal.
Through a steady stream of upgrades I have managed to avoid paying more that $100 for any version of Windows. So if it costs $45 per box then that's $55 profit. Also, I would assume that most of the Windows business is in OEM sales and I've heard figures as cheap as $50 for an OEM version bought in bulk.
As far as using Office and Windows to prop up the rest of their business, everyone knows that has been going on for a while now. The reason Microsoft hangs onto its monoply with such vigor is that without it, the company would collapse under its own weight. So they are almost forced to charge more money and gain more market share just to keep the company afloat. If they were to lose a significant portion of their business in Windows or Office, they would quickly lose profitablity and even $36 billion in cash reserves wouldn't last forever in such a large company.
Smeghead every day of the week.
You can pay $200 for XP Home Full in the store, or $90 OEM at anyplace like Googlegear.com or Directron or whoever.
business strategy
1. Have a monopoly
2. ????????
3. PROFIT!
<JessLeah casts 'Dispel Troll' and recites:>
1) One small good deed does not cancel out many large bad deeds.
2) IE is actually not a buggy piece of anything-- I personally think it's quite nice. I merely dislike it because of the morals of the people making/pushing it.
3) Putting words in my mouth does not mean I agree with them. There will always be situations where companies will release some things at a loss or for free-- it's the concept of the "loss leader". Look at how many video game companies routinely lose GOBS of money underselling their consoles. They make their money on the cartridges/CDs. That's a very common and acceptable course of action.
Do you really think your cell phone company (assuming you have a cell phone) makes money off of the sale of cell phones?
Honey, I shrunk the Cygwin
Although it might not be an abuse of monopoly power to have a division that doesn't pull its own weight, some of the things do come out of the financial statement.
The biggest one is that Windows CE doesn't make a profit, after six years! It's way too early to look at XBox, but... what does this say about CE?!
Also, the margins that they have on "commodity" products (OS and office suite) should be pretty revealing as to the long-term effects of sticking with MSFT products.
The difference between $45 and $300 is "monopoly rents"? Bull shit. A lot of businesses have that much markup. Computer cables, for example. Or compare them to the cost of North Face brand jackets: That's about the same margin.
I dislike MS because it is a monopoly, but these numbers are bullshit.
Microsoft is very aware of this. They also know that at this point, an office application that can't reliably import/export/work with with Microsoft Office documents isn't worth beans. Hence why their file formats are so thoroughly undecipherable.. they want to make sure that others are unable to work effectively with MS Office documents (crack open a MS Word document with a plain text editor, and you will see what I mean).
slashdot!=valid HTML
Come again?
i like slashdot. i pay for it to support it. lately i wonder why. do any of your realize how old these kind of stories are? is it possible to post something that doesnt involve finding any reason to bash microsoft? funny how there are rarely stories about linux screwing up something yet when i open up my browser i see 4 ms stories a day that tend to repeat themselves. i think ill reconsider paying for slashdot when my pages run out. maybe the source for this story is good but its the same blah blah about ms losing money. you know what if you hate them that bad let them lose it without showing 2 stories a day about the eu thinking about doing whatever to ms or about ms losing money about whatever project. stop useing these kind of stories just to say how good open-whatever software is or how it will ruin microsoft. maybe a story about how good ms is doing in some area or a story about how bad linux in some area? or *gasp* maybe a story not about microsoft? and isnt that logo used for their stories here on slashdot a little childish? i see all other sections get proper logos. grow up please. id pay for my pages again if that happened.
No other department brings more money into the company than it consumes during its operation. Okay, okay, some could argue that profitable support departments may exist in some companies but this is rare.
Next you are going to tell me that Microsoft should get rid of all of their marketing staff, developers, support staff, admin staff, etc. because they are a cost centre being supported by the sales team.
I'll say it again - colossal bullshit!
Did anybody else think they'd come up with a new product when they read the headline?
General Relativity: Space-time tells matter where to go; Matter tells space-time what shape to be.
u r teh sux.
An even more frightening conglomerate that has been secretive about its profit by segment is major league baseball. When the contraction idea was being put forth earlier this year, the executives of MLB were trying to tell us that many teams were in danger of losing money. They don't make their figures clear and apparent even though they have anti-trust exemption.
Many public and (taxpayer-funded) private universities get into exclusive distribution agreements with soft drink (and food) distributors in exchange for contributions.
Then there's Microsoft.
Game: Player 'Donald J Trump' now has AI skill level 'experimental'.
You do realize that you just invalidated any argument you made against MS for abusing a monopoly position, don't you?
If Americans think "Windows is great" and "worth" the $300 that MS is charging, then MS is doing nothing more than selling a "great" product to a happy population who feel it is "worth" the cost. Exactly how capitalism is supposed to work.
On the other hand, if you were to say that $300 is the upper limit that people will stand without openly revolting - and that MS is extorting that amount by virtue of being a Monopoly (thus, by definition, there being no comparable alternative to turn to) - THEN you can claim abuse.
According to your argument MS is just another well behaved, successful company, doing capitalist society good by their actions. I really hope YANAL.
"They do not preach that their god will rouse them, a little before the Nuts work loose." Kipling, 'The Sons of Martha'
This stuff is free, and people would rather pay for MS product. That, my friend, is the mark of quality. The OSS zealots don't understand that.
Microsoft is leveraging their high prices to enable them to give away other products, thus undercutting their competition. If Microsoft didn't require their overcharging in order to charge lower prices on their other products, you wouldn't hear many complaints on the lower priced goods.
Microsoft is aggresively entering new markets because, when you own 99.9% of one market, further growth in that market can only take place at the rate of growth of the market. And since the OS market is realtiely mature, it does not grow as fast as other, emerging markets. Sorry to burst your bubble, but it has nothing to do with linux being a "major" competitor...
So who honestly is surprised by this? It's right along the lines of the Microsoft we've come to know and loathe. Profits are up, competition is down, the government doesn't mind...what more could they ask for?
MS has many divisions within it. They sell games, hardware, gaming platforms, palm-top software, Office software, and OS', and much more. This story proves that the Office and OS divisions are making all of the money, financing MS' raids into other areas. All other departments are losing money out the wazoo.
What this proves is that every other MS product is so crappy and so poor selling, that they're losing brickloads of money on it.
In other words, the only reason they can venture into other markets is because they're using their MONOPOLY in one market to finance their ventures elsewhere, which otherwise would fail on their own crappy merits.
This is just on piece of the picture of MS abusing its monopoly powers.
social sciences can never use experience to verify their statemen
The only reason the article was posted was to make Linux feel better that they're competing against a monopoly. So what? Who the hell cares if MS is a monopoly. Taking them to court is for crybabies. Rather, try: How did MS get to this point and why the hell is a free product having trouble competing with such an "expensive" one. It's features. Microsoft gives people what they want and linux gives em CLIs. Gandma and Grandpa don't want to know how to set up perl. Joe Business User doesn't want to have to look under the hood. Linux will NEVER become the dominant OS until it's as easy as XP (or whatever MSs latest OS is). Stop the whining and get back to work.
The difference between the $45 price and the $300 price is what economists call "monopoly rents".
/. heads have a habit of missing, monopoly power is NOT illegal, the misuse of it is. Maybe if you guys had gone passed your High School economics or Intro Economics classes in college you would realize that this is NOT a perfect world, consumers are not perfectly aware, and that there are natural inefeciencies that exist.
Sure, if you say so. Tell me, do you think a single license of Adobe acrobat actually costs anything near $250, or Adobe GoLive6 at $399,InDesign at $699, or PhotoShop7 at $999? I'll move off of Adobe, do you think it acutally costs cisco $84 for a console cable (yes, they charge that much!), or $5000+ for a 3600 series 4 slot router, and that price is without ANY serial interface cards. The point is, just because the price is higher than what it costs them to make a profit, it is not neccesarily a "monopoly rent" , ohh, and BTW another point most of you
they lose money in every business area except Windows (86% profit) and Office (79% profit).
On another point, in the business world this is known as a Cash Cow, or a project which reaps in lots of money and is used to fund other less profitable business ventures. Without projects such as Windows and Office, things such as the Xbox would never have existed, and if they did would have cost many times more for the consumer to purchase. Also consider all of the other R&D microsoft has conducted over time (i.e. GUI design, Ergonomics), where do you think that money comes from? Do you people actually think that each project has its own allocation of funds that only comes from the profits they individually generate? If that was so then no general research into ideas which are not imediately destined for profit would ever occur.
Taking over one bit at a time...
If so, it's just barely not true. Ever tried to get support from Microsoft lately?
A monopoly exists when there is only one company in the industry, or supplying a particular product - this isn't the case here. Consumers do have a choice at present, as other posters have stated. The fact that compatibility, which is highly desirable, is one of the key features of the Microsoft products does not mean other choices are not present. The difference is not monopoly rents - it is actually referred to in economics as "supernormal profits". Generally these happen under perfect competition (i.e. a market situation) in short-run situations, where the timeframe being considered is not long enough to allow potential competitors time to enter the market. However, barriers to entry can cause time frames to change somewhat with regard to competition. Barriers to entry present would be in the form of economies of scale, and IP rights to industry standards.
The Mothership
Another snide remark from michael regarding Microsoft.
Yes they have large economic rents (abnormal profits), thats because they have a (unfair?) competitive advantage.
In economic theory, these economic rents do not go on forever. Over the long term competitors will come in and eat into MS profits, until basically they are just making 'normal' profits.
They way its going MS seems likely to have these 'rents' for many-many-many years to come, until 'artificial barriers' are removed. Yes the current desktop OS market is anti-competitive, until we get more regulation in industry.
Quit Slashdot Today!
Let's see.... I log into Slashdot, and I get one story about how Microsoft charges "too much" for windows, and that they have a "monopoly with an inferior product." Down the page is another story about how Microsoft charges "too little" for the XBox and that they are "in last place in the console market with a superior product." Which is it kiddos? Are you never happy?
...just because you know how to type in bold, it doesn't mean you're right.
Apparently the United States of America is a haven for evil profit taking capitalist dogs...
Shame on them
We should all be following that glorious Soviet model for economic progress.
---- "Logoff! That cookie shit makes me nervous!" - A. Soprano
...and still no one likes M$ :)
- When all you have is a hammer, everything looks like a nail -
There have been a number of camparisons from windows costing $300 to the costs of various linux distros. what you guys seem to be missing is that the price tag that comes along with linux includes UNLIMITED LICENSING. you pay that high price to redhat so that you get their support, and you're operating with some sort of standard and a company to look for when you need support. When you buy a copy of windows, you have license to install it on ONE computer.
... wait, we already know that debate. linux wins.
also, it seems that you're comparing the cost of windows desktop to a linux server. realistically, if you evaluate the costs of windows XP to redhat linux, you'll find that the personal edition of red hat is only $40. when you step up to professional you start getting server software included. if you compare the pricing for microsoft server software to red hat
so, compare the pricing of XP ($300) to the fact that the $40 version is still available for FREE from ftp.redhat.com. last time i checked, i couldn't find XP on ftp.microsoft.com.
You are aware the scenario you explain in your first paragraph is piracy?
The OS you bought with the $550 PC is licenesed on that PC _ONLY_. You can not transfer it to another PC, even if you delete it from the original PC
Normal people worry me!
Capitalism works on the principle that you vote with your money. A monopoly is the economic equivalent of a one-party state.
If you don't feel they need different standards to prevent abuse of power, I don't understand you. Lady Justice may be blindfolded, but there's no need to make her deaf and dumb too.
Kjella
Live today, because you never know what tomorrow brings
Hi, The truth is, one of the key components one looks at is net income (how much money comes to you), and not core earnings (profits). If the net income growth is vectoring upwards, and profits are still positive, that company is good for the long term: this is a 'successfully managed company'. Think of it this way: a company that makes $1.00 a year on revenues of 1B is frequently "worth more" than one that makes $1M on revenues of 10M, since you can almost _always_ manage your way smaller (tighten expenses, cost-of-doing-business, etc), and it's really hard to manage your way larger: if the money isn't already moving through you to begin with, you have to 'do something hard', like make a new product, invent something, a new service, to bring the money to you. The fact that most of these business areas are raking in the revenue means that they really are 'investing', instead of merely taking the loss to bend the market to their will. For instance, they spent 628M to make 531M: you don't think they could cut out 100M on MSN to make it profitable, or at least not a loss? They surely could, but I bet that they would harm their long-term growth of income. XBox is a little egregious: made 505M, spent 682M. CE/Mobility is just right for a 'start-up': made 17M, spent 40M. Now, if these continue for several years at these levels, then you might question, but XBox is relatively new, CE/MObility has become 'hot' recently, MSN probably doubles as a way to defray (hide) some of their existing costs (hosting microsoft.com, msdn, etc) that might be associated with other business units, etc. -J
As a former employee, I think they are doomed too. Linux is only a minor problem though, the real issue is the maturity of the market and thier inability to add value to their current products. Their products will simply become a commodity.
Of course, they way MS is doomed is most companies dream: they can coast along with their current products (and sizable cash and investements) for about 20 years before they see the train at the end of the tunnel.
One more proof that these two websites are less and less appealing to people who have a brain and use it.
.NET Server, both products were written by the Server platform group, not the Client group.
Windows XP shares >90% of its code with
This explain why the Client group has such a high percentage of profit and why the Server platform group didn't.
It shouldn't be that hard to use your brain once in a while instead of spreading lies about your opponent, it actually might even be useful and intelligent.
...I'd actually BUY a couple of copies instead of using my warez'ed versions.
The OS division is where MS gets the cash to pour into products that will never turn a profit...are only marketed by MS for the sole purpose of having a presence in that market, without hope of actually taking over
Hunh? Game boxes arn't profitable?
Ok. Why would Miucrosoft get into such a market then? Clue Brick. Microsoft is using $$$ from it's monopolies to drive competition out of another market, once Microsoft has 90% marketshare and all the other players have turned in their cards since they can't make any cash, then, and only then (about 5 years down the line) will Microsoft raise the price on their boxes. And when they raise their price it will be far far higher than what it would have been if the competitors were still around.
What they are doing is illegal. How'd you like it after 5 years of being in a business that Microosft decided to compete with you? They'd duplicate your product and sell it for half price or even less... till your organization bled to death in red ink. Then, when you finally give up and close up shop, they raise their price back up with a price far higher than you were selling...
The only hope against game boxes is an open source game box operating system and hardware specification. If Sony and Nintendo want to compete they'll have to make the conversion; or just drown in red ink.
I'd agree this is why they are using the income of Windows/Office the current cash cows to get into other markets. The OperatingSystem and the OfficeSuite are both things that OSS (lot's of O's and S's here) is strongly moving to compete with. They can use the profits to move out of the market that is being attacked into something else just as profitable. This is good business practice. On the other hand it can also create new monopolies as the old ones crumble but does it matter as long as they keep crumbling?
At what price learning? At what cost wisdom? The price is a man's peace of mind, and the cost is his life.
How much of that x$ does bill spend modding his comp? ;/
Go back 10 years. Microsoft's main revenue drivers in 1992 were uh, Windows 3x and Office 4.3. Arguably Windows had pretty good market share but Office was still losing to Lotus 1-2-3 and Wordperfect. [...] We're not talking monopoly rents.
How does the fact that Microsoft has been doing this for years change the observation that they charge monopoly rents?
We're talking about how some parts of your business become cash cows and support other parts of your business that they believe are worth investing in and will one day become profitable.
And what exactly is Microsoft "investing" in in those other parts? Their losses in the Xbox division, for example, don't result from enormous activity in development or even marketing, they result from selling the hardware below cost in order to drive competitors out of business. It's an "investment" if lose money on on R&D, manufacturing facilities, and advertising; for a monopoly, it's an illegal business practice if you sell products below cost in order to drive their competitors out of business.
Actually you did pay for windoze, ever hear of the M$ Tax? That computer would have been about 100 USD cheaper if it hadn't shipped with windoze.
Actually, I kinda doubt Windows 3 was profitable in 1992 -- they were basically giving it away with Mice and OEM copies of DOS.
MS's game plan since Day 1 was to cut deals with OEMs in order to extract a small cut of every unit shipped. As the PC market exploded according to BillG's predictions, this proved to be a wise choice. Anyway, ~15 years ago, their most profitable product was probably the ROM BASIC that shipped with virtually every microcomputer, from Apple to Zenith.
These guys (slashdot/OSDN) are on the ropes if their eyeball count drops. These M$ stories are just the trick to keep the rates up. The fanboys love to rant, and the rest of us like to watch the wreck.
Eventually it will catch up to them, (the number of people who are tired of this obvious pandering for traffic is growing) but for the time being, this just lets them sell more ads to M$.
Enjoy the show.
