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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!
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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%?
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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.
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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.
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?
Difference being that Microsoft is selling software and Redhat is selling service and support.
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.
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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.
Ever heard of Debeers?? Its the reason that you can have a 2000% much less 200% markup on diamonds, fucking cretin, research before posting!!
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.
They aren't charging $1000 a copy (or $2000, or more) because there is a limit people will stand-- in this area, at least (and perhaps only in this area). Joe Consumer won't care if you tell him "This OS is made by an evil candy-from-babies-stealing monopoly with flappin' heads and beady little eyes", but he WILL care if you say "Hey, did you see that new Windows on sale at Best Buy? It's a thousand bucks!"
I've found that most Americans remain quite apathetic to anything and everything, in general-- until you make it blindingly obvious that something will hit them in the wallet.
Saying "Windows is made by a monopolist" doesn't get them riled up.
Saying "Windows will now cost $1,000 a version" does.
Why? Simple. Since they feel that Windows is great, and therefore "worth" $300-- but $1000 gets it to the point where it's seriously impacting their finances. And that is where most Americans put their collective foot down.
Honey, I shrunk the Cygwin
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
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.
Thing is, Microsoft has distribution centres worldwide, as well as dozens of manufacturing centres with manufacturing equipment that can stamp out hundreds of WinXP and OfficeXP CDs a second. Red Hat doesn't. Basic rule of manufacturing: Manufacturing/purchasing in bulk costs less per item. So the final cost per WinXP CD is far less than the final cost of the latest Red Hat distro. Thus, by all logic, Microsoft could sell WinXP for less money than Red Hat. The reason they don't is because, by looking at the article, it seems they need all that extra cash to support all those failing, yet competition-stifling ventures.
I'll be honest, we're throwing science against the wall to see what sticks. -Cave Johnson
I doubt they could make a profit by doing what they do for 50 cents... Not that I'm defending their prices, I don't know enough about it. I somehow doubt you do, either.
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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First of all, MS isn't "acting like a capitalist"-- you're right on that accusation-- but they are certainly not acting like a welfare agency. Depending upon which aspects of MS's business plan you dislike the most, they are acting like "a software racket" (think of the Mafia's control of certain industries-- like that, only without all the guns and cement shoes and stuff
The free market. It's not free if one company runs the show (almost) by their lonesome.
Competition. (See above)
Competing on quality and price, not marketing.
At least, that's how the "classical capitalists" would have it-- people like Adam Smith and whatnot.
In any case, MS's behavior in the past decade or so has been sort of a twisted mockery of what capitalism is "supposed to be". Look at what ths Soviets did to socialism-- twisted it into a monstrous nightmare. MS is doing roughly the same thing to capitalism-- wrecking it.
They are most certainly not anything to do with welfare...
Honey, I shrunk the Cygwin
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.
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
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
Microsoft charges a price they believe the market will bear. They don't charge $1000 a copy because people wouldn't stand for that. That isn't to say the price could creep up to close $1000 in a few years (provided they will still be in the OS business). Actually, this issue is already covered in Judge Jackson's finding of fact in 1999. See this.
Notice in particular the first sentence (emphasis mine):
And this is all from 1999! How much have they (not) changed in three years?
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 $550. You get XP Pro, and a computer too. Unfortunately you get the lame-ass "system recovery" disk but with the most recent Dells I've seen that CD is just a Windows XP Pro CD without the fancy hologram. You can, for example, copy the I386 folder onto a blank hard drive and set up XP that way.
Personally, I just pirate the stuff. Or should I say, I set my system clock ahead to 2104 when installing Windows, and now the 30-day trial won't expire any time soon. (in XP there's a similar deal to make the activation clock get reset, though it's less elegant.)
By the way, I leared that system clock trick from contractors who were working at Microsoft. Apparently they had to do this on their test systems because they only had the trial versions of MS product. Go figure.
i can download a full version of redhat for free. and have it be legal.
can you download windows XP, legally, for free?
i think it takes a whole different spin on things when a company can sell something for 150$ (and people purchase it) as well as give it away for free, and still be afloat.
k.
--even a broken watch is correct twice a day.
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?
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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.
The definition of "monopoly" has absolutely nothing to do with "whether or not a company sells things for what the market will bear".
