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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".
Microsoft doesn't charge for the support. That comes "free".
I don't buy other MS software. As it is they are monopolizing nearly everything now adays. Next week well see them monopolize toilet paper and raise the price to $5.00 a roll for 1-ply.
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Its definitly a good point to compare prices to other successful buisnesses in the same area. The catch is though, that there are no other successful vendors of operating systems for x86, and I agree, Linux doesn't count because of its open nature. I think that MS would make more sales at a cheaper price, but realistically, how much more could they sell? I agree though, that high profit margins don't make a monopoly, Adobe must have sky high profit margins on Photoshop, with so so many copies out there at a couple hundred dollars per copy, but everything is very standardized, and someone could create a competitor with no real technical (and I think no legal barriers).
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I was describing retail pricing - MSRP, if you will. Educational and nonprofit pricing has always followed a different set of rules.