Over here (in NZ) it's illeagal to continually sell products at a loss - ie. promotional sales are ok, but not consistant losses. This is obviously a law protecting businesses from MS-style anti-competitive behaviour. Is there nothing like that in the states?
Also, someone out there might be able to help me out here, but what does MS actually gain from making losses on all but 2 of their products? I mean I can understand how forcing the competition out of business so you have a monopoly would be great for profits, but how did their anti-competitive strategy with Netscape (for example) help their revenue? Wouldn't MS do better by dropping all their products that aren't going to make a profit in the long run?
I worked in Windows and NT for many years, and then MSR for a couple after that.
MSR provides nothing to the Windows internals. What a ridiculous statement.
MSR is a prestige organization only, and MS pays huge for that 'prestige'. Every so often you will hear about something from MSR getting into a product, but let me assure you its all hype. Most things that actually do get into a product were built by people from the product team who changed orgs to MSR after the idea was already proven. And those are very rare too.
No, MSR is a worthless academic sideshow that will be cut off the day MS profits are unable to hide its wasteful useless bloat.
One years statistics isn't enough. You need to focus on the big picture. Visual Studio used to be a significant portion of their income, and still is. That is offset by the fact that in the past two years massive amounts of money went into new products for Visual Studio.
but it's in the top ten.
Let's see: Microsoft makes money on some things and loses money on others. Conclusion: Monopoly!
HUH?
Also, do you know anyone short of the most deluded fool who would pay $300 for XP? You can get it for $89 if you know what you're doing, or even less if you're a student.
Slashdot: news only a mother could love.
The problem with a monopoly dominating areas of the market while losing money in them is that firms should not lose money in the long run. If MS didn't have so much revenue from Windows, it wouldn't be able to afford to compete in other areas. But since it does, it can; the BIG NAME can stay in the market and be unprofitable, eating up market share from possibly profitable firms. Firms can and often do have short run losses, so it'll be interesting to see how long they continue running losses.
Something I don't think anyone's pointed out yet is that the OS would largely be useless (read: unsaleable) without software.
Many people, myself included, viewed paying $499.95 for a copy of Lotus 1-2-3 back in '88 as unreasonable. It was higher than the price the market would bear. Lately the prices have been more reasonable, but for no apparent reason, now that I think about it.
How do you make money overall when your customers don't like what you want to charge for the one item but the other item is useless if they don't buy both? Sell 'em one for a pittance!
It's not a new idea. It's "give them the razor and make the money back on the blades" -- except in reverse.
It seems to me that MS should be worried by these figures. They have a whole load of different products but only Windows and Office actually make them any money? We're not talking just Xbox here, this is MSNBC, MSN, PocketPC, VisualStudio, Consulting, etc. They've busted there butts trying to diversify for the last ten years and have come up with zero to show for it. Whether they are a monopoly or not is not the point. The point is that they have a huge sled and only two dogs are pulling it. If something should happen to Windows and Office, say Linux and OpenOffice, they would have nothing left to fall back on. Yea, they have a ton of money in the bank to keep them going for a few years but they'll have to work hard at finding something else to do for a living.
I hate the abusive stuff MS pulls as much as the next person. The only way things will change is put your money where your mouth is. As other's have said, buy computers using other OS or software. If you're really that fed up, then switch.
MSR provides nothing to the Windows internals. What a ridiculous statement.
OK, so all the recent multimedia capabilities in Windows have been just invented by random coders. I guess someone has lied to me.
Depends of course how exactly you define internals.
When men used to be men
This is the content portion of your post:
.NET Server, both products were written by the Server platform group, not the Client group. This explain why the Client group has such a high percentage of profit and why the Server platform group didn't.
Windows XP shares >90% of its code with
Good points! You should have stopped here.
Instead, you couldn't resist getting in a few useless jabs:
One more proof that these two websites are less and less appealing to people who have a brain and use it. It shouldn't be that hard to use your brain once in a while instead of spreading lies about your opponent, it actually might even be useful and intelligent.
What wasteful, unwise things for you to write! You could have made your point without diving down to invective. As is, your post looks like a troll and will probably be regarded by most as such. If you want to be convincing, you will do much better to present your facts without slandering your opponent. Hell, every opponent is a potential convert.
I don't make the rules. I just make fun of them.
Probably because they had more competition in those areas 10-15 years ago, so they wouldn't be considered a monopoly at that time. Or did you think that Microsoft had always been the only choice?
And what exactly is Microsoft "investing" in in those other parts? Their losses in the Xbox division, for example, don't result from enormous activity in development or even marketing, they result from selling the hardware below cost in order to drive competitors out of business. It's an "investment" if lose money on on R&D, manufacturing facilities, and advertising; for a monopoly, it's an illegal business practice if you sell products below cost in order to drive their competitors out of business.
The last time I checked, Microsoft was spending a lot of money on advertising the Xbox. I remember seeing one billion dollars thrown around several times for the advertising budget. They also bought out Bungie and had to pay them to port Halo to Xbox, and they had to pay nVidia for R&D on the chipset. They were going to lose money the first year even they didn't sell below cost.
Hold on for just a second. A can of coke costs about a nickle to make, can, ship and refrigerate and I just payed 0.75$ for it out of a vending machine.
That's because you mainly pay for physical delivery and distribution. And it is because Coca Cola does have monopolies in many places (there is only the Coke machine, nothing else, nearby).
MS has priced their product (successfully, I'm sure) to maximise their profit - which is NOT the cheapest price they could charge, any more than the same is true for Coca-Cola. [...] It has nothing to do with being a monopoly.
Monopolies price their products to maximize profit as well. And it is precisely when the prices charged become significantly higher than the cost to produce a good that you know that the market may have become inefficient and that you are dealing with a monopoly.
This is a feature of our modern "capitalist" society; competition only goes so far in the face of advertising and consumer apathy.
Consumer choice and competition are essential to bring us the benefits of free markets and capitalism: efficiency and innovation. If you are saying that advertising and consumer apathy undermine it, then the answer is not to lean back and say "oh, well, that's the way it is", the answer is to figure out how to rescue our economy. Breaking up companies is one way of doing that: if no single company dominates the market, consumers have to make a choice.
Look at Apple. Everyone knows that Apple has generous profit margins. However, they went out and bought their OS outright, and then spent another 4 years developing it before they offered a shrink-wrapped version. And the price they charge? $129. And that for an OS that serves 5% of the computer market.
Microsoft, OTOH, initially develops NT in partnership with IBM, so some of their costs are defrayed. Then they are the sole developer, but they have several releases, in addition to charging a per-seat license on for the server version, so they make up their development costs with each version. Now they are up to WinXP, which costs $300 for the professional version, which they are selling to 90% of the computer market. It should be obvious that MS is charging far, far more than they need to.
Also, keep in mind that most sales of Windows XP are preinstalled bundles on PC's, so who knows how much profit is made when you shell out the $300 for a shrink-wrapped copy.
I'm sorry, but when someone is making 85%+ margins AND shutting other companies out of entering the market, I don't know of a clearer definition of monopoly.
As a capitalist, I'd much rather see the market solve it's own problems. One way would certainly be for the government to seek out open source solutions as much as possible. Particularly the military; they already train their personnel on troubleshooting PC's, there's no reason they can't put more emphasis on Linux.
I just wouldn't want to see it issued as a directive that all departments must switch to Linux, because I'd hate to see Mac OS X get shut out.
You are absolutely correct, given one assumption you are making:
"other parts of your business that they believe are worth investing in and will one day become profitable."
I am reading between the lines here a little and assuming you do not mean "one day [after competition is destroyed] become profitable." You see, that is part of the issue.
.
wait a minute, Michael.
if the profit margin is 85%, then the cost to produce it is $45. that means that selling it for $45 will only BREAK EVEN, not make a profit for Micro$oft.
if we take a typical "sell it for twice what it costs to be able to stay in business standard," then M$'s fair selling price would be $90. and that would be to those in the retail and other distribution channels, because those reseller need to make a profit as well...!
so if these resllers price it for twice the cost $90, they need to sell it for $180 to stay in business (by the same 2x cost rule).
so, what's actually happening is that M$ is overpricing something that they could sell for $90, and making a tidy profit.
good for them...!
if you've ever been in business, you quickly learn NOT to begrudge anyone their fair share of a profit -- lest they do it to you -- but you also learn that FAIR is something that is never defined to your satisfaction.
in reality, i say the price is whatever the seller and customer agree upon.
an EDUCATED buyer is what drives prices down.
FAIR ain't got nuthin' to do with real life...
The price of downloading Debian GNU/Linux is set to rise 550%.
;)
550 * 0 = 0
>>I've paid zero for Windows (came with computers)
You paid for your license when you bought those computers. Don't believe me? Call your vendor and ask them yourself.
Huh?
Really, the incomes of different Microsoft divisions are entirely fictional. Most of their sales come from package deals to OEMs, which they could account for in any sort of way. After all, the number one computer game for a long time was the solitaire version that came with Windows. If Microsoft wanted their entertainment division to make more money, they could charge for solitaire and include windows with it for free. Since most people get them both via an OEM, nobody sees them itemized, so MS could change the pricing around, and the only effect would be that the division split on the SEC reports would be different.
Of course, the SEC filing is not a lie, but Microsoft could choose any gross income they wanted for any given division, and it would be just as accurate, because it doesn't actually reflect any measurable difference in the world outside.
If someone is found guilty of pirating warez, lates say Windoze XP... should the company value its "loss" at the retail level, the fair market value, or the cost of production?
Actually, Microsoft should be paying the Pirates!
With extra copies of the software out there in use, the value of the software (which is proportional to its user base) is increased. Therefore, Priates are actually helping the monopoly along. For early adoption software, I'm sure Microsoft is very happy to have Pirates spreading copies to friends or anyone else in the market. More copies is less sales for competitors and greater chance that their file format will become the standard.
However, once a product hits 60% or some other magic number of market dominance, the software is ubiquitious and the Pirate isn't helping to "spread the word". At this point, the Pirate is a net loss for Microsoft, and they are actively hunted down. Further, all of those "non-prirate, good customers" who have, unfortunately, illegally installed copies; well, Microsoft will be very nice to them with their payment plans.
Moral: If you want to hurt Microsoft, don't use or help spread the use of their products.
For this whole article I can rely on just my .sig!
I've finally had it: until slashdot gets article moderation, I am not coming back.
I am aware that MS probably considers the scenario described in that first paragraph to be piracy. There's a big difference between MS saying that it's piracy and it actually being piracy.
MS's claim about OEM OS'es seems to hinge on the meaning of ORIGINAL PC ONLY. What does that mean, specifically? If I replace the CPU, do I need to buy a new copy of windows? What if I get a new HDD? Video Card? Motherboard? Case? Monitor? Sticker? Keyboard?
Interestingly, in Windows XP there's product activation. After I put a new hard drive and video card in a XP box, I was told I had to re-activate. But it didn't tell me that "you now have a 'New Computer' and this OEM version of Windows XP is only licensed for your original computer. Take out the new hardware if you want Windows to function."
Now why do you think that is? I think it's because the whole concept of OEM'd products, and the terminology MS has come up with, is certainly very open to interpretation and speculation.
Most vendors feel this way too. They will gladly sell you an OEM version of Windows, so long as you buy some piece of hardware at the same time. I'm not quite sure how far they push it, like does buying a case fan or cool LED thingie count, but a HDD, CPU, or video card will definitely "qualify" you to purchase the OEM version of Windows.
The silence from Microsoft on "what constitutes a PC" is just another example of FUD. People who agree with your assessment that my scenario is piracy pay $300 for a product. People who know "the deal" pay $150 for that same product.
It's kind of like a tax on not knowing anything about how "computers" work. And if MS were serious about it, they would make Product Activation function differently in an OEM version of Windows, and not let you "re-activate" after enough hardware has changed. However, if they did that, everyone would get all up in arms because upgrading video card and adding a new HDD does not a new computer make. So they continue making an extra $150 per sale off the straight-laced and/or ingorant consumer because those people are afraid of the Big Bad EULA.
I agree. I think Bill Gates himself said that the biggest competition for Windows XP was Windows 98/ME/2000. It would be stupid for Microsoft not to try to branch out into other markets.
Well, I was there 10-15 years ago, and Microsoft was pretty much as dominant then in their market segment (small business computing, home computing) as they are now. Apple briefly looked like a threat and another potential monopolist, but they self-destructed.
The last time I checked, Microsoft was spending a lot of money on advertising the Xbox. I remember seeing one billion dollars thrown around several times for the advertising budget. They also bought out Bungie and had to pay them to port Halo to Xbox, and they had to pay nVidia for R&D on the chipset. They were going to lose money the first year even they didn't sell below cost.But the fact is that, despite all those other expenses, they are selling below cost. And while it isn't necessarily illegal, many of those other activities are also undesirable from the point of view of competition: if the only reason your product succeeds is because you can outspend your competitors in advertising, then the market isn't efficient anymore. Similarly, buying independent software developers that otherwise would have rationally chosen to develop for your competitor's hardware only is also highly questionable.
The main differences between Microsoft and other companies is that Microsoft seems to have certified morons for investors!
Competent investors are willing to pay for a stock according to how high FUTURE earnings are expected to be. Current Microsoft investors seem to be paying for the levels of past earnings, i.e., for the glories of days long past! Back when Microsoft was in its glory, with returns on equity of ~40%, it didn't have as many of these "white elephants" to bleed away the cash. Much is made of Microsoft's ~$40 billion in cash, but Microsoft also has more than $5 billion shares, for only about $7 per share in cash, believe it or not! This is called watered stock, from all those "free stock options" given to employees instead of salary!
In any normal company, when investors see a company raking in cash by milking one or two so-called cash cows for billions and then pissing it all away on various whims of the Chairman or CEO, they abandon the stock in droves, calling it yesterday's company.
And from what I have said above about the cash levels, they aren't going to pay a big dividend, ever! Being Microsoft, nor are they likely to bring out a great innovation, either!
MS gives out IE for free, that's anti-competetive?
Boy. You don't even kind of get it, do you?
Giving away software isn't what makes MicroSoft a monopoly. Using their leverage as THE MAIN supplier of household Operating Systems to distribute this software, to the exclusion of others, with a toehold in the OS that other browsers will not have and then, ultimately, claiming that the browser is INEXTRICABLY intertwined with the OS -- all of these things are what make MS a monopoly.
Repeat after me: It's not giving away software, it's unfairly using an advantage and obstructing others that makes MicroSoft a monopoly.
I don't think most people would care if MS kept to standards, but that's another story.
The opposite of progress is congress
They also have developed a Bayesian junk mail filter that ships with MSN8 (see research.microsoft.com link).
So... I find your claim somewhat suspicious.
Ryan T. Sammartino
"Ancora imparo"
Note that 20% profit rates are normally considered very good in most businesses
You, my friend, have quite obviously never run a business...a 20% margin will most definatly NOT keep a business afloat.
I have run a software company, a consulting business, and now a florist, and not one of them could ever, ever survive on a 20% margin. FYI, my typical markup on fresh cut flowers is in the neighborhood of 300-400%.
never bring a twinkie to a food fight.
This just confirms what they said during the anti-trust investigation and trial. If they didn't aggresively pursue their market, they would be out of business in short order.
Computers are useless. They can only give you answers.
-- Pablo Picasso
Here's part of the problem with the complaints against Microsoft. Computer software, by its nature, is a nonrivalrous good. This means that once the first instance of software exist, multiple copies can be made at either no cost or a negligble cost in the case of computer software. In a fully competitive market, marginal revenue will equal marginal cost which equals price. However, a software company cannot charge nothing for its product and hope to remain in business, so either Microsoft goes out of business, don't celebrate too much, or they have to charge a price higher than marginal cost of production.
Another result of computer software being a nonrivalrous good is that the average cost curve for computer software will be downward sloping when it crosses the demand curve. This is an indication that the industry is a natural monopoly, becasue competition cannot exist in equillibrium because eventually if two firms create similar software products, say Windows vs. OS2, there can usually only be one winner, with the loser either going out of business or leaving it as a marginal product with no real market share.
Microsoft is a very large software company and is also a natural monopoly. However, as long as there are other companies that attempt to compete or innovate with better products, see Apple, Microsoft will have to keep improving their products to maintain their market share. In the end, the real winners are the consumers because they benefit from this.