From Merriam-Webster:
1 : exclusive ownership through legal privilege, command of supply, or concerted action
2 : exclusive possession or control
3 : a commodity controlled by one party
4 : one that has a monopoly
What you are talking about is merely one "classical complaint" about why monopolies are bad ("Monopolies are potentially dangerous because once a company has a monopoly, it can effectively charge whatever it wants").
Microsoft is a monopoly because they have a near-100% market share in many areas.
Microsoft is abusiving their monopoly (as determined by the Feds) because they abused their monopoly standing in various ways (e.g. browbeating all hardware vendors to not offer any alternative-OS/no-OS computers).
If I recall correctly, having a monopoly isn't even illegal... it's abusing a monopoly that's illegal. But as the old saying goes, "power corrupts; absolute power corrupts absolutely", so most people nowadays don't seem to draw much distinction between "a monopoly" and "an abusive monopoly". Since, in the end, virtually all of the former turn into the latter-- and usually in short order...
Honey, I shrunk the Cygwin
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.
<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
Did anybody else think they'd come up with a new product when they read the headline?
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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.
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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'
I don't think MS went into XBox so much to steal market share from the game consoles, but more to keep the game consoles from taking their market. Most MS decision makers are all business and do not understand games at all, only when the argument that the consoles could concievably take users away from the desktop forever (a la thin internet clients) surfaced did seem like a good way to cover the bases.
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...
Everywhere you see the Wintrolls saying how great WinCE is. how great MSN is, how great XBox is.
Fact is that all those are just losing money and not what Microsoft wants us to think they are. *ALL* their products except for Windows and Office are so crappy that they couldn't survive without massive cash infusions.
I always suspected that MSN and WinCE are not making any money (and I was called crazy when I said so), now I know that I am right.
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
MS most certainly do not give it away free. You normally get two (or a few) incidents for free, after that you'll cough up $80 each time.
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...just because you know how to type in bold, it doesn't mean you're right.
...and still no one likes M$ :)
- When all you have is a hammer, everything looks like a nail -
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.
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.
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.
This is so non-sequitur, I'm gonna burn a little karma and have a little fun, OK? ;-)
I see you referring to the color "blue". You correlate this closely with stocks in Japan performing ballet, but I don't think that is quite the conditional you wish to imply.
You are correct in referring to departments, and money, and how this has an impact on the environment. Why, just last week, someone I know took a fishing trip.
Is it because 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 that you came to me?
Don't think of it as a flame---it's more like an argument that does 3d6 fire damage
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.
Microsoft's playthings like XBox and WinCE will never be profitable.
Or to put it in words you understand:
ALL divisions at Microsoft are dependent on Windows and Office. With people refusing to upgrade and/or migrating to OpenOffice and Linux, ***** ALL ****** Microsoft products are endangered. - Sooner than you might think.
Expect the MSFT-shares to drop a bit in price over the next days. Shareholders don't like being lied to - they also don't like a company that is picking up losing ventures one after another (most recently and most serious is XBox. Sold about half as many units as Microsoft expected and promised - at a higher loss than expected.)
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.
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.
Always remember: The most profitable product Microsoft sells is not Windows and not Office, it's MSFT-stock.
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.
Windows wrote theirs from scratch...
Wrong! Windows 9x came from DOS, which Microsoft bought from Tim Paterson. Windows XP came from Windows 2000 which came from Windows NT which came from a joint project between IBM and Microsoft.
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.
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.
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.
.
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...
Consumers do have a choice at present
OK, call up Gateway and try to get them to sell you a computer without Windows pre-installed. Can't do it, can you? Or try running over to Best Buy and getting a computer without Windows on it.
Or try buying a Sony laptop without Windows installed on it.
The fact is that consumers do not and will not have a choice until the have the freedom to purchase any computer they want WITHOUT Windows installed on it.
Right now Microsoft has the market sewn up with these pre-installs to the point where consumers do not have a choice.
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.
Well, Bill Gates has been selling shares in the millions, not thousands. He appears to have sold about 10 million shares in October.
But I'm not sure what that has to do with the companies profitability or monopoly status. Microsoft is a profitable company, regardless of stock-option loopholes. If the price of MSFT stock goes down, that would actually reduce MSFT's expense for exercized stock options, if it chose to expense stock options. I'm guessing that's what you are referring to when you talk about "tax-stock-option loopholes".
MSFT-stock is not sold by Microsoft, except at the IPO and any secondary offerings. When MSFT stock is bought and sold on the open market, Microsoft doesn't get any of that money. The shareholder who sells the shares gets the money.
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.
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"
"Do something man. Right now."
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
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
..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
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.
I don't think the US has laws exactly like you are talking about, but the recent Microsoft settlement proves that it doesn't matter anyway.
We do have laws protecting against the anti-competitive business practices Microsoft has used over the past 10-15 years, and we let them profit from those practices all of this time anyway. When it finally looked like they would get some punishment (everyone knew it would be much less than what they had gained from their illegal actions), it turned out that nothing happened.
So, we have more problems than just the lack of legal protection, we also lack legal enforcement when it comes to rich corporations.
As for your second question, I don't think Microsoft plans on losing money in their other markets forever. Take MSN as an example. Microsoft sees AOL as a huge opportunity. Imagine if you could try out a new market for several years without having to worry about how much money you spent. It would be nice, right? Well, it also poses a great opportunity to starve out the competition, leaving the market all to yourself in the end. If such illegal business practices work out, you will eventually recover your losses and have a new source of income. I think Microsoft recognizes this opportunity.
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
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.
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 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.
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.
"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!
No, I've never run a business, but that doesn't mean that I don't know what I'm talking about. (My interest doesn't go beyond watching the stock market.) For one thing, I said MOST businesses, not all. My experience has been that manufacturing-oriented businesses tend to have lower profit margins than service-oriented ones.
If you do a quick Google search for profit margins, you'll find results like the highest profit margins in Houston and the top businesses in Massachusetts. Funny, 20% gets you in or near the top 20 in those localities. I suppose all the businesses there are dying quickly.
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
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.
No, but you can go to walmart.com and dell.com.
You do have a choice. But you have to choose to research and compare products before buying.
Based on upvotes, Ageism is the only "-ism" Slashdotters care about and think isn't SJW
"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
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.
I wonder how many of Sony's customers actually call Sony up and ask for Linux to be pre-installed on their laptop... I'm sure there are a few, but not all that many. 'But Linux doesn't cost Sony anything! Why shouldn't they?' you cry.
Well, let's get back to reality now. If Sony wants to ship a desktop with Linux pre-installed, they've got to hire people to put together a pre-installed Linux distribution to use. People with experience building OEM Windows distributions aren't rare, and the tools to help this process are relatively common. Also, you've suddenly got to make sure all your hardware is completely supported in Linux. So you have to go out to your component suppliers.
So after you've done all this, you start selling pre-installed Linux on your computers... and suddenly somebody has a problem! Uh oh, I hope you have some people on hand for technical support! And you can't just outsource your technical support to a specialist company, like you can with Windows.
Let's face it. There simply isn't enough consumer interest to support pre-installed Linux on the desktop. Sure, you're going to save about $100 per computer (OEM license cost), but how many do you have to ship to make up for initial setup cost in the first place? The cost of the Windows license simply isn't a big enough on most computers being sold these days to make up for the pathetic level of general consumer interest (I don't consider the 0.5% of desktop users using Linux to be significant).
Now, the server market is different. Lots of people want Linux preinstalled on x86 servers and *gasp* I can buy it preinstalled! I've been able to for years! But there's appreciable demand, so that's no big surprise.
For the record, I use Debian GNU/Linux, and have for years. When I bought this computer (it's not worth my time to hunt down parts at OEM prices and build it myself), I just went to a local store, specced it out and asked for it without a Windows license. Easy as pie. But I didn't expect the guy running the store to preinstall Debian on it for me.
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
... 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
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...
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
Comment removed based on user account deletion
Microsoft's playthings like XBox and WinCE will never be profitable.
/.) predict that many of Microsofts ventures will be profitable.
How does such rubbish get a +5? NONE of us know whether or not they will be profitable, and people who actually study business (or who at least have a basic understanding of business, unlike many here at
Microsoft's problem is that without happy shareholders, all their tax-stock-option loopholes don't work anymore.
NEWSFLASH - Companies rely on happy shareholders. Please, got back to school.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips
Try calling up Sun and getting an enterprise server without SunOS on it. Try calling Apple and getting a PowerPC without OS X or OS 9 on it. Try calling IBM and getting an r/6000 server WITH windows on it. The bottom line is, just as Apple owns the PowerPC architecture, Microsoft owns the x86 architecture in a way. My Dad bought an iMac. He had the choice to A) use different [aka More Elegant] hardware and B) use a different OS.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips
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
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
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
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
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
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.
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.
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:
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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.