Another comment about the whole Microsoft case and antitrust laws in general. I cannot understand how these laws can be remotely construed as constitutional. It attempts to punish companies for being to big and successful and to attempt to regulate the amounts of profits that companies can make. As an example, let's look at the Microsoft vs. Netscape case. Microsoft made it very hard for Netscape to compete when it started to bundle its browser with Windows. I'm sure candlemakers were very upset when electricity became widely available too. If Microsoft were to stop bundling the browser with Windows and consumers preferred to buy Netscape instead. This will result in Microsoft's marginal revenue declining. Now, of Microsoft wanted to increase the price for Windows, then losses in revenue will only be attributable to Windows as opposed to both Windows and Explorer. So, with bundling, Microsoft is less likely to increase the price of it's software. Yes, 300$ does seem expensive in relation to other software. However, you tend to use it a lot more than other software, Grand Theft Auto is excluded from this conversation. So, economists can show that the total cost to consumers is less with the bundled software than buying it separately. Consumers are better of with Microsoft bundling the software. Maybe we should try to convince the courts and the legislature to leave economic matters alone because all they can do is screw things up with their own monopolies, Amtrak is a good example.
"Laws are made for the public good...The public good is not to be considered, if it is purchased at the expense of an individual." Lord Acton
I would buy windows at $45!, wouldn't even bother with the upgrade version, just buy a new one each time.
This is so typical of slashdot that it's really quite amusing.
Yes, the retail copy of XP is $300. Do you have any idea how small the percentage of people buying a retail copy of Windows is? The OEM copies that Microsoft makes a killing on are often *less* than $45 to computer makers.
That's to support a free product that you're pretty much free to do with as you will.
Heck, I think you might even be able to sell ISO images of RH software because of the GPL (any lawyers or wanna-be lawyers care to comment on that?)
Try that with M$ products and you'll soon find out that BSA doesn't stand for Boy Scouts anymore...
income from OS market: $2 billion a year
loss from exterminating netscape: $300 million
loss from running sega, nintendo, and sony out of the console market: $5 billion over 5 years
the look on Bill Gate's face when MS is broken up by the EU: Priceless
See, the paradox with capitalism is that it always ends up in a state of monopoly. That is, the accumulation of wealth allows you greater power, which leads to mergers, and mega mergers. See Time/warner/AOL, Microsoft and all the things it has bought out, the oil cartels, the MPAA and RIAA, etc etc.
Getting the state to regulate is a wasted effort too, because theses mega-companies have enough power and wealth to buy off politicians.
I don't know what the answer is, but my favourite is stateless socialism (Anarchism). I know many here will disagree. But it's something that hasn't been tried yet.
You have to keep in mind that there are different ways of measuring success. And profit is only one of them. If their goal is to attain 10% market penetration or to get 5 million customers, etc... without making a project (yet), then they are successful. Success depends on how their goals are defined.
> Microsoft charges "too much" for windows, and
> that they have a "monopoly with an inferior
> product."
> Microsoft charges "too little" for the XBox and
> that they are "in last place in the console
> market with a superior product."
Can you not see that these are not the same product? Surely you can.
If not, I will help you out. Windows is an operating system. The xbox is a console gaming system.
You're welcome.
Let me guess - you didn't pay anything for the engine in your fucking car because - get this - it came with the car!!!!
Looking through the threads here I see two lines of thought:
Those who are of the latter opinion seem immediately offended by outside influence upon corporate behavior, whether that influence comes from the legislature, the courts, or even public opinion. Companies, they seem to say, should be able to do whatever they they need in order to be profitable. In the case of Microsoft, this includes charging (arguably) much higher prices for their core products than the market would otherwise bear, or using their monopoly position to force other vendors out of business.
I, for one, reject this libertarian/apologist view of Microsoft's behavior. Markets function best when there is vigorous competition between different players, unabated by abusive monopolies. Microsoft is a monopoly; there are no other competitors for the PC OS and "Office" market, Linux be damned. Being a corporation, and therefore in reality a legal fiction, they can (and should) be made subject to laws dictating what behavior is acceptable. Their behavior has been highly unacceptable in this an many other cases.
Out of money spent on the Xbox, the division lost 177 dollars. The article cites revenues of 505. (177)/(505+177) is only about a 25% loss. And most of this is in initial outlay; MS has a lot of mindshare to purchase first before they're taken seriously on the whole XBox deal. In fact, thanks to Microsoft's desires to conquer this lucrative market, they're excepting a loss for the first year--they're losing money (or at least they were at one point) on every sale.
Its concievable that if MS has learned its lessons well that the Xbox or whatever successor could actually turn a profit. Especially if MS decided to find a way to leverage Blizzard out of Vivendi. Blizzard does have some ties with the console gaming, they made The Lost Vikings under an older name, and if they had enough time and cooperation from the hardware manufacturers, I think they could proabably take the best of their PC games and mix it with the console's ease of use.
I Browse at +4 Flamebait
Open Source Sysadmin
Quote:
/.'s egotisical "You're a coward unless you give us demographics" policy:
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*BZZZT* WRONG! The profit subsidises projects that puts other companies out of business. The X-Box is currently losing $750M/year, and is set to rise. How can other companies hope to compete, or even break into that market?
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What Microsoft is doing is called making long term investments. They knew XBox was going to lose money at first, because of the cost of the hardware. Why does everyone know this except you?
Oh, and if a new OS company came along and wanted to compete... would you say they were screwed over worse by Windows or Linux?
Of course in your zealousness you're going to say Windows, but is it _really_ true?
Aren't you OSS freaks hoping to put MS out of business with free software? If you succeed, aren't you basically putting all businesses in industry X (where X == OS in this instance) out of business? Why buy an OS if you can run Linux for free?
Competition indeed... this seems hardly better than giving away a browser for free.
Now for an off-topic rant about
For the record, I'm proud of being labled "anonymous coward", because it means I had the balls to not cave in "Go on, prove you're not chicken, give me what I want.". No, I won't and your pathetic attempt at manipulation is futile.
The people who invest in Microsoft are such retards that probably nothing will happen to the stock. It is grossly overvalued now and will likely remain the same on Monday and after. These "investors" seem much like the people who "invest" in Amazon.com, while it's stealing money from investors and transferring it to company insiders!
With its ~$40 billion in cash, Microsoft is very much like a Money Market Fund that never pays out any distributions! Now we also learn what we all suspected, that most divisions are slowly pissing away all that cash!
Only a complete, unreconstructed idiot would consider this to be an "investment"! But, it is obvious that Microsoft "investors" are already idiots and will likely remain so on Monday!
..it's called "Employee Stock Options", and it's sold to Microsoft Employees in exchange for them receiving an otherwise mediocre wage.
When the price of the stock goes down, it ends up either increasing the real money that MS has to pay, or increasing the number of stock options they pay. Of course, the latter means that actually everybody's stock is slightly devalued, it's just that the ponzi effects haven't shown up yet.
Should the stock start to drop quickly, I'm betting the amount it will drop will be staggering as all of those employee shares start flooding onto the market.
When the MS bubble finally bursts (and if the company never pays dividends, sooner or later it will, just like any ponzi scheme) it's going to be sheer hell on the economy.
That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze
Thank Bush for this one - it's from having to clean up all the messes swept under the rug when Slick was President - you did notice that all the Enron and MCI restated financials all began back in 1998 and 1999, didn't you?
Actually, YOU don't seem to understand the basic definition of a monopoly. MS has a monopoly because the court found that there was not a viable competitor in the market - they have exclusive possesion or control of the desktop OS market.
The "abuse" of that monopoly (using monopoly power to leverage other business in a way that gives MS an unfair advantage) is the illegal part.
While I agree that "most people" don't care if MS used standards, I would bet that "most computer professionals" DO care, yet due to the monopoly issue can do very little about it. MS's failure to adhere to standards (and the embrace and extend practice) makes it REALLY flippin hard to interface MS systems to other non-MS systems.
What crap is this. I don't like Windows and dislike MS incredibly more, but I hate purposeful, outlandish inaccuracies.
/. editor decides to ignore this (how exactly do you ignore this and then whine about how Dell et al. dropped Linux installs, aka the OEM channel?)). And I can tell you Dell is not paying $300 a box for XP Home. They aren't even paying $80.
/. for bringing the blatently obvious forward; we all know MS are screwups. After all, this "news for nerds" has been hammered at for 5 years now. Get a new soapbox. Why don't you freakin form a PAC and go after representatives that piss you off, since obviously you aren't happy with that vote you get, since you feel more special than your neighbor.
Full version of Windows XP Home, not the upgrade, full retail, and the version most people opt for, is no freakin way close to $300 at most online outlets. I picked mine up for $150+tax, shipped from a retail office outlet, at the end of September, sealed in its oversized blister pack with box inside, all legit, all receipts and packing slips, CUA, and all. Again, full retail, not the OEM stuff.
Even the Pro version, full retail, is $250 if you have a brain and freakin shop around. Obviously, the editor is so flush with cash after laying off all those fellow workers at OSDN.
By and far away most of MS's products ship out through the OEM channel. You know this, but silly
And, while it's not $45, a company can charge whatever the hell they want. So, while I'm on this rant, any car produced today doesn't have $2,500 worth of parts in it, but you aren't going to find a car for that price. But I don't see you bitching and whining about the labor unions driving up car prices, or, more substantially (as workers really just try to get what they believe is fair with the rest of society), the health profession (an enormous part of a car's expense is actually to pay for the outrageous sums the doctors and pharmaceutical industry "requires" for their income and profit margin, which gets passed on as health benefits, aka company cost, to the autoworkers).
As if the doctors and pharmaceutical industry don't exercise state monopoly power via "professional" ties, aka the state laws that requires medical licensure which, while justifiable, are not justified because they are leveraged to cap the number of people trained, since they control the academic channel.
Gee, those billions MS costs us are really hurting us, as compared to the trillion dollars getting thrown around behind your back with medical expenditure, worsening by the day as profits rise, generics get put out of business, and our population ages (typically requiring more care).
I applaud
A witty [sig] proves nothing. --Voltaire
For the 3 months ended September 2002, the first number on each line below is revenue, the second number is operating income/(loss), in millions of dollars:
Client $ 2,892 $2,482
Server Platforms 1,523 519
Information Worker 2,385 1,879
Business Solutions 107 (68 )
MSN 531 (97 )
CE/Mobility 17 (33 )
Home and Entertainment 505 (177 )
Reconciling Amounts (214 ) (455 )
Overall $ 7,746 $4,050
Yes they are losing money on a lot of other things, but the amounts of those losses are pretty insignificant to Microsoft. Even the comparitively low-margin Server Platforms division could use its profit to cover the losses of Biz Solutions, MSN, CE, and XBOX combined. The overall profit margin (4050/7746) is still 52% -- an astoundingly high margin for any business. After income taxes, Microsoft's profit for the quarter (yes, for a quarter, not a year) is "only" $2726 million, which is a net margin of 35% (that's 2726/7746), still extremely high.
At this rate M$ will catch up to 10+-year-old olvwm in about 2030 or so....
The price of PCs have gone down dramatically in the last several years. Even though the price of Windows is the same, or has risen is something that the consumer mostly doesn't see directly. Not many people have done the Windows upgrade since Windows 95 came out. Now they just get a new OS when they buy a new computer. A similar thing happens with Office being loaded on new PCs. Unless consumers *really* start to resent the prices of Microsoft, not much will happen.
whopper?
And all the American Touristers he ruins?
Microsoft is doing LARGE investments for upcoming products and _then_ they get returns. When you look at profit margins the way you did (and it is showing in the Home, Business, and other divisions) they are having huge upfront costs and then they harvest. So when you look at the profit margins that MS is enjoying today for Office and Platforms, think again, go back in history and have a look at the upfront costs, the bets that Microsoft made in the past.
Sony was the first to lower their price on the PS2. MS just followed. I don't know where they are losing money, but they are not losing much.
MS could sell the XBox for $49 without breaking a sweat... why aren't they? They are selling their console at a price slightly higher than the competition. Surely this shouldn't be illegal!
In fact, if they did lower the price to $49, Sony could too, and so could Nintendo. They would all lose money... so what would be the point?
When Arby's offers five roast beef sandwiches for $5, they are losing money (i.e. selling below cost) in the hopes that people will spend money on fries or drinks (where they make tons of money). They also hope to attract business from their competitors... should this be illegal?
A monopoly can't have alternatives. It has a monopoly on the market. No competition! Alternatives are competition. I don't know how much more simply it can be stated, but obviously it won't be enough for you. You'd rather name call than make a cogent argument.
Imagine a monopoly, where comparable goods are offered not only at a significantly lower price, but literally FREE. Yet, this has had negligible impact on MSFT's monopoly. How long would the following monopolies have lasted?
1. Standard Oil in the face of a competitor that gives away oil for free.
2. Coca Cola if Pepsi began giving its product away free.
3. AT&T if another company offered no-strings attached free long-distance.
I would go so far as to hypothesize that MSFT is one of a new kind of monopoly the likes we have never seen before. Not unlike Ebay and Paypal, MSFT has not only created the market, but created all the rules. In order to break the monopoly, you're going to have to get MSFT to change the rules. However, as these companies have more money that god... the only way to do so is by getting the government to exert force.
I don't blame MSFT at all in this. If I were chairman of MSFT I would be doing the exaxt same thing. You have to admit that these are some intelligent men and women, and they've made a whole lot of money for their stockholders. However, I do blame the US Gov't for not taking a more aggressive role in asserting its role as the final arbiter of economic policy in the United States.
. SLASHDOT: Home of the vicious nerd.
I see a lot of people prophesizing about how Microsoft is going to use its Windows monopoly to take over other markets, but I personally don't really see it happening. While Microsoft has a lot of power in the computer industry (they were able to take out Netscape, and they're working on replacing every other media player software) but in other industries, they really don't have the leverage to take over a market. Take the X-Box for example. Microsoft made a superior console, and is selling it for MUCH less than its worth, but its still not dominating the market, nor, I beleive, will it. Sasme thing with the phones that Microsoft is selling. Microsoft has no leveraging power. If they threaten to cut off the supply of phones if a store refuses to only sell theirs, who cares? Most people don't even want phones with Windows CE (I know I don't). Most people want the phone to be able to make a phone call, and thats about it. Its the same thing with game consoles, and with PDAs. Just because Microsoft has leverage in the computer industry, doesn't mean they have anything in any other industry
Just a little blurb re: your "Another comment about the whole Microsoft case and antitrust laws in general. I cannot understand how these laws can be remotely construed as constitutional."...
Way back when (turn of the centure kinda thing) the trusts/monopolies were pretty much beginning to contrtol the gov't...forcing all of their workers to vote a single way, making elected officials who they didn't like have a hard time in office (via crime, etc...making them seem impotent, essentially). So they were essentially trrampling on the rights of the people which the constitution (correct me if I'm wrong) is there to protect. Not the rights of a company to get very very rich.
IMHO, there's a point beyond which gov't regulation is needed, or else the country would begin to fall into anarchy. A situation which it's the gov't's job to avoid.
"The Jungle" by Upton Sinclair paints a pretty stark picture of trusts getting out of hand, unfortunately the last couple chapters descend into inane blather about how good socialism is, yadda yadda yadda (sorry to ruin the ending for you!)
--Jubedgy
Si hoc legere scis nimium eruditionis hebes
Seriously. Y'all need to read The Fountainhead(or read it again). Short of that, at least try reading this:
FAQ's on the Microsoft Antitrust Case from The Center for the Advancement of Capitalism
Yes he surly is
...hitler
Look at the vedio..man that cracks me up
Bill is related to
I think what we are looking at here is some sort of economic evolution. You will notice that Microsoft's most mature products (office and Windows) are profit leaders. However, loss leaders will be products that some day (maybe 5 years) will bear the fruit grown in the soil rich with competitor's blood. Once all of the competition for browsers, or Database servers are dead, they can crank up the profit margin on those products, as all of the competition has been swallowed, killed, or discredited by FUD.
The real unanswered question is whether this is a death knell or call to arms.
hah, can you just picture phoning up MS sales dept and trying to get them to sell you wind0ze at lower cost??
them...$300
you...$50
them....$275
you... etc...
hahaha
As a former employee, I think they are doomed too. Linux is only a minor problem though, the real issue is the maturity of the market and thier inability to add value to their current products. Their products will simply become a commodity.
Coca-Cola hasn't added value to their core product in a century, has substantially higher prices than their competitors (generic), operates in an extremely mature business, and yet has not trouble increasing profits.
tree of knowledge. Sweet Apples. The Serpent brought us the Word and Visicalc dropped from the heavens and lo! we had a choice and we took it.
(Self) Banned from Garden of Windows.
Cake or Death? Cake Please!
The reason products succeeds nowadays is because they outspend their competitors in marketing, that's the way the market works. How the hell do you think such a pile of crap the PS2 is can sell that much?
haha this is funny.
Actually -- Coke does have a monopoly!
They undercuty Pepsi in the fountain soda business... ever notice that 95% of places sell Coke only when you go out to eat?
To a "coke drinker" Pepsi tastes off... many people are not willing to switch back and forth.
Strategy works
Also it could be mentioned that Microsoft has been speculating in put options on their own stock. Like much of Microsoft's business plan, this only worked while the stock price went up, so it's history now (or they're still losing boatloads of money on it)!
All it does it drive companies out of business. Who's the first to go? The Black worker, of course. 6948 Black computer based businesses were shut down last year because of profits being stolen by OSS product made by white coders
Who do you think you are, Chris Rock?
"MS has priced their product (successfully, I'm sure) to maximise their profit - which is NOT the cheapest price they could charge, any more than the same is true for Coca-Cola. This is a feature of our modern "capitalist" society; competition only goes so far in the face of advertising and consumer apathy. It has nothing to do with being a monopoly."
Profit Maximization:
Perfect Competition Case
Price = Marginal Cost
Perfect Monopoly Case
Price = Marginal Revenue
It has EVERYTHING to do with being a monopoly. If Ford were to decide to raise their prices, people would buy less Fords (not less cars). If MS decides to raise their prices, people buy less Operating Systems, Computers, mice, etc (add any compliment good). The effect on the economy is devasting. Furthermore, optimal output for a monopoly != optimal profit, since they control the price (optimal profit is at much lower output). So, you get much less (maybe half) the purchases of computer related equipment than you would in a competitive market.
So, you see, it has EVERYTHING to do with being a monopoly.
Sdelat' Ameriku velikoy Snova!
Make jokes like that and they will bring back Microsoft Bob and use their monopoly power to impose it on a helpless world!!!
If you sell your product for 300 dollars (like in this example) your profit margin is way TOO high and you are guilty of monopoly rents. Price it at $45 dollars and then you are preventing anyone from challenging and competing with you. Base your price on competitors and you are collabortatively pricing.
No matter what you do you are guilty...
That is why splitting the company up into portions is not a bad idea...
Can anyone think of a reason (other than bad precedent) to not produce baby microsofts?
Walking the line between protecting the public and interfering with the free markets is tricky at times...
--Joey
Of course, the contents of a can of coke is consumed whereas after you buy a copy of windows you can use it forever (basically). That's the problem right there for MS. The "consumable OS" is their holy grail!
I'm with the OP. The biggest problem for MS (and some other software producers) is that after a certain point of software maturity, many customers will not have any reason to upgrade. This is why MS is so keen to introduce "renting" software and also why old systems are so rapidly dropped from being supported, something which is still a useful ploy to instill fear in managers. "Oh! no! No support?! Must upgrade!"
Belief is the currency of delusion.
Ah, so I suppose all the research they do into voice and handwriting recognition haven't contributed in the slightest to the development of the TabletPC?
And I suspect the MS SQL guys ignore all the research they do into databases.
Junk mail filtering? Pshaw. They'll never use that.
Compiler technology and programming language research? They'll never use any of that!
Ubiquitous computing? Who has ever heard of MS being interested in that!
While MSR doesn't appear to be working on anything directly related to the NT internals, almost every research project they list looks pretty related to things MS is working on in some capacity.
So what? MS pays them dont they? If MS is paying them what do they really care?
How is it so "embarrassing" to here people talk about how great their product is even if it isn't. The VPs are trying to keep them motivated, is that good. Would it be better have the VPs yelling at them and telling them how crappy their work and product is.
How do we know you're just not making this up?
Well, and breaking up big monopolies is a good first step towards addressing that problem and restoring a free market.
First, there were about 10 people who made points like these: Mcdonald's charges $1.25 for a large coke when it only costs them $0.03. Diamond retailers have a 200% markup. Vending machines sell coke for $0.75/can when it costs $0.10 to manufacture. Look at how big their profit margins are! And so on...
The profit margins at Mcdonald's, jewelry retailers, and vending machine companies are very low. You have to take into account all the costs in calculating profit. Mcdonald's only pays $0.03 for the coke they are selling you, but they paid over $1 million for the building in which they are selling it to you, and over $200k/yr for employees in that building, plus costs for managers and benefits, to say nothing of corporate expenses, advertisements, and so on. Retail jewelry stores fail more often than any other kind of store. Sure, they charge a 100% markup, but they get like 2 paying customers per day, for which they must pay rent on a store and employees' salaries, etc.
An 89% profit margin is extremely unusual. IIRC, the average profit margin in American business is around 4%. The only other large companies that take anywhere near that profit are drug companies, right after marketing a "blockbuster drug" where there few competitive alternatives.
According to contemporary economic theory, profit only occurs where a monopoly exists. This is because in perfect competition price = marginal cost.However, this cost includes "opportunity costs" or the next best choice given up.
Accounting profit alone does not indicate a monopoly. But who are we kidding, most businesses these days have some kind of monopoly.
For instance your example:
" What about soda fountains at McDonalds (or wherever you buy your greasy fat)? They charge you $1.25 for seventeen cents of syrup and some essentially free carbonated water. "
You have just described what is called a "local monopoly." You are paying monopoly rents because you'd rather not go to some other geographic region to get your sugar water at that particular time. Believe me, those prices would decrease drastically if there was another fountain next to it selling at half price.
"What if people just EXPECT windows to cost more?"
And what if MS has gained some much power over the computer industry that THEY now decide what people should expect from the market.
Monopoly is the ugly boil of capitalism that nobody wants to admit is real. Free markets fail when there is a monopoly and more closely resemble Micro-Communist empires.
Sdelat' Ameriku velikoy Snova!
"What about soda fountains at McDonalds (or wherever you buy your greasy fat)? They charge you $1.25 for seventeen cents of syrup and some essentially free carbonated water."
You can also walk next door to the supermarket and by a six-pack of soda for $1.25, that is the difference. It's REAL choice great?
If you wanna get rich, you know that payback is a bitch
If you oss guys are so good, why don't you create an OS that people can use. The fact that people still dish out so much for windows when your stuff is free speaks volumes about your quality. You know what your attitude is called ? Its called jealousy...yeah ..u guys are just J.
No wonder that slashdot uses green as the main color.
Turns out a monopoly doesn't have to abuse it's power to be 'illegal' does it?
Your right, my argument was malformed. The abuse obviously follows the actual state of being in a monopoly (this is starting to sound like a Monty Python skit).
But if you read Sherman, et al. you'll find that monopolies are illegal because they COULD lead to abuse. This is what drove Rockefeller up a wall. He didn't actually DO anything illegal (not like create J++ out of Java or anything) and he still got pinched.
And finally, your second sentence sucked. It seems like you're arguing that MS has a monopoly because of a court finding and not because the actually have a monopoly.
Seeing as we're being all picky on semantics.
The opposite of progress is congress
MS could sell the XBox for $49 without breaking a sweat... why aren't they? They are selling their console at a price slightly higher than the competition. Surely this shouldn't be illegal!
At issue is why Microsoft isn't charging $400, not why they aren't charging $49. The Xbox design is too costly--it shouldn't survive in an efficient market. There is better technology at a lower cost. The main reason Microsoft wants Xbox is because it pushes their software into yet other markets. Microsoft is propping up an inefficient, costly design with subsidies from other divisions in order to drive competitors out of business. That should very much be illegal.
When Arby's offers five roast beef sandwiches for $5, they are losing money (i.e. selling below cost) in the hopes that people will spend money on fries or drinks (where they make tons of money). They also hope to attract business from their competitors... should this be illegal?
We want to prevent Arby's getting a monopoly (locally or nationally) since we need competition on order to keep the market efficient.
Our legal system does that by punishing specific behavior. If you take that approach, if Arby keeps selling below cost for an extended period of time, yes, that should be illegal.
Actually, I think a better approach is to punish outcome. Let Arby's do whatever they want, but if they manage to establish a monopoly (e.g., the only burger joint in town), then break them up regardless of how they got to that position. Similarly, we should stop all this bickering about what Microsoft did and didn't do or whether they are a monopoly or almost a monopoly; they have more than 80% of the market share in a number of sectors, and that should be reason enough to break them up.
Either way, if we want to live in a free market and capitalist system, we cannot tolerate the existence of unregulated monopolies--we need to curb monopolistic tendencies somehow.
emerging markets. Sorry to burst your bubble, but it has nothing to do with linux being a "major" competitor...
I have no bubble, I'm pretty much un-affected by whatever MS does these days. From time to time I need to spend effort getting my video card working so I can play games, but other than that, I'm a Unix admin.
--
Matt
As a former employee, I think they are doomed too. Linux is only a minor problem though, the real issue is the maturity of the market and thier inability to add value to their current products. Their products will simply become a commodity.
Of course, they way MS is doomed is most companies dream: they can coast along with their current products (and sizable cash and investements) for about 20 years before they see the train at the end of the tunnel.
True enough, it's been said that they are their biggest competitor. How many shops are going to upgrade to WinXP from Win2k, or Office 2k to Office XP?
--
Matt
Watch it - your post reeks of business savvy "lingo" and factual basis. You should know that this is not the place for such things.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips
Today, they have a collossal profit, and in addition, the OS and Office divisions support the Xbox, the media player, IE, .NET, and so forth. I think it's pretty clear that they're making higher profit margins now that the competition's gone. I think it's also obvious that most of their other projects are mainly to make it harder to switch away from their OS and their office suite.
"The question of whether a computer can think is no more interesting than that of whether a submarine can swim" -EWD
This is more to the ill informed replies to your comment then your somewhat innocent post but . . .
;)
"And that is where most Americans put their collective foot down."
No, I would say most Americans put their foot down way back when the price went above $10 or $20 (not that it historically ever did; I am thinking of supply and demand curves here).
MS wants to maximize profits. They do that by maximizing consumer surplus. However, if they charge too high then less people buy the more expensive versions, and they make less profit (@$1000, say). However, at $10 they sell a whole lot more (almost everyone in the U.S. can now afford a computer) but the price is so low that they still don't make the best profit. So they sell somewhere in the middle, or "under" sell. The economy suffers since an artificially small amount of people can afford computers at MS optimized profit levels (relative to a competitive market), but that loss to the economy (consumer surplus) becomes MS's gain.
So pat yourself on the back, you have just made MS richer at the cost of your next job or bonus by buying an MS product
Sdelat' Ameriku velikoy Snova!
... is because they can get away with selling it for what they sell it at. The only correlation between cost of production and the cost of the item is that the cost of production is the bare minimum you can sell it for in the long run. Ultimately prices are determined by how many copies of the software you can reasonably sell without driving people to a competing product. Because of Microsoft's monopoly on the market, they can keep these prices higher because the barrier to entry for any competition is greater.
But anyhow, the cost of XP's actualy physical production and shipping is insigificant. What costs money for these products to be made is software developers and marketing. RedHat does some marketing, but it's all much lower cost and lower visibility advertising. RedHat pays only a small percentage of the cost of the development of Linux, funding a few key developers, and people to package and test their distro.
So really XP should cost a whole lot more. The fact that Linux still has trouble making headway despite it's substantially lower cost is indicative of the problem with the market.
This sig has been temporarily disconnected or is no longer in service
Well, guess what... windows 9x took a lot more coding then dos. Yes, they may overcharge but there is a great bit of difference between coming from dos and compiling lots of bits of free software and selling them in a package with support.
:), but thats not the point... .
But RH makes a free downloadable full featured version (or else they wouldn't be able to use OSS software but thats another point) so it's all good with linux
Hmmm... Pie...
Microsoft is deploying a wonderfully automatic update infra-structure. Windows 9x(with a download)/2000/XP and Office 2000/XP are pretty good at telling the user there is a critical update waiting for download and installation. It absolutely NOT above Microsoft to use such an capacity to, for instance, install a new DTD for all their file formats every week. Besides, in an upgrade or two Microsoft may well ask the user to let it update everything without asking. Now, chase this...
One can measure the degree to which linux sucks by the price microsoft is able to charge. Linux is free but Microsoft can still charge $300. Get a clue guys, fix the problems in your freeware operating system before you complain about microsoft's price!
I notice that the Lynx console isn't as common as it once was. When people hear `evolution' they tend to think of successful species, the apex of the pyramid, but evolution is all about death and destruction. There are far more species fossilised than extant.
Perhaps when OOo and Linux barbeque their cash cows, Microsoft and all of these loss leaders will be a set of bones and footprints.
The thing which astounds me about Microsoft making such a loss is that I can buy a full-power no-screen PC (thrice the clock, thrice the disk space, fourfold the RAM) for about the same (all-in-1-mobo AUD$110, CPU 80, RAM 90, case/kbd/mouse 60, HDD 120 == $460) as Microsoft's cut-down XboX (AUD$400 plus extras, no kbd or mouse).
Why are mighty Microsoft making a loss on something that Joe `Beanhead' Local Wholesaler can make a profit on?
Got time? Spend some of it coding or testing
To post/complain on here. Most of you are !MS....... yet, I don't see 3/4ths of you working on an OS that can compete with it. Not even linux, or the Mac OS can do that (yet). When you can offer all the backward compatibility to all the programs that your everyday user DOES use, along with all the new programs coming out, the games, the office programs, etc. Then tell me microsoft is evil because it's smashing the competition. It's beating the competition because it WORKS the other stuff CAN'T compete (once again, yet). I use linux myself, but mostly for server-related things, which I think it's better than MS for. But with everyday apps... or fragging someone in say JK2, etc. Windows works better, faster, and without a bunch of extra crap. Add to the fact that hardware vendors choose not to (for the most part) make drivers for Linux, etc. That makes those OS's much less appealing, thus cutting into linux's share of the market. It isn't just microsoft. All the software vendors, all the hardware vendors, and most users contribute to their monopoly and their profits. So don't complain about it until you've switched 100% over to linux or some other OS (which roughly half of you, possibly more haven't). Or, until _YOU_ can program a better more competitive and still compatible OS. Until then get over it, it's a monopoly, but it WORKS!
Now, I'll admit that they have used their market share to keep certain programs out, and to bash those said programs.... but what company doesn't? And which of you, after building a multi-billion dollar empire wouldn't try to protect it? But, I'd bet you that even if microsoft played fair, they'd still win.
Comment removed based on user account deletion
Hello,
I don't know where you came from but here in a post 9/11 America you can't speak against our President. Doing so makes you not only an unamerican, unpatriotic, bastard but it also makes you a terrorist.
Hmmm... Pie...
http://www.tucows.com/system/preview/194362.html
Amazing how people are willing to spend days downloading and configuring Linux stuff but can't be bothered to spend 2 seconds to look up Windows shareware/freeware.
What kind of R&D? `How to keep Linux out of India'?
Got time? Spend some of it coding or testing
Professional Sports probably makes more profit than Microsoft but when's the last time you hear the government sueing the NBA, MLB, or NFL or a major number of people complaining about it?
I hate to use this as an example though as I don't think Professional Athletes deserve what they make.
"Not knowing when the dawn will come, I open every door." - Emily Dickinson
Hold on -- the problem with comparing the $300 list price with the 85% profit margin at first blush appears to be that, of course, copies are sold at every price from $300 down to whatever bulk OEM bundling deal might be hammered out.
However, that misses the point altogether of a margin: an 85% profit margin is always an 85% margin. 85% tells you what fraction of the take, and it's a big take, is characterized as profit. And 85%, especially given the VOLUME we're talking here, is staggering. 85% suggests you've either got a product that it unusual and special and hot and patented or hard to imitate, or that something fishy is going on.
You almost want to ask, why don't they spin off the Windows division? Well, we know that the Windows division bankrolls other, future plans of the Microsoft Corporation as it casts about trying to provide for its ongoing viability.
As for the relevance of monopoly, easy, it raises the highest price that the market will tolerate by imposing illegal constraints on the market finding something better. It's the essential reason that a monopoly is desirable. Think of it as getting a higher price from your customer with a handshake and a gun than a handshake alone. Simple as that, and just as illegal.
Why bother converting?
Got time? Spend some of it coding or testing
Less than USD$700. And Moore's Law did the price crunching, not Microsoft. There were plenty of other relatively low-cost OSes around, like CP/M and AppleDOS. Economist, schmonomist: technology wielded that axe.
Got time? Spend some of it coding or testing
Microsoft is leveraging their high prices to enable them to give away other products, thus undercutting their competition.
Without doing research, I can pretty reasonably put this in two words -- "bull" and "shit".
I'll be willing to be that two years ago, three years ago, all those markets were reported as profitable. And it isn't because of a "tech downturn" that dropped *everything* into red ink without managers doing any cost saving. No, you'd hear about divisions being cut, layoffs, everything if there were real losses.
It's pretty obvious what's going on. MS is making money, just as usual. A while ago, a big company went belly up because of "loss hiding" -- our old friend Enron. As a result of this, lots of laws were passed making executives and auditors legally liable for hiding losses, inflating profits, and tucking them into future good years. Perhaps more importantly, the current public opinion is to crucify execs doing this, and not to let the government let them off the hook easily.
What's happened is that our buddy MS has, like most large companies over the past few years, has been tucking away a few too many losses under the rug and artificially jacked up reported profits.