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
Actually, you are wrong, have you ever added up the separate cost of getting all three things a la carte?? at wendy's for instance it is EXACTLY the same price, and mcdonalds I think you save maybe 5 cents, point is, value meals are not about saving you money, they are a cost saving measure for the fast food restaurants because they reduce order/order processing time, meaning they can process more people during the lunch hour rush, thereby making more money and improving their margins ever so slightly... they are not there to save you money in the least.
From the FAQ
/. article, then why should Microsoft feel threatened by AOL Time-Warner?
Infact, are their any companies which are in a posistion to try and create an OS for the PC home market which could compete with Microsoft?
"One of the facts that this myth ignores is the role of the capital markets in a free economy. So long as investors are left free from government controls, they are free to bring an unlimited amount of new capital into any given industry. Thus, for example, a software company that has built its way up to a $400 billion market capitalization over a period of twenty years (Microsoft), may suddenly face, almost overnight, a $350 billion rival (AOL Time Warner)--thanks to the free capital markets that make such a merger possible."
Remind me, are AOL Time-Warner making Operating Systmens? Or are they making products to run on Microsofts OS's, I.e. complimenting rather than competing with Microsoft. And if Microsoft makes money off it's OS and Office exclusively, as shown in the
The answer, is no there isn't. Other companies do not have the commercial influence to threaten Microsofts posisiton in the OS market.
Companies will frequently offer products at a loss as a benefit to their employees. Items can be had at below cost as part of an employee purchase plan and is typically limited by a dollar value per quarter or per year. $30 CDN is a good deal for WinXP Professional, but isn't an indicator of cost.
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.
Monopoly is the ugly boil of capitalism that nobody wants to admit is real. ...
According to contemporary economic theory, profit only occurs where a monopoly exists.
While I've minored in economics (and don't pretend to be an expert), I have a few beefs.
First, due to diseconomies of scale, it's entirely possible to regionalize a product. Franchises are somewhat related. Independent ownerships (and pricing) with royaltiest paid. Technically, McDonalds wouldn't be a monopoly, so long as it was regionalized.
Moreover, I've always hated the concept of zero profit. There is a tremendous false impression that zero profit means no money is made. The simple fact is that executives earn a salary, and that salary is counted as part of the fixed and or variable costs (variable if they charge hourly (which counts if they are compensated via bonuses)).
In a perfectly competative market, theoretically any possible reduction of variable costs lowers the market price. Thus, companies with lower executive pay-offs would affect such a change (given the greater proportion of their salary v.s. a workers salary). In reality, however, there are few truely "perfectly competative" markets. This is polluted from things like brand-name recognition, or similarly risk-aversion costs (due to not purchasing from known name brands), or locality/availability. Computer fairs, for example would be a good candidate for perfectly competative markets, but several dealers are shady, and those vendors set up next to the front door are highly likely to charge more for the same product.
The fact that many such computer companies are family owned (possibly even with family connections overseas for lowered costs), the employee costs are directly tied to firm profits. Yet, obviously if there was zero increase in price from OEM purchase to customer sale, the companies would all go out of business. Yet, somehow it's still worth the while of hundreds of companies to visit these computer fairs.
The reasoning is that everyone must generate at least a penny of revenue in excess of hardened marginal costs (meaning raw materials). That penny necessarily goes to the variable cost of labor. But that labor is directly tied to "profit" of the owner. It is then the goal of marketing / business strategy to command greater than 1 penny "profits".
The point here was merely debunk the notion of zero profit and perfect competition. Again, technically all labor expenses should be summed into the profit category since they are variable and expendable in direct proportion to the level of competition.
Beyond that, I believe that the concept of Average cost and short/medium run plays heavily into the practicalities of profit maximization. Theoretically in the long run, Average cost equals Marginal cost, and therefore price = MC due to competition. From this, only Monopolies can maintain a profit. However, no product/consumer is static. Virtually every product has evoked change in supply or demand to a degree that warrants both newer R&D costs (contributing to higher Average costs) and to short-term niche markets which allow for higher consumer elasticities.
I am thinking of the entry to maret as a diffusion rate with a natural impedence (resistive) force. The rate of change of a market is directly proportional to the ability to command profits, since there will be more opportunities to command a niche with little competition.
Further, given the set of markets that are changing (arguably a majority), and that AC = MC only after an infinite time, then for this set, AC != MC necessarily. Thus the dynamics of such transient markets are too complex to generalize. For some firms, costs will be lower for market entry, and thus AC for them will be lower than for competition. However, that market will eventually saturate or be obsoleted. At that point, transition can occur where the process begins again.