Now, all of a sudden, Bill G. and Co. could be doing hard jail time (to say nothing of their auditing firm) if they can be shown to be deliberately hiding losses for another year. So they want to get rid of their losses *now*. It can't wait for another year -- they have to show all those unreported losses and inflated profit immediately. Well, they can't say that Windows is losing money -- 2k to XP migration is critical right now, Linux is a threat, and looking less than stable would be an awful idea. They can't say that Office is losing money -- for the first time in years, competitors have just sprung up, including Open Office and even WordPerfect pulled a comeback. The Office product also has to be rock solid. So where are all those losses going? Right into these non-core markets. Everything else loses money to clear up the balance sheets.
This isn't just MS, either. You're going to see a *lot* of big companies doing this, and a *lot* of negative filings, as companies have to avoid giving away past reporting falsehoods.
Now, I haven't looked at their past sheets. If this is consistent with past filings, I'm wrong. But I'd quite confidently bet that I'm not.
May we never see th
I dunno about you but i absolutely hate shopping for computers (and don't do so anymore) at normal places like compusa, circuit city, and other mainstream computer/electronics places. I personally can't stand the teeny boxes, the super shitty components with amd systems, and the preloaded software.
Pricegrabber.com, or pricewatch.com, will get you excellent prices on components. I haven't a bought a new computer for my self for years. Just upgrading certain parts as they get ancient (that includes my case as well).
Hmmm... Pie...
Microsoft Canada charges $30 CANADIAN for vanilla(read oem) WinXP Professional to its employees.
I have a couple of friends who worked(as co-op students) for Microsoft Canada in Mississauga, Ontario. So I'm not speaking out of my ass.
Plus MS employees get _really_ cheap M$ hardware(70% off--no fucking joke), though they have a limit on how much units they can buy. The exception to this is Xbox...there's hardly any discount(about %10 off) mostly because their incurring losses on the units already.
its funny, cause if they actually DID charge 45 bucks for xp instead of the bullshit 300, maybe id actually pay for the copies i already use
The profit per job for my brother-in-law the steel fabricator was roughly 6%, but since the jobs were typically in his yard for less than a month that probably worked out at 60-70% of his capital investment returned per annum. Or would if BHP (effectively has a monopoly on steel here in Oz) didn't make and fail to warrant crappy steel (e.g. beams with huge lesions in them). A lot depends on your PoV.
Got time? Spend some of it coding or testing
in fact, it is bad to charge as little as possible for a product, because consumers immediately think "this must be a load of junk if it's priced below what competitors charge". Like it or lump it, it's how people think.
When was the last time you saw a $5 pair of shoes and thought that they must be ever so superior to the $100 pair sitting next to them? So much more comfortable, and reliable?
Never? That'd be right.
I keep seeing people say that because they make a lot of money on one product and lose on the others that it doesn't make them a monopoly. That is true, but just step back a little and ask yourself why they do it. They slowly cripple all the smaller businesses around them that are trying to compete against these underpriced products. When that happens, they begin to gain more and more of the market until they pretty much have little to no competition left. When this happens you have serious abuse of a monopoly. It has already happened with the Windows OS and Office. Now they will slowly begin to gain control of other markets they seek to take control of. Once you have the money pouring in from a product that you can price however you like, then there is no problem undercutting the competition with your other products. The entire Microsoft strategy is genius and also very evil. It will ruin many industries. The economy may only get worse with Microsoft having so much power and control. Bash the Microsoft bashers all you want, but they are the ones atleast slowing the beast down.
Question everything.
The OS division is where MS gets the cash to pour into products that will never turn a profit, or at best break even; the services they're providing (even for a charge) that are good to have but aren't really marketable, or are only marketed by MS for the sole purpose of having a presence in that market, without hope of actually taking over.
Hint: public companies don't enter markets just "to have a presence." They enter markets to make money. The ultimate goal is to take over a market. NO ONE enters a market to have a presence, not even Microsoft. At the very least, they may take a loss in one market to sell people in that market other Microsoft products. But strangely enough, I don't think that was your point!?
"And like that
I happen to know another company with a negative cash flow in most divisions. Actually, all divisions. It's VA Linux, and they're burning up money (from VCs and the IPO). Does that make them evil? Nope. Capitalism is about investing money (and taking a loss here and now) in the hopes of achieving profits in the future. It cost a lot of money to develop SourceForge (and all those star wars ripoff ads!), but now that it's developed, maybe they'll be able to sell it for large amounts of money.
Why is it different for MS? Because they don't need to seek outside VCs or do an IPO to create MSN or MSNBC or XBox? Or because someone has a hard on for them?
Do you even lift?
These aren't the 'roids you're looking for.
I remember seeing one billion dollars thrown around several times for the advertising budget.
I might be off, but I remember a $1B advertising campaing related some a MS product recently; might have been WinXP. The analysis of it was that this statement was pure marketing.. They included in that money expenditures of OEMs, and other creative aspects. That particular campaign was more like $200 Million physical MS dollars.
Given the ruthless rational marketing gaming they're playing, I wouldn't trust any numbers that come from MS. Remember that they have to justify their [low] expenses, not only to the government/public, but to their share holders; many of whom have been crying for years to have dividends paid out.
-Michael
Well, last time I checked it appeared that they were not paying taxes at all. Outrageous. I wonder what their current situation is ...
You completely missed the point, and you're wrong as well.
The unique thing about Microsoft is that its monopoly in the OS and Office spaces allow it to grossly overcharge for these products, which they would be unable to do in a free market. Every company does not do this.
They are using the fruits of this overcharging to enter and dominate other markets, so that by the time Linux and OOo blow away the OS and Office markets, Microsoft will have other monopolies to exploit after the same pattern, and with which to maintain their existing monopoly (e.g. if they wipe out most competing PDAs and 'phones, then your PDA and phone will only interoperate with Windows, just like only Outlook interoperates with Hotmail unless you pay money).
Fortunately for the consumer, I think a number of their little loss leaders are going to stay belly-up no matter how much artificial resuscitation they endure.
Got time? Spend some of it coding or testing
During my time at Microsoft, everybody was aware that Office and Windows were the cash cows of the business. That's why they get all the nice ship parties.
And I've never run into a Microsoft employee who spelled "hear" incorrectly. Or who posted non-anonimously about something like this.
Nice troll, though.
Linux is a viable alternative to Windows.
Well, and breaking up big monopolies is a good first step towards addressing that problem and restoring a free market.
While I'd love to see MS broken up; I highly doubt that it would solve much. It would only get deregulated, given enough time. MS and Intel are in collaboration (due to mutual advantage). Why would OS / Office companies be any different.
Office, for example, proportedly would better support Apple / Linux. BUT, Linux support would cost them money initialy (and would require nightmarish tech-support), and would open up the Linux platform. Doing so leaves them vulnerable to competition, such as from Star Office. Further, I believe many proposals had share holders owning stock in all sub-divisions. They would obviously further the collusion efforts in any ways possible.
Remember, we're living in the same as as Enron, with accounting and inter-corporate cohabitation that puts even MS to shame. Any circumvention is possible.
Lastly, no government is going to break up MS any time soon; at least not until we're out of a ression. MS is a large contributor to our international exports; thereby lessoning the trade-deficit.
-Michael
They promised us that they would NOT use them!
"A plan fiendishly clever in its intricacies"- Homer Simpson
What a complete crock of shit. It's overconfident bastards like you that give Linux a bad name by proclaiming it a cure all for every code bug and user mistake known to man. Ever hear of alternative shells, using your brain downloading attachments, Windows Update, and if you can't find it within your brain power to figure out when to use BATCH over VBScript then how are you managing counterintuitive shellscript commands. Just because YOU choose to use shellscript doesn't make it "normal".
Hello what happens when that nice distro becomes just a wee outdated? Security changes. New distributions, new trends. Do you chuck out the old and put in the new and say to hell with all the old files you made? Or will you have to manage that?
I'm sure that your genius brain can solve all the problems thrown at you with the great Linux distro you've purchased at Best Buy. Good Luck to you.
Personally, I think The Register got it wrong. On their focus, that is. It's natural for businesses to use their more profitable divisions, as even The Register mentions, to fund their less profitable divisions. Although, eventualy, if the new divisions remain unprofitable, it would be wise to lose them.
So to adress your arguments:
You should really check out those other links in the article. When you do you will see the problem is with the monoply rents and not what it is spent on.
Microsoft's great sin(note the humor and realize I'm poking fun at myself;-) in this case is that while the cost of producing PC's has gone down significantly, the cost of the OS has gone up. While the margins for the OEM's(note that OEM's operate on small margins) have gone down the margins for Microsoft have risen. Microsoft is in effect soaking up all of the extra profits. Microsoft can continue to raise prices because they have a monopoly. This is their monoply rent.
Yes, the consumer is being hurt here. Although it's not obvious because much of the rising costs have been hidden by the decrease in hardware prices. It is estimated by the CFA, that the Microsoft and Intel monoply tax err rent is $296 per computer.
This is an argument of abuse by Microsoft that effects the consumers more directly. While much of the arguments against Microsoft describe how their Monopoly has hurt the industry. There has not been as much description on how Microsoft's monoply has hurt the consumers. Now, I may be wrong on this, but I believe consumer damages are also grounds to take action against a monoply in the USA.
Well put. Just a few additions.
A capitalistic society is necessarily a buyer-beware society. One of adverse selection, and price/quality volitility.
However, it is also a game of rationality. With the Adam Smith (society benifits from each acting according to his best interests), or better John Nashes addition of collective barganing, we can compensate for corporate abuses by:
1) Having a reliable system of regulatory law
2) Having an adaptable set of regulations
Part 2 is qualitative at best, but generally should work for major issues (supposedly MS should have been such a case).
Part 1 is the most important. In developing nations, it's less likely to exist. Mafia, corruption, beuracracy, and fear of hurting the economy by punishing opportunistic yet successful businesses all frustrate this goal. However, even after successfully enforcing laws, it is important to make sure that there is a very low probability that a corporation can "get away with" violations. Lacking such accountability, corporations can factor in such prosecution into the cost of risk. Prosecution is no more coercing to them than, say, the risk of losing a couple shipments of supplies/product due to bad weather.
Prosecution should be nothing less than detremental to a business, and there should be no [risk of] leanency(sp?), for fear that the process can be treated as insurable loss. Arthur Anderson is a wonderful example of such a practice. It'll be another decade before an accounting company would risk such data-munging.
This is the only way that a mostly free capitalistic society can prosper.
Personally I feel that elements such as software patents are egregious, but these fall into the qualitiative elements of regulation. So long as item 2 is upheld, however, the long term should not be the worse for it all.
-Michael
I'd rather be using open software and open formats anyday; no lock-in required and I know I have a whole lotta money left in my pocket to pay for other things.
Ah yes, you are right, M$ has always acted that way. Windows '93 was essentially dumped onto the world using the DOS cash cow to support it. That would be a monopoly rent that was given to them by IBM's patents and stellar reputation for Business Machines. I remember Bill Gates admitting that "Piracy" made his crappy GUI dominant. They were able to leverage all the work put into DOS in their adverts, saying that Windows 3.x was a good bet thanks to all the DOS software out there. From there, a vendor lock was easy and so was the browser war. Today's little server war will be a tougher nut to crack, because M$ has pushed people beyond reasonable expectations and they are abandoning them.
M$ has made it's bed. Can you name one business partner M$ has ever had that does not regret it? The developers left first when it was apparent that no one but M$ can make money under M$. The users are following as they realize M$ software quality has never gotten any better and that it only gets worse as M$ finishes off all "rivals". Oh yeah, they also got wind of Palladium, and all the dirty EULA changes.
Now let's just go back 75 years or so. Remember how Standard Oil used it's monopoly on refining to achieve a monopoly on exloration and retail? Can you tell me how that's different from the hideous vertical monopoly on computing that M$ aims to achieve through Palladium and "trusted computing"? One difference is that the later is simply unAmerican as it will effectivly eliminate your first ammendment right to free speech. It will eliminate your means of uncensored electronic publishing, if they sucseed. Something tells me that they will fail as the world is not full of slaves, despite examples like yourself.
In order to enslave others, we must first enslave ourselves. It's an implicit concept, that if you can extort things from others and think that's OK, you must believe that it's OK for others to extort things from you if they can. The world does not have to be that way, you know.
Friends don't help friends install M$ junk.
Ok, here is the chance for all you pengin breaths to shut up and vote with your dollars. Thats how the system works. MS has such a strangle hold on the market because it works. Go ahead and feed me a line of BS about how much better Linux is and then go research it. Then you can tell me that you were wrong. Linux is slower (3rd party verified) A major PITA to patch (common sense). And lets look beyond that. Why the hell does RH insist on isntalling Sendmail on a "desktop" install. 99% of the people out there dont need an MTA running locally, they use the corp/ISP mail server. Same with Apache and so on and soforth. For whatever reason, Windows is the defacto standard and you pay for out of the box functionality. Same with Office. I tried OpenOffice and thought it was the most unpolished kludgy piece of water buffalo dung I had ever used. Linux has another fatal flaw. It is a patchwork of different software makeshift pieced together into an OS. Now, I am not saying it doesnt have its place, I LOVE Squid, I like the control Apache gives me, but for the desktop you may as well give me a Timex Sinclair 2000, its just as useful in todays business enviroment. Sure, I could spend a week *ucking with Samba to be able to print or access a share, or I could use XP and do it in seconds. The reality is that unless you are a Geek, the price difference is more than worth it. The time savings more than pays me back and I just dont have a problem with that.
Wanted to query your comment on bringing drinks into a fast food restuarant. Why on earth is it for health reasons?!?!?!?!?!
Sounds exactly like the restuarant in question is purposefully making its own micro-monopoly.
If this is in fact supported by legislation, who ensured that such legislation was brought into place originally? The large resuarant chains perhaps?
Sounds awefully fishy to me!
"This is the first time this figure has been made public." The full version of Windows XP costs about $300.00. Microsoft could sell it for $45 and still make a profit."
And _THAT_ is why I will pirate the few Microsoft specific programs that I would like to use for temporary projects.
I would pay $45 for Windows XP, just to have a legit copy. I absolutely will NOT pay $300 for it... especially since the only reason I run Windows on some of my machines is to play games. I can go buy a ^%#@$#@ console for half that price.
But you won't. The fact that Mozilla does the same thing to Opera that you cry foul over when MS does it, this really catches your balls in an ethical Catch-22 of such hypocritical porportions that your selective sense of sanctimony can't even acknowledge it, you bury it down deep in an attempt to ignore it. I don't see you raking Mozilla over the coals for the way you do to MS. It'll be interesting to see how you justify this one.
YOu absolutely DO HAVE TO BUY THE COKE WITH THE BURGER (and possibly Frensh Fries, too), IF you want to get the most for your money. McDonalds calls them Value Meals.
Man, where did some of you grow up? In Siberia? You don't sound as if you know the first thing about the money you spend every day.
Well, this isn't something you do once and it works forever, it's something you have to do regularly. Also, I would split them "vertically", not "horizontally": multiple competitors that each produce the OS and applications, not a single company for each product.
Remember, we're living in the same as as Enron, with accounting and inter-corporate cohabitation that puts even MS to shame. Any circumvention is possible.
The problem may be hard, but that doesn't mean we shouldn't address it. The alternative is worse.
Lastly, no government is going to break up MS any time soon; at least not until we're out of a ression. MS is a large contributor to our international exports; thereby lessoning the trade-deficit.
Foreign nations aren't going to go for that forever. Either, they are going to push Linux or domestic software heavily, or they will impose high import duties on MS software.
...could a comment this stupid be +5 insightful.
You:
Shareholders don't like being lied to - they also don't like a company that is picking up losing ventures one after another
Me:
I guess you've never heard of a little company called Amazon? Sometimes you plow your profits into horizontal diversification so that you can increase profits, etc
Thus, let's say a product generates a certain revenue stream for 2 years, but you amortize the costs over 10. It looks great on paper, but year 3-10 you have no way of recouping it... "Sure you do... other products!" Yeah... like the next version, with the same problem due to the same faulty accounting.
The time frames MS used are large enough that they will show a profit for another half decade or more - but the money isnt real. The SEC was convinced to drop the investigation (plenty online about it... simply go to Google) - and no, not because MS wasnt guilty of doing so - the SEC decided they were guilty on a number of counts and told them "dont do it again...".
Now, knowing that only the Win/Office divisions are (falsly) profitable, that means the true MS losses must be staggering.
Simply do a Google Search and check it out - now, the hard part is reading about a dozen (no joke) stories to actually see all of what the SEC accused them of and told them to stop doing. Most of the articles downplay it as simply forgetting to list a few accounts and other BS. Keep reading and you'll see it's a long long list of violations.
Rob
WebMaster:
BinFeeds
XXX Thumbnailed Image Newsgroups but
Does this new breakout of information have something to do with Microsoft being slapped on the wrist by the SEC for accounting irregularities?
Post Enron, everyone's books are being scrutinized, especially companies like M$ where the potential for self dealing to inflate profits is large and employees are compensated with stocks and bonuses. Enron and others were busted, in part, for inflating their revenue streams with "trades" with other companies that hid costs and essentially double counted income. AOL played this game with advertisers and got slapped. Wold Com got busted at this and more serious accounting fraud. Microsoft's secret package deals with computer vendors have been proven predatory and anti-competitive. Some of them might prove to be fraudulent.
I don't trust M$'s statements. Like the difficulty M$ claimed to have seperating their browser from their OS, the book keeping problems were obviously a lie. Given the general level of dishonesty we see from M$, it's doubtful they have told the truth in these recent disclosures. How big are those other losses? How real are their poffits? It's hard to say, but it's very odd that they just keep beating "market expectations" in a down market. Conservative companies are just starting to switch from NT to win2k. Smart ones are dumping M$ altogether. How much of those proffits are "surplusses" from previous years? How much of it is really double and inside dealing? Only time will tell, but Microsoft is dead save bad laws and federal mandate.
Friends don't help friends install M$ junk.
Go to PriceScan and look for Windows XP. I did just now. You can get the home edition for $85 and the pro version for $135. Not quite $300 is it? Also when the hell did it ever sell for that much? Even when it came out I only saw it for $200!
http://www.pricescan.com/items/item129347.asp
Microsoft definitely has a monopoly. But it is not illegal to be a monopoly. It is illegal to use monopoly power in certain ways, and neither I nor the vast majority of the SlashDot crowd is anywhere near capable of determining what behavior by a monopoly is legal and what behavior is illegal.
Homework assignment: go read the complete trial history of 7 major monopoly trials. After that, I'll listen to your opinions about how illegal Microsoft is. Until then, don't take it upon yourself to determine how illegal and evil Microsoft is.
Microsoft has done something that no other industry could do: provide a platform compelling enough to allow it to continue to make 85% profit margins even in the face of fairly strong competition being given away for free. People want/need/think they need Windows and Office. And maybe they don't just get it because they are ignorant masses. Perhaps they get it because it provides some things that nothing else can.
First, it is pretty tough to say exactly what it cost to produce Windows. We can see how much Bill spent on employees in the Windows division last year versus the profits that Windows sales brought. But Last Year's work on Windows isn't what made people want to make Last Year's Windows purchases. It was the work of years of figuring out how to make Windows valuable. A lot of this was research (which loses money). Some of this is peripheral applications (which lose money) -- without them available, nobody would want to buy Windows.
Now in doing this, Microsoft has stepped into controversial territory. Instead of under-pricing to take over a market, they are under-pricing to ensure the survival of another market. Those are different things. Predatory pricing is illegal, but the other hasn't been completely evaluated in court (AFAIK). Perhaps they are both wrong, perhaps only one. (Although it is likely that the real answer is that you can't really have one without the other, so maybe the question is moot.)
But I suggest that instead of yelling about how evil (aka very effective at doing what companies are supposed to do -- make a profit) and mean (aka looking out for themselves instead of their competition) Microsoft is, and how all Microsofties should go to jail, I would much rather focus on topics more grounded in reality:
What is Microsoft doing that Open Source isn't? How can we start doing this better without abandoning our values?
Should this practice of non-predatory undercutting be legal? It has definite advantages for some people (even not counting Microsoft), and definite disadvantages for some people. Is it different, as I asserted earlier, or is it the same as the normal predatory price undercutting?
What population is most hurt by this practice? Can Linux fill this need? Should we work to make this happen, or would it be better to chase the more mainstream population?
What do we need to do to shore up Linux's environment in the same way that Microsoft shores up Windows' environment?
The mindless repetition of whining and flaming of Microsoft every time any article about them comes out won't get anybody anywhere. Lets talk about something intelligent for a change. Please?
Thanks.
Time flies like an arrow. Fruit flies like a banana.
`-1, Muggle' (can't spell to save their ass)
Got time? Spend some of it coding or testing
Had lunch with a MS guy last week. He said MSR is basically a big think tank which hires philosophy majors. UI gurus apparently don't come cheap.
Not one living soul in the great US of A *HAD* to buy Windows XP this year. No sir, not a single, solitary soul. Not one.
And please spare me the rot--"Oh, yes you did! If you wanted to get good deals elsewhere, then you HAD to buy it!"--because that's for the birds--a real looney tune, if you know what I mean.
People, the only things you HAVE to do in this world are pay taxes and expire. That's it. The rest, including Windows, is ENTIRELY OPTIONAL.
Now that hopefully we have that fundamental reality quite squared away...LOOK at all of the people who did buy WinXP this year--NOT because they "had to" but becasue *gasp, shudder* they WANTED to buy it!
What a novel concept, huh? Imagine that--a product comes out that people don't HAVE to have and people buy it anyway just because they WANT to. Wow, and double wow--I've never heard of such a thing before, have you? (Thick, syrupy sarcasm.) More sarcasm:
And of course we know that PEOPLE NEVER BUY THINGS THEY DON"T HAVE TO HAVE--ever--and the only reason people might DO THIS AWFUL THING is because Microsoft is FORCING THEM AGAINST THEIR WILLS THROUGH A PROGRAM OF DECEIT AND CHICANERY to buy WIndows XP when the truth is people *really, really* don't want it or need it! (Mountains of sarcasm and ridicule.)
EVEN MORE SARCASM:
All consumers who bought Windows XP are idiots, with no will power, and mere shills for the black-hearted, immoral, God-forsaken and cursed corporation known as Microsoft. (Continents of sarcasm.) Still more sarcasm to come:
Oh it gets worse, people! Microsoft has been labeled as Evil by the Federal Government (itself a soft-hearted entity who rarely even pushes people to pay their taxes, vote, or anything else)--therefore EVERYBODY KNOWS that Microsoft is supposed to LOSE MONEY and if the company MAKES MONEY why this is STARK PROOF of the rotten, reprobate nature of this God-damned corporation. (Oceans of sarcasm, and yes, more to come...)
CAN you believe, people, that Microsoft makes an 86% PROFIT (shudder, jeer, boo!) from selling--*gasp*--SOFTWARE???? I mean, so many EXPERTS have chimed in here to say that YOU CAN"T MAKE THAT KIND OF MONEY SELLING SOFTWARE UNLESS YOU ARE A BLACK_HEARTED THUG RIPPING OFF OLD LADIES WHILE THEY CROSS THE SIDEWALKS!!!!! NO--the EXPERTS tell us that a SOFTWARE COMPANY "should" make around a FOUR PERCENT PROFIT selling SOFTWARE!!!!! GOd bless them every one for being such righteous paragons of Holiness that they can lead us all to the promised land so that we don't wind up in Hell alongside Microsoft!!!
(Planets of sarcasm with still more to come)...
WHO would ever have dreamed the sinful thought that SOFTWARE COMPANIES MAKE HIGHER PROFITS THAN HARDWARE COMPANIES BECAUSE AFTER THE DEVELOPMENT COSTS ARE PAID FOR THERE REMAIN FEW EXPENSES TO SELLING IT OTHER THAN THE MEDIA IT SHIPS ON AND A FEW OTHER MINOR COSTS! Oh, thank goodness we have all been led to the light--and now we know the TRUTH--THAT any SOFTWARE COMPANY OF THE FACE OF THE EARTH SHOULD MAKE A FOUR_PERCENT PROFIT AND ANYTHING MORE COMES OF WICKEDNESS AND EVIL!
(To tell you the truth there isn't enough sarcasm in all the known Universe to cover the ignorance and stupidity I'm seeing expounded by SOME--thank goodness not all--people on this "issue.")
Of course the sad thing is that 1 guy bought it then passed it around the floor of residence for everyone to install.
Maybe that has something to do with my leaving :P
I've never really looked so closely at Microsoft's address than today:
;-)
One Microsoft Way, Redmond, Washington 98052-6399
This must be why their business policy is to monopolize. Their mission statement is on every letterhead and piece of correspondence. They can't help but overcharge.
That's not ad hominem.
Ad hominem is:
"Ayn Rand: Her extramarital affair is proof that no one, not even her, is too ugly to get laid at some point."
True, but ad hominem nonetheless.
All's true that is mistrusted
You going to post this on every story 'til you get above score 0?
The economy is in recession, most IT enterprises are collapsing and happy if they manage to have small loses and you think it may not be abnormal 80% of profit by the biggest convicted monopolist of the IT industry?
Pass that think you are smoking, I need it for my depressive mood.
IANAL but write like a drunk one.
Hey, mod this one down, it's obviously a troll.
Or would the AC prefer to give details on what this all-important life-saving piece of Microsoft software was?
First, it's too much of a crapshoot. Even the possibility of a flat beverage turns me away. Second, as you already mentioned, fountain drinks are way overpriced unless you want that diabetic fit inducing 64 oz. Big Pull. Finally, when you think about it, you're gonna save $ if you just by a sandwich and get your soda a the grocery store.
Also, I would split them "vertically", not "horizontally": multiple competitors that each produce the OS and applications, not a single company for each product.
:)
I'm sure this topic has been beaten to death, but I'm not quite sure how this would work (haven't thought about this in what must have been years).
Either:
A) give each fork a complete licence to the existing code, thereby forking all the software
B) mix and match segments, effectively doing both vertical and horizontal splits. (One doing MS Hardware and some but not all office products, but both doing Office/Windows (the main point of contention))
If A, then both companies would simply duke it out until one won (namely dirty incompatibility tricks, having even less incentive to share APIs). Note that winning=loss of profitability for one company.
Note if B, then you don't avoid the problems of A, but you tend back towards verticle non-competing companies.
I'm just not invisioning how horizontal could work.. With AT&T, you at least could regionalize the market and then regulate the leasing of regional lines to non-regional companies. But we're talking about a software commodity (at least at first).
Maybe it's just time for me to go to sleep.
-Michael
Okay, lets go through the _obvious_ projects that are either foundations of currently used MS technology in production, or directly used... and see how useful MSR is (or isn't). and I stress "obvious" and "in production" and "foundation" or "directly relatated". Anything not obvious or "possibly but not obvious" are not checked. Items marked with a (+) are projects that appear to be a foundation for future production or that appear to be going direction into production at some point in the near future or that have a strong association with a product that is currently in production but the MSR project is currently not effecting production.<P>
.NET Framework)<BR>
I read the description for each project before reaching these conclusions and thus no conclsion can be made by the title alone (in most cases).<P>
(*) = Obvious<BR>
( ) = Not Obvious or Not Effecting Products<BR>
(+) = Appears to be related to current product<BR>
but the MSR is not currently effecting<BR>
production with project identified<BR>
(/) = Appears to effect current product in part<BR>
but not probably entirely... or parts of<BR>
research described appear to already be<BR>
used in production currently<BR>
(.) = Alias to another project<BR>
(long list warning)<BR>
1) ( ) Adaptive Systems and Interaction<BR>
2) (*) Advanced Compiler Technology<BR>
3) (*) Advanced Programming Languages<BR>
4) (*) AsmL<BR>
5) (*) AutoAlbum<BR>
6) (*) AutoDJ<BR>
7) ( ) Automatic Lexical Learning<BR>
8) (*) Bartok (See 2)<BR>
9) ( ) Behave!<BR>
10) (+) Boxwood<BR>
11) (/) CAMDIS<BR>
12) (*) ClearType<BR>
13) (*) Collaborative Video Viewing<BR>
14) (*) Common Annotation Framework<BR>
15) ( ) Communication, Collaboration, and Signal<BR>
Processing<BR>
16) (/) Component Applications<BR>
17) (*) Cryptography and Anti-Piracy<BR>
18) (*) Data Management, Exploration, and Data<BR>
Mining<BR>
19) (*) Data Mining in Commerce Server<BR>
20) ( ) Data Mountain<BR>
21) (.) Data-Driven Machine Translation (NLP)<BR>
22) (*) Database<BR>
23) (*) Detours<BR>
24) (/) Distributed Meetings<BR>
25) (*) Distributed Systems<BR>
26) (*) Document Processing and Understanding<BR>
27) ( ) Dr. Who<BR>
28) ( ) Easy Living<BR>
29) ( ) EyeCU (Reminds me of the movie AntiTrust<BR>
30) ( ) Face Modeling<BR>
31) ( ) Farsite (Napster anyone?)<BR>
32) (*) Filtering for Junk Email and Parental<BR>
Controls<BR>
33) (*) Flatland (See 14)<BR>
34) (*) Foundations of Software Engineering<BR>
35) (+) Generics (future release
36) ( ) Graphics (Related to 30)<BR>
37) (.) H-Colorings (Theory Group)<BR>
38) (*) Hardware Devices (Pocket PC Foundations)<BR>
39) (*) Hardware Systems (See 38)<BR>
40) ( ) Harold (I once read about future plans to<BR>
implement technology from this project<BR>
41) ( ) Social Computing Group<BR>
42) ( ) Indy Performance Modeling Infrastructure<BR>
43) (*) Information Retrieval and Analysis<BR>
44) ( ) Integrated Systems<BR>
45) ( ) Intelligent Systems<BR>
46) (*) Interactive Visual Media <BR>
47) ( ) Internet Graphics<BR>
48) ( ) Internet Graphs<BR>
49) (.) Internet Media (Theory Group)<BR>
50) (*) IPv6<BR>
51) ( ) JetStream<BR>
52) (/) Junk-Mail Filtering<BR>
53) (/) KidTalk<BR>
54) ( ) Koh-i-Noor<BR>
55) ( ) Large Display User Experience<BR>
56) (+) Lead Line (Very interesting project - it<BR>
also spawned Chat 2.5 and V-Chat)<BR>
57) (*) Lookout (Clippy anyone?)<BR>
58) ( ) Machine Learning and Applied Statistics<BR>
I don't feel like documenting all the rest of them. It appears that MSR is proving itself just from these 55% of the total listings on MSR Project list page.<BR>
Please, go check your facts before posting about how useless they are.<BR>
Thanks,<BR>
Leabre
If they lowered the price of Office and XP to sensible levels they'd sell more copies to home users especially outside the US where this software is extremely expensive compared to the cost of hardware and more importantly people's income. Home users have no real incentive to buy the software so it has to be cheap. By making the software cheap they'd end up selling some copies where previously they'd sell none and hence they stand to actually make more money.
Unfortunately then they may be deemed to not be maximising shareholder value, i.e. not screwing their customers and employees sufficiently.
If A, then both companies would simply duke it out until one won (namely dirty incompatibility tricks, having even less incentive to share APIs). Note that winning=loss of profitability for one company.
Well, you just keep doing it. Sooner or later, management would figure out that being split repeatedly has costs and is probably not such a good idea. If they don't figure it out, some competitor will take advantage of their disarray.
Another approach would simply to have progressively increasing taxes depending on company size or marketshare.
Moderators: the parent does not deserve kudos: although a judge accepted a settlement, the prosecution, that is the goverment, where far too eager to settle. They were not interested at all about real remediation.
IANAL but write like a drunk one.
Two points:
1. The $45 figure makes mockery of all Microsoft's TCO FUD: if they really wanted to reduce TCO for their customers, they could start with the price.
2. MS could kill Linux companies by making Windows as cheap; cheaper even, they have huge reserves of cash and could run at a loss for years just to wipe out the competition from Linux.
Scary.
After looking through the posts I see many people complaining that MSFT shouldnt sell Windows for 89% profit margin. Why not ? Hell they can choose to sell it at 1000% profit margin if they wish to. They spent the money on R&D and its their product so they can price it at $0 or $1000.
Being a monopoly isnt illegal. Abusing the power you have when you become a monopoly is. If Microsoft didnt have such licensing agreements with their OEMs where the OEM couldnt bundle another OS without facing repercussions then its all fine. If a company decides to sell coke and pepsi said that if the company sold a coke vending machine their rental rates for the pepsi machine would be higher then thats illegal and bad . Pepsi selling their product at a higher or lower price than coke isnt.
dvNuLL
Err...
Operating income 2001: $2.9Bn
Operating income 2002: $4.0Bn
I fail to see a surge of previous years "unreported losses" in 2002. As a matter of fact, a company as profitable as MS would most certainly have a strong incentive to hide profits (not losses) in order to reduce its tax bill.
Well...
In most other situations I have been involved with a profit margin of 50% means that I earn 50% of what the unit cost to produce, not that I make twice the money it costs to produce.
The correct production cost per unit is therefore $162 (300/1,85).
>High profit margins don't make you a monopoly ...