Such a system is highly susceptible to marketing (information scarcity / irrational purchasing), assymetric advantages (family connections, illicit collusion, etc), and simple luck (being at the right place at the right time at the right price with the right product).
My point in all the above is merely that the rate of change of a market is sufficient to allow for non monopolistic / non-perfectly-competative markets that could very well have been either. More-over, the food industry / computer industry necessarily falls into this category of rapid change (new "better" products replacing older ones).
I'm sure a lot of research has gone into this area, and I freely admit that I'm out of my leage. I'm simply [trying to] debunk what seems to be the elementary/classic view. You "can" make a "profit" from your hard work; you simply have to get past the idea that your dividends from your IPO'd company are the be-all-end all (completely ignoring the lunacy of capital gains off IPO'd shares, which is nothing more than gambling). (And yes I realize that economic profit covers more than dividends, but it is merely a different scale).
My main motivation for the above rant is the notion of fixed wages or worse yet, salaries w/in a corporation. Company effibility (to outside investors / analyzers) ignores the economic welfare due to employeeing potentially thousands of people with very high salaries/wages. If, instead, there were low salaries and instead a heavy bonus structure directly tied to contributed value to the company (i.e. productivity), then expenses would be more variable, and the need disperse profits would deminish; bonuses could be proportional to profits, and annual reported losses would be significantly reduced. The system rewards productivity retroactively instead of proactively. Mistakes / setbacks are more quickly regulated in terms of firm performance-analysis and future decision making. Most notably, there are fewer sunk costs.
I'm ranting at 2am, so I appologize. The more general argument, however is the viability of smaller, regional firms with little or no stock-based control / revenue streaming. The goals are a reduction in what I consider the adverse wants/effects of corporate economies of scale (namely corporate immorality/ neglect/devaluing of consumers) which is a natural extension of the unregulatable masses of businesses in a market based economy.
-Michael
A million people have replied in this thread but noone has termed it this bluntly so I will.
You are a complete idiot, your subject stating that "we all need to learn some economics" makes me laugh. From my microeconomics 1010 book I quote:
"[having a monopoly] Does not mean that the monopolist can charge any price it wants - at least not if its objective is to maximize profit. This textbook is a case in point. Prentice Hall, Inc., owns the copyright and is, therefore, a monopoly producer of this book. Then why doesn't it sell the book for $500 a copy? Because few people would buy it, and Prentice Hall would earn a much lower profit."
Monopolists are ruled by the demand curve in the market that they operate, they cannot charge arbitrarily high prices because the market will not support it. The definition of a monopoly is not "They can charge whatever price they feel like" (although this is true of monopolies they could charge whatever they want, but, they choose to charge at a price that maximizes profits which is not an arbitrarily high amount, it is determined by the demand curve in the market) it is "a market that has only 1 seller and many buyers, and has significant barriers to entry"
Go study economics yourself, monopoly rents are the difference between what would be charged in a competetive market and what the monopolist can charge.
I hope you realise he won't get the joke.
You're talking about the substitution effect. The previous guy was talking about Supply and Demand.
.NET) which will of course require upgrading.
There is a certain demand for PC's. Some people can NOT afford a $2000 PC, no matter what the configuration of costs is. Many people can afford a $150 console gaming system, however. Likewise the demand for consoles is higher than for PCs. To some people, a MAC or Linux are not substitutes. Thus, they may simply elect to not make a purchase (this includes deciding to not purchase an ADDITIONAL PC for say their children).
Thus, you have a demand curve that's directly related to the price. Higher price means fewer purchased PCs. While there is a substitution effect, it is completely practical to say it is only a small factor (given the realistic monopoly of MS on our everyday computing needs).
Thus MS, being a veritable monopoly on a virtually zero marginal cost product (e.g. software) can greatly determine the price.
However, If they charged $1k for their OS, there would be fewer purchasers. Revenue = quantity_sold * unit_cost. At some point revenue will peek for a given price. The propensity for consumers to pay higher prices without losing too many sales is the elasticity curve. You can be absolutely sure that MS is keeping VERY close tabs on the elasticity of their product, and charging accordingly.