>MS has priced their product (successfully, I'm sure) to maximise their profit
I couldn't agree more. But maybe a coke can analogy doesn't sit well with /. crowd. A better one is probably branded clothing.
Nike can charge ridiculously high amount of money for their apparel and stuff. They definitely didn't spend $50 for a piece of shirt. They can probably sell it for $5 and still make a profit. (that makes it a 1000% profit, excuse my math if it's incorrect)
An even better example is Gucci, Prada, LV, etc. Have you ever taken a stroll down fifth ave lately? What Nike charged for $50 they charge for $500 or so (makes a nice 10000% profit). You cannot believe the insane amount of money they ask for clothing. And they also make their extremely expensive clothing in third-world countries where they pay workers' wages by a handful of dollars per MONTH.
All this doesn't make Nike, or Gucci, or Prada a monopoly doesn't it? It's simply your usual economic law at work: highest profit for lowest cost.
Don't get me wrong, I hate MS just like the next guy, but trying to attack them from their windows pricing scheme is not IMHO the best way. They can easily dodge this.
People do not want the product. People are forced to use it. Do not believe me? Try to give back your Windows license and get a refund for a branded machine. It is close to impossible. MS coopted all major hardware manufacturers who could not put forward new OS options to consumers without fearing retribution form MS.
Think! Clients fearing retribution from their provider. It is amazing that people like you see that as normal...
IANAL but write like a drunk one.
The IT industry is faltering, unemployment is at its higest in a generation, most IT companies are haapy to turn small loses and yeah, riiiight, in that backdrop, 85% of profit is not abusive.
....
By the way, I have a bridge to sell you
IANAL but write like a drunk one.
They are the only ones who make COKE. And so is IBM. They are the only ones who make Websphere....
In related news it's reported that it cost MS $255 (per copy) to develop Solitare and Mine Sweeper.
Jeremy Logan's Website.
But it must be good. To be in a position where you can enter a market and undercut prices until you're in the box seat. With the accumulated profits, pick another tougher market and pay your way to the box seat in that one. Take these profits... ...ad infinitum. This is the monopoly.
It is true that computers are tools and that people need to get a job done, but people should be a little militant against the monopolist, and look for viable alternatives at every turn.
The social problems looming in the belly of Microsoft are so very scary.
I can't believe this crap is rated 4, Insightful.
The differnence is that a grocery store has actually a realistical possibility in returning the investment and finally make a profit. Microsoft's playthings like XBox and WinCE will never be profitable.
Wow, I'm sure you've done extensive research to support these claims.
It's no coincidence that Bill Gates sells thousands of shares each week. He knows that even after all the beating the MSFT-stock received, it's still overpriced.
If you're so sure of that, why don't you purchase put options on MSFT. For those unfamiliar with equity derivatives, I'll explain the basics. You buy the right to sell MSFT stock at their current price in 1 year. The option's cost must be something like 5% of current stock price (too lazy to check that, but the order of magnitude is correct). Then if in 12 months MSFT has dropped 50%, you buy stock at 50 on the market, sell it at 100 and make a hefty 50 margin out of an initial investment of 5. You could make truckloads of money by betting on MSFT being overpriced. Of course, if you're wrong and MSFT doesn't drop, you lose the whole initial investment of 5. Do you still bet?
Microsoft's problem is that without happy shareholders, all their tax-stock-option loopholes don't work anymore. And without them, they would make losses - RIGHT NOW.
Last time I checked, income taxes were based on... income. This means you pay a fixed percentage of your income. And that percentage is BELOW 100% (in the US it must be around 30%). So, do the math, income tax CANNOT make a company lose money, it just reduces profits.
Always remember: The most profitable product Microsoft sells is not Windows and not Office, it's MSFT-stock.
When was the last time MSFT issued any significant amount of stock to the public? They don't need to sell stock, they have $40Bn in the bank!!!
The only remotely accurate part of your post is the fact that MS is dependant on Win and Office, but not for the reason you mentioned. Nobody seriously fears that those product lines will stop making money anytime soon. The issue here for MS is that with like 95% market share, these products can no longer grow quicker than the market. And the long-term growth rate on the market is low. Since MSFT's high valuation relies on high growth expectations, MS has a strong pressure to find new high growth revenue streams. That's the reason why they are investing heavily in new markets (gaming, mobile computing etc...) The growth potential is astounding, even for MS. First you have the inherent (high) growth of these markets. Second, increasing their market share from their current 10% to their expected 95% represents a lot of room for revenue growth.
So the basic questions are: "Will MS succed in these markets?" and "Will it be able to make a profit in these markets?" Apparently, investors are pretty confident.
There is usually a huge difference between wholesale and retail prices in software. But the cost (to each distributor or major retailer) may well be a secret.
1. Release software package
2. PROFIT!
3. ????
4. PROFIT!!!
My premise here is that MS is not the problem, it is the users out there. Past monopolies occured when a particular resource was in short supply and a company basically got there first. Abuse of those monopolies occur when the above said company won't play fair with others to allow use of the resource that is in short supply. MS may have a monopoly, but its extremely artificial. There's NO reason in the world why another company cant just go in with their new fangled bells and whistles operating system. Its not like with AT&T where you couldn't just start stringing lines on the poles all the way across the country. Its software, and software is fairly easy to make, and fairly easy to market. The reason why Netscape Corp failed is not because of MS's monopoly, but more because they chose to fight a battle on someone else's terms. Had they went in and fought the battle on different terms, things may have been different. MS is a tough nut to crack at any level, but I believe the best level to crack them is in windows. And while I know this will not be what most want to hear, I don't think linux is the thing to do it. The model for linux(give the software away, make the money back on support and other doodads) is inferior in a business sense. You get a company that can come up with an excellent OS product, coupled with some decent marketing, then there will be results. Also, while OS/2 Warp failed, I don't believe that 1-2 failures(or even 10-12 failures) are indictive of anything other than normal business. Remember how many DOS's there were out there? How many lasted?
If MS does do anti competetive behaviour in that market, well, its a bit different than what happened before, and deserves a higher penalty.
3) Putting words in my mouth does not mean I agree with them. There will always be situations where companies will release some things at a loss or for free-- it's the concept of the "loss leader". Look at how many video game companies routinely lose GOBS of money underselling their consoles. They make their money on the cartridges/CDs. That's a very common and acceptable course of action.
Wrong. You fell for the same myth that Microsoft did. No major video game company sells their consoles at a loss - except for Microsoft.
All this arguement about MS being a Monopoly. Hasn't this been shown in a court? Regardless, its interesting to see all the money Microsoft has avaliable in its core 'monopoly' business in order to use its position to attack other markets: mobile phones, consoles, etc.
By allow this behaviour to continue the American public simply fosters unequal competition in which ever market Microsoft casts its eyes.
Here in the United States it is legal to be a monopoly, it just depends on HOW you get there and HOW you maintain it. Go read the Sherman and Clayton Acts...
Sorry! I should've pressed "Preview" - I rephrased myself one time too many so it went wrong:
opportunity cost = profit from the choice you make - profit from the second best choice
This eliminates the point of opportunity cost (not the cost itself).
Karma. Moderation. Is my
What? Microsoft Doctor? God forbids them to launch such thing. ;)
--
Karma is overrated, whoring is ok.
This is the same M$ that was hding profits o.O and go in trouble for it. I'm pretty sure the tech slump has impacted profits in some areas. Windows and Office willmake money because everyone uses them. All the other products actually have competition or only service a small segment of the tech sector. Now do you think the XBox would loose money if we were still in the dot.com bubble? I doubt it.
This eliminates the point of opportunity cost (not the cost itself). In this case in your explanation.
Karma. Moderation. Is my
I don't mind that MS makes a large profit on the operating system because use much of those proceeds go to develop other products, like Enterprise Studio. In fact, if they did not make such large profit on the OS, the development tools could cost thousands more than what the tools currently cost.
I do mind that MS makes poor products. I do mind that they refuse to open the OS (especially for security reviews). And I do mind that they are willing to sell my privacy to the recording artists.
The NES and the Sega Master system were of the same generation.
The SNES and the Genesis/Megadrive were the next generation.
It's really no surprise that the Megadrive was faster than the NES since Nintendo's 16bit console wasn't released at the same time as the Megadrive...
Greylisting is to SMTP as NAT is to IPv4
I don't think anyone who's posted to this page has actually hit on why monopolies are bad and why there are laws about anticompetitive practices, and why, most importantly, Microsoft should be stopped.
As Microsoft's profit and loss figures show, they make all of their money from a very narrow range of their products. In order to continue their profitablity they must continue to increase their market share in as many areas as possible.
Microsoft decide to enter a developing market segment. They decide they can turn it into the next big thing. There's only two or three competitors in the field, so the buy one of them, and badmouth the others... (our product, when we release it will be better etc... It will integrate with all our other products which you already use... Don't buy theirs... Wait for ours... etc). After a year or two of buildup whilst people wait for the new M$ product, the market begins to stagnate. There's only one company actually releasing software, and no-one's buying because of better PR/Marketing by the more wealthy company (Microsoft of course). M$ finally launch their new product into a stagnant market. It doesn't sell well so they undercut the only remaining competitor. (give it away for free, bundle with the OS etc). The only remaining competitor can't compete under those kinda circumstances and dies.
Now... at no stage along this process have Microsoft ever turned a profit. They never let the market develop naturally because they were big enough to stomp all over it. The market stagnated instead of growing.
Unsurprisingly, Microsoft isn't able to make a profit in this marketplace, so they decide that it probably wansn't the 'next big thing' after all and stop releaseing new versions and supporting old ones.
Market Dies.
Results...
a.) two or three vaild competitors are killed off.
b.) The market place dies due to lack of innovation.
c.) Microsoft spend $4bn of the money they extracted from other market areas.
This is why it's called AntiCompetitive
This is why there's rules to restrict 'natural monopolies' to only operate within their market segment.
They are a monopoly in their market segment because it's what they do better than anyone else.
If organisations with this amount of power/money/control decide to missue is in other market areas in which they do not excel, it's incredibly destructive.
...go download some mp3 stuff, watch a porn site or puke around in some source code, BUT... ...stay away from economics. You don't know anything about it. NOTHING.
How many products is Microsoft handling? Thousands? And all those products are sold without profit, except Windows & Office? WAHAHAHAHA !!!
It's even getting better, the debts of those thousands products are completely covered by the profits of Windows & Office... Wahahahaha ! A guy is wondering why MS is one of the biggest software companies in the world, by selling all - but two - of their products without any profit.
About X-box, that's a risky investment. MS is hoping to generate profit through the games and the developer licences.
Such a project is costing a lot of money. And tell me, citizen of the world-state of capitalism, what's wrong about investing money generated from previous profits? Wahahahaha.
Richard Forbes
Comment removed based on user account deletion
Without doing research, I can pretty reasonably put this in two words -- "bull" and "shit".
I am *not* going to make an attack on the validity of your comments, but simply because WE DON'T KNOW. To me, it seemed that your comment involved much more speculation and "guess work" (seeing as it was much more in depth, but self-admittedly backed up without any facts) than the original poster's, yet you called bullshit on a broad statement that pretty much summed up the story. I'm confused.
--- What
Our government is without a doubt the hit men for our unjust corporations here. Reading this makes me sick at the very thought of being an American and the thought of using such an evil product. All I have to say is thank god for leet-warez!! I would never in my right mind pay 300 dollars for a far from perfect piece of software. I really don't get how/why people moan and bitch of these high unjust prices when right down to the bone they can protest and uproar to our wonderful government and then our wonderful government could kick microsoft (a happy little dictatorship here) in the ass. I hope the Europe being much smarter then us shows microsoft that they shouldn't be such dick fucks. ok I just woke up I need to go wake up some more.
A bunch of linux-using /.ers are complaining that there is no alternative to MS Windows.
Or am I missing something?
Ok, so you are saying that Linux distros are monopolies too... or will be if they get decent market share. By your logic, RedHat is a monopoly because they distribute free software (open source, GNU). That doesn't make sense.
Microsoft is a monopoly because they have control of desktop computing and are trying to leverage that into other markets. Microsoft charges high tariffs on their products because they know most people won't buy an alternative product. I think this leads to a good argument for standards. If Microsoft's new office format (in xml) is standardized then people could buy whatever office product they want. That may help. Remember Microsoft Office IS the key product. They needed a windowing manager for office.. and that code led to Windows XP now. Microsoft released Office on the Mac first. If microsoft didn't have office, they are screwed. Use open office, use Lotus SmartSuite, use wordperfect, use appleworks, it doens't really matter, just not Microsoft Office.
How many times have we heard people say I need a PowerPoint presentation on that... why is that.. a microsoft product... hmm.
"Most business type software enjoys an 80 percent profit on their software products"
That cant be true! How do you come upp with 80%?
Is it profit after burning cds ?
After develepment costs ?
Profit for the company ?
Please me enlighten me!
(I know now what mi next projekt will be =)
CIA Factbook 2002 (US):"Since 1975, practically all the gains in household income have gone to the top 20% of households
and here's what you get if you sell the crap!
E85-00086 MICROSOFT WINDOWS XP PRO (Sell) $278.99 (Cost) $272.36 (Margin)2.4% $6.63 and that's if you're lucky!!!
Microsoft is attacking computer-based companies ranging from toys to accounting, using funds from one business to push into other fields.
This is like a conglomerate which owns a tire manufacturer, an accounting firm and a toy company using profits from the tire manufacturer to sell low-price toys and fund activities of the accounting firm.
Perhaps another analogy... if an automobile manufacturer buys a steel company, can profits from the auto business fund selling of cheap steel? Anti-dumping may forbid selling subsidized steel internationally, but how about domestically? (For that matter, can a third company buy cheap steel and sell it overseas?)
Seeing the replies here really shows me that the disgust and contempt I have for the common American geek is justified. I desire a free market, most of you desire a socialist regime that enforces "equality."
While I am no Objectivist, has anyone read Atlas Shrugged and seen that a company's sole purpose is profit? When a company profits, it prospers. Prospering along with that company are its suppliers, its employees, its investors. Microsoft is not Bill Gates, but millions of people who rely on them.
Windows is no monopoly -- people are free to make a better product. Why have they not? Because Microsoft spends a fortune on Research and Development. They do it to stay ahead. They compete by offering customers (not consumers) what they want, at a price they are generally happy to pay.
You socialists make me sick, and it gives me great joy in seeing the market crash because of excessive government regulations and unjust lawsuits against corporations. That's when it all started -- Microsoft gets sued, and some of you lost your jobs. Good.
Eventually, it'll be on your backs and your consciences when the economy falls through the floor. With government increasing inflation every month, decreasing the value of our dollars (and our investments), and destroying any ability to make a profit by over-regulating and over-subsidizing industry upon industry, the day of Gault's Gulch should not be far, IMHO.
I just hope some of you wisen up and realize that Microsoft is one of the greatest things to happen to this country... And if you want to compete with them, you are free to do so. Get together with the millions of other programmers out there and make Linux work.
I've tried Linux. The interfaces are disgusting. The driver support is non-existant. The software available is terrible. Why? Because those who are working on it are generally unpaid, and that's what you get out of free labor: exactly what Russia got during communism -- NO PRODUCTION.
You state that abusing the power you have when you become a monopoly is illegal, but you think it's fine for Microsoft to gouge consumers and make an 89% profit margin? You don't think that constitutes abusing their monopoly power? Heck, people wouldn't pay $300 for a copy of XP Pro if they could get a 100% compatible OS for $29. The reason Microsoft can get $300 is because they have a monopoly.
---------------------------------------------
SERENITY NOW!!!!!!!!!!!!!!!!
It hasn't been tried yet because we already know the outcome. Massive suffering for most of the population. Keep some things in perspective. Microsoft is a software company. They aren't jacking up the price of food for crying out loud. Just because you can't get everyone in the world to run Linux is no reason to throw out the overwhelmingly successful economic and political system we've had for the past 225 years.
There's a way to deal with monopolies you know. Its called "trust busting". It was done to Standard Oil, it was done to AT&T and if necessary it will be done to Microsoft. You think there wasn't bribery back then? Oh and the anti-trust cases took years for those companies and did not always succeed on the first try. Yet we didn't resort to foolish anarchy then, why should we now?
Mac OS X and Windows XP working side by side to fight back the night.
How silly is that? The fact that if they sold 20 million XBoxes they'd have to shut it all down, or the fact that its really true?
Could open source really affect Microsoft pricing? Here's an excerpt from their 10-Q filing:
Challenges to the Company's Business Model. Since its inception, the Company's business model has been based upon customers agreeing to pay a fee to license software developed and distributed by Microsoft. Under this commercial software development ("CSD") model, software developers bear the costs of converting original ideas into software products through investments in research and development, offsetting these costs with the revenues received from the distribution of their products. The Company believes that the CSD model has had substantial benefits for users of software, allowing them to rely on the expertise of the Company and other software developers that have powerful incentives to develop innovative software that is useful, reliable and compatible with other software and hardware. In recent years, there has been a growing challenge to the CSD model, often referred to as the Open Source movement. Under the Open Source model, software is produced by global "communities" of programmers, and the resulting software and the intellectual property contained therein is licensed to end users at little or no cost. Nonetheless, the popularization of the Open Source movement continues to pose a significant challenge to the Company's business model, including recent efforts by proponents of the Open Source model to convince governments worldwide to mandate the use of Open Source software in their purchase and deployment of software products. To the extent the Open Source model gains increasing market acceptance, sales of the Company's products may decline, the Company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline.
Believe in things of which no person has ever learned
for giving it away for FREE!
Damn.
"Oh, you hate your job? There's a support group for that, it's called everyone, they meet at the bar."
When you are making a profit, you are going to be a growth stock, if I understand the term correctly to mean a stock that is expected to continue to increase in price.
Steve Balmer made an infamous statement that would seem to indicate that Microsoft would have no problems with curtailing its stock growth in order to save money elsewhere.
The statement that MS infamously paid no taxes last year, if factual, only serves to increase the probability that MS is hiding profits to reduce its tax bill, because hiding profits is one way of achieving zero taxes.
We're talking about how some parts of your business become cash cows and support other parts of your business that they believe are worth investing in and will one day become profitable.
On a certain scale, this is fine. However, what Microsoft does is invest (very often at a loss) in nearly every technology-oriented market from cell phones to media centers to handheld tablets to office servers to enterprise databases. They put their tenticles into everything hoping for a few of them to catch hold. It sounds a lot like SPAM, but in a corporate marketing context. With tens of billions of dollars in reserve cash, a few dozen failed projects is pocket change to them.
Healthcare article at Kuro5hin
The difference is, the GPL allows us to download RedHat for free. You do not have to buy a GPL'd produt. What RedHat sells is service and support, NOT an Operating System.
Not won't , but can't .
It works like this: someone at work emails me a Word doc, or an Excel spreadsheet, expecting updates to be made and emailed back. They have the latest "security" patches at somehow also subtly change the default save format so even if I can read it in whatever OSS prog I have on my Linux box, I have little chance of saving the changes in a way that doesn't screw up the formatting. So I would also have to use Word/Excel with the latest patches, simply for compatibility with my own manager, etc.
The entire company (of 150,000 folks around the world) would need to almost simultaneously switch to some other product. But the story doesn't stop there. Sure, we'd all be compatible with each other within the company, but the sales force (and others) talk to external customers, and those customers have the latest and greatest Microsoft products. So, in order to maintain compatibility with our own customers (and probably suppliers too) we'd have to maintain some Windows boxes and an army of trained monkeys to copy docs from one system to the other.
Another example - I've seen job ads where the employer requests that you email your resume in Word97 (or whatever) format. Why would a plain text file not be acceptable?? The implication is that if you don't send them the correct format, they trash it immediately, as if having Word97 is a prerequisite for employment. And presumably that means that you have to have Word97 (at enormous expense) on your home PC because: a) you wouldn't work on your resume at work, right? and b) you wouldn't have a pirate copy of Word97, right?
First of all, it was just an example. Are you next going to tell me that since one of my examples was bad, obviously "product dumping" / selling items as a "loss leader" is a myth too? Maybe my example was wrong; maybe it wasn't. But my point still stands.
Secondly, accounts on this "myth" vary. Some very reputable sources say it's quite true. Who do you believe? Might not be the same folks I believe.
From this page on The Guardian: "All three manufacturers are determined to build up a large user base. The consoles are sold at a loss...".
Honey, I shrunk the Cygwin
"Unlike most of you, I am not a nut." - Homer J. Simpson
....pardox is a word being diluted....
> Windows is a Monopoly because there are no viable alternatives.
no, the company selling this pile-of-poo (R) is a monopoly. Windows is a family of products, oft times passing themselves off as operating systems, from said monopoly holder.
> Linux is a viable alternative to Windows.
For many, many uses, yes.
why isn't there a "-1; poster is a moron" button?
They are illegal when they are abused. They have abused it in the past, but that's a non-issue. The fact is that they can abuse it and get away with it easily.
So they now are actually stronger than before. They can stop competition by just "saying they intend to enter a market", say making a free version of this or that. Would you keep investing in that area if you trully believed MS would get into that market?
Nope. Nobody wants to get in the way of Microsoft, because they can kill you anytime leveraging their proven monopoly os the basic OS.
The only competition that is fighting MS key milkers are the war machines oracle, IBM and Sun plus all the free software enthusiasts.
unfinished: (adj.)
I think you're right.
People who quote themselves bug the crap out of me -- Me.
Shoot all the moderators.
XP is highly overpriced.
And, this recent disclosure does illustrate that.
How or why?
Look at comparable releases.
The competitive price for an OS is significantly less than what Microsoft charges. The same is true for office software.
Most interesting however is the impact this public release is going to have on the consumer class action suits that have sued Microsoft for overcharging. Of course it is true. But, now the details from Microsoft are public information.
And, at least some stockholders are not going to approve the wasting of millions on loosing ventures. Other corporations drop money loosing deals. And, Microsoft has a few it should drop, right? Or, maybe Microsoft will just increase its illegal activity in their effort to make these bad deals profitable? They clearly did that with IE. They even said it was going to be required.
Maybe Microsoft will not look so rich if it has to pay AOL 10-12 billion or so in damages? A billion or so to SUN and BE might also perk up the stockholders not hell bent on using illegal means to earn revenue.
NexuSys - Linux support by the best
Monopolies bear directly on the price charged and collected.
But, it is not just the fact that alternatives are not available. You can buy several Linux distros. You can even download them for free.
But, if you have invested thousands in applications that only run on Microsoft crap you will still pay $200-$300 to avoid buying new versions of all those apps. And, that assumes you can get those apps on other platforms.
The monopoly price is forced upon consumers by Microsoft because consumers can not pick other choices. For many the alternates are simply not affordable.
Staroffice and OpenOffice are cheap. But, if you do depend upon Microsoft Office you are out of luck thinking Linux. At least until CrossOverOffice runs a few more apps. You can run some of those old apps on Xandros (and other distros with CrossOver and other tech). But, you may not be able to run your full selection.
Or, maybe you can and have switched already?
It is a lot nicer across the street. Lower prices. Higher quality. And, you do not have to buy from crooks using illegal means to keep the price high and alternatives away from consumers.
NexuSys - Linux support by the best
You simply can not excuse illegal acts by declaring other acts are not illegal.
Profits are not illegal. But, seeking profits does not excuse illegal means to maximize profits.
It is the same with monopolies. They are not illegal either. But, you can engage in illegal acts to gain them or maintain them. And, Microsoft acts illegally on both of those counts.
The result is the enormous profits.
The result is the lack of competition.
The result is Netscape being removed from the market (but for going open source and being bought by AOL).
The result is RealNetworks having great technology but finding that all consumers are screwed by being first forced to buy the Microsoft brand of media player.
And, by the way, bundling the media player and browser does keep the price of Microsoft system high.
If XP Home costs $200 suggested. You can easily assume that consumers pay $65 for IE and $135 for the base OS. Or the reverse if you want. But, they are screwed because they always have to buy both.
Bundling keeps the price high AND precludes competition.
And, that is why the DOJ is so stupid for doing as Microsoft asks rather than acting to benefit consumers or the software industry. It is pure stupidity to assume one company is the industry. It is not.
And, no consumer is ever benefitted by being forced to buy any product what so ever no matter what it is or how bad they need it.
Is anyone so stupid to suggest that all individuals should be forced to buy a particular branded cure for cancer just because they have cancer? Or, do the idiots only ID themselves when they discuss the Microsoft brand?
What about the FORD car? Do idiots ID themselves suggesting that all car buyers should be required to purchase a FORD if they want a Chevy? You hear that stupid arguement too. Some even argue that it is okay to be forced to buy a FORD if you can buy a Chevy afterwards. Of course if you need another car next year you have to buy the FORD first again. But, those idiots were lying the first time around. They do not believe it either.
NexuSys - Linux support by the best
whose foolish? go check your facts on anarchy.
here
XP home is not worth $2000, right?
So, if XP Home did cost $2000 you would switch, right?
Or, have you forgotten the reason why you have to buy from Microsoft?
DELL was stopped from selling Linux to you.
Your old apps may not run on Linux or the MAC.
You are not going to replace all your apps simply because you need another PC, right?
XP Home or XP Pro is no valuable than a free copy of RedHat until you look at the applications you have or think you need to run.
RedHat is superior and lower in price.
So, if you are buying from Microsoft it is because you did not have the choice to avoid it.
If all you need is OpenOffice or StarOffice and an OS, then fine. Then you can argue that consumer pay $200 more for the Microsoft crap because it is worth it.
But, if they can not run their stuff unless they pay the high monopoly price then that argument is bogus. You are left with suggesting that paying too high a price for the OS is less than a fair price plus the cost of buying all the apps you need. Assuming you can get them for Linux, right?
If you can not get the apps at the same price or at all on Linux, then Microsoft is not competing against Linux nor can any consumer conclude it is worth the extra price. The OS is required. That is all.
NexuSys - Linux support by the best
There isn't anything inherently wrong with a normal company funding it's way into new territories. What is disturbing here are a number of things:
1. MS makes insane profits on Windows and Office and it is causing a great deal of hardship for those who have to pay for them. And yes, if you have to use Windows, then you have to use Windows and it is a hardship to pay significantly more than you should. Operating systems and PCs in general are becoming the routine, instead of the exception. MS profits are little more than a substantial tariff on what is becoming a ubiquitous PC world.
2. MS isn't a normal company. On the one hand they are extremely successful. On the other, they have kind of a "Survivor" mentality when it comes to its competition. They out-spend, out-clone, out-pr, and ultimately outlast their competitors. I remember reading recently that an MS employee commenting on the Sendo about-face, that "natural selection would occur," as if MS were the Alpha Prime and due to simple evolution would eventually dominant the cellphone market.
For a long time, I felt as many still do, that MS was just a successful company who could do no wrong. After a while though, that does begin to ring hollow, as MS continues to win and competitors continue to stumble and fall. At some point, while sitting in the stands cheering for the home team, you begin to get the feeling that you are being had. The competitors products don't suck in any less amount than what you are buying from MS, often they were better.
I often wonder what it would be like if MS suddenly decided to conquer my company's market. Would we last because we are better then they are or more established then they are. NOPE. Simply put, if MS decided to conquer my company's market, they would. We are a little guy, dependent on little profits in a little market. And I have no doubt that if half of the people defending MS would stop and think about that, they would realize they are in no less of a secure position. So is the boogey man coming to get me, No, but the point is the boogey man does exist.
Remember, "There but for the Grace of God, go I."
Ah diddums. Heaven forbid a corporation make software decisions based on compatibilty so people aren't wasting time trying to read and edit group files.
Heaven forfend that I as an employer want a standard application method so that instead of dealing with unreadable text resumes I can spend the time working out who is best for a job. Just cause your resume is ugly doesn't mean you are suited for a job that requires communication abilities.
Some people just have NFI.
Wolja
Wolja Future Tombstone: Shit happened then I died
is why there is no third party software that runs on windows.
The truth doesn't care what I think.
Banks make similar profits when the going is good, but for many its dropped to about 40% at the moment. Poor them.
As the BCG Market Share Growth matrix says, this would be a Cash Cow. It won't last forever, so don't worry about it. At least one compay is making some money and not laying of employees.
After work yesterday I began to write up a response. It felt good to review the basics. However, too many principles have been brought up, and I lost interest when I remembered that this was just a post for /. So, even though I feel it is my duty when I spout off economic principles to explain them, the fact is that better explanations exist on the web, and the best thing I can do is say "RTFM" (F=fine). This should get you started:
1 jp w/scp_grid_ans.PDF
/. (or you create one. Be ambitious
.
http://instruct1.cit.cornell.edu/courses/econ10
P=MC in pefect competition, local monopolies, and opportunity costs are basic but very essential concepts to economics. It is as fundamental as Debits and Credits, or Accrual accounting to accountants. There are, of course, silent assumptions that are made with these concepts.
I am not saying that either of your ideas are wrong, of course. They are quite advanced, actually. But you can't just dismiss the basics and then expect people to get the advanced ideas you are trying to convey. It's like saying, "1+1 != 2. Now I will prove that a^2+b^2=c^2." Maybe, under your assumptions you appear right, but now people must forget the universal assumptions that they have learned over the years just to understand your idea. Its like having to learn a new language just to understand your point and after that, how would I convey your point with out having the person they are explaining to learn these new assumptions?
Now, if you find an "economics forum," kinda like
!), I would certainly take the time to explain these concepts in detail. However, there is just no motivation to spend an hour or two carefully explaining some concepts that took me weeks of intense studying to grasp when some moderator (who might get "Open Source" WITHOUT getting Economics) mods my work as offtopic just because he/she (probably he) doesn't understand.
But one tidbit of advice . . . the strongest arguments you can make in economics USE the basic assumptions like P=MC in PC and such to disprove more complex assumptions. Dismissing the basics only proves that you have not invested the time to learn the basics. I know its an "ivory tower" thing to say, but a lot of great ideas and concepts are encrypted in a heirarchy of symbols and assumptions and the only way you will every grasp them is by learning these symbols and assumptions. The Internet is your oyster . .
Sdelat' Ameriku velikoy Snova!
Having other products on the market does not mean you can buy them instead.
If you need a particular application and that application is available only on the Microsoft crap, then you are forced to buy the Microsoft crap.
Simple minded people may claim they think that all consumers have a free will to buy anything they want. But, it is not true with computer software. YOU must in fact buy whatever the pre-requisites are.
And, as long as XP costs less than replacing all of the applications a user needs, upgrading them and incuring the expense of re-training and converting Microsoft can continue to charge extremely high prices for inferior products. And, they are doing so now.
They forced you to buy XP, right?
And, before you claim they did not, list all your applications you had or now have and detail how much it would cost you to switch to the MAC or Linux. Not just the cost of the PC and OS. But, all your applications. Can you get your games on Linux? Can you run the games you now have? Or, do you have to buy all new versions?
It is pure deceit to suggest that any customer can avoid paying the exorbitant price for XP. For many that is the lessor of two expenses.
And, it is deceitful to suggest that it is okay to screw all consumers with a high priced XP by falsely claiming they had a free choice.
Maybe they had a choice and maybe they did not. But, you insult all consumers buy suggesting that did have a choice when in fact they may not have. Or, the other choice was very expensive indeed.
If XP costs $2000, would you switch to Linux? If you say "yes", then detail exactly which applications you plan to move over to your new platform. Detail exactly how much that move will cost. If it would cost you less than $2000 and XP did cost that much, then you would move I expect. But, if training and expenses to switch cost more than $2000, you would pay Microsoft $2000 for a $25 product.
And, that is why it is deceitful to suggest that people buy XP because it is worth it. XP is worth $25 and no more. But, millions are forced to buy much higher prices for XP simply because of the fact that many vendors are forced to only offer the Microsort crap, some customers can only find the applications they need for the XP and not the less expensive platforms or it would simply cost to much to buy new software for an alternate system.
It is not what XP is worth. And, it is not what XP should cost if competition existed. But, rather it is the fact that a very large percentage of customers know they have no choice.
And, that means they are all more intelligent than yourself since you claimed not to know that.
NexuSys - Linux support by the best
This is how I see P=MR:
1. Revenue = P*Q
2. dQRevenue = dQ(P*Q)
3. Marginal Revenue = P
4. ***
5. Profit!!!
(I learned step 4. and 5. from Slashdot;)
Sdelat' Ameriku velikoy Snova!
"In terms of Monopoly pricing, Marginal Revenue (MR) = Marginal Cost (MC)"
Another thing, if MR = MC in a Monopoly, then profit = 0 in a monopoly (P = MR - MC; if MR = MC then P = 0). You agreed with my Monopoly = Profit statement though, right?
I think you are getting confused with perfecton competition. I guess, it is more accurate to say:
Perfect competition:
P = MR
Perfect monopoly:
P = MR
However:
Perfect competition:
MR = MC, so P = MC. That is significant because you are only breaking even in PC.
But:
Perfect monopoly:
MR > MC, so we say P = MR, where the difference between MC and MR are monopoly rents.
Please prove me wrong so that I can get tuition refund:)
Sdelat' Ameriku velikoy Snova!
The most advantageous, pre-eminent thing thou canst do is not to exhibit
nor display thyself within the limits of our galaxy, but rather depart
instantaneously whence thou even now standest and flee to yet another rotten
planet in the universe, if thou canst have the good fortune to find one.
-- Carlyle
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