Further, they are working VERY hard to artificially enhance the elasticity curve. By regularly making OS releases, there is an irrational desire to "have the latest and greatest". Irrational only in the sence that experience should teach them that MS hasn't provided many good "new releases".. They've often been buggy and filled with "more of the same". Still some are attracted to the glitter of new graphical UI's, and they justifiably acquire some utility; though it is doubtful that that utility equals the cost of an upgrade.
MS goes one further by obsoleting existing software lines (due to non-backward compatibility). New games require new Direct X engines, which aren't provided on successively older OS versions. Office is necessarly non backwardly compatible. MS seeds new markets which will generate interest in new software paradigms (such as
All this equates to maintaing a heafty elasticity and demand curve. This more than compensates for the substitution effect as it exists today.
There is one good thing to come from all of this.. As they price themselves closer and closer to their desired elastically justified point (held back only by sticker shock psychlogy, and fear that the government will intervene), they lower the "barrier-to-entry" costs that were fundamental to their anti-trust-trial. It becomes ever cheaper relatively-speaking for a company to choose Linux. Moreover, it becomes more viable for a 3'rd party to charge money for a newly developed UI for Linux. Moreover, companies (such as Win4Lin, and others) are already doing it.
The only obsticles are compatibility.. But such a commercial company is now legally required to have access to such compatibility information from MS (as far as I understand the most recent rulings).
Unfortunately, MS knows this, so their cost increases will probably continue to stagnate; being just above what is acceptible, but not above that critical barrier to entry.
The article's paper is jiberish in the sence that they are merely demonstrating what we already know.. MS is not constrained in terms of pricing by competition. I was also upset to read what MS "could" have charged, since this neglects the billions spent in R&D.
The problem is that Windows currently takes the role of stanrdard oil or AT&T.. A necessary comodity that is being charged well beyond the reach of needy people. Walmart is selling $200 PCs ($300 if you want windows). That's 50% of the cost for a barely useful machine (web browsing and that's it). To write a term paper, they'd have to shell out the equivalent of 200% of the cost of the machine. The paper is obviously dated in this respect. What we really need is a paper on the effects of harm to the public due to excessive charges.
The OS itself is only worth maybe $25-$45 dollars, but MS doesn't just sell an OS. They provide lots of "innovation" for additional fixed-cost. The monopoly argument must be tied to the harm of the population (as with AT&T / standard Oil) for our corporate friendly Republican congress to give this issue a second glance.
-Michael
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 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.
Did I mention I worked there? Seems somewhat convincing doesnt it? See, MSR's only goal is to convince MS execs (=balmer) that they are relevant so they keep their paychecks.
So I may appear that what they are doing is relevent, because they spend most of the little time they do spend working pasting together a story.
But is IS a sham. The real technology is actually bought off small companies and then rubber stamped by MSR.
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
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.
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
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!!!!!!!!!!!!!!!!
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
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
You do have a choice. But you have to choose to research and compare products before buying.
I agree that there are some systems available that have Linux pre-installed.
Choices, yes, but damn few and not at all clear to those who don't already know.
A firewall can not protect you from yourself. Turn off what you do not need. Do not use the firewall to do your work.
Personally, I build my own. Only my first system (4.77mhz 8088 -w- 128K), the two Suns, AIX, and my second hand Dell laptop weren't put together from parts. I've even built systems for friends with Linux pre-installed.
At work, building each system or buying from mom & pop shops aren't options.
It is unusual that I personally have the chance to pick out the number of systems needed to meet Dell's and other companies minimum order for a blank or Linux-pre install.
Note: You can easily get some companies not to install Windows. Now, look at the price difference between "With Windows" and "Without Windows". Except for Wallmart I can't think of any big company that will sell the "Without Windows" system for less. Because of that, it's not worth the hassle to even ask for systems without Windows...Microsoft still gets the money and my company saves nothing.
A firewall can not protect you from yourself. Turn off what you do not need. Do not use the firewall to do your work.
Well, while the Genesis and SNES were of the same generation, the way the competition played out was a little more complex. The Genesis came out a fair bit before the SNES, as Sega, realizing that the Master System was losing to the technically inferior NES, decided to try and trump Nintendo and release a next-generation console. As a result, there was some time during which the Genesis did, in fact, compete directly with the NES in the gaming market. This is really the primary reason why Sega did so well with the Genesis. It jumped the gun on the competition and got a 16bit console out well before Nintendo. Once the SNES came out, things changed (although, the Genesis did remain successful, since it had captured more of the market).
Interestingly, as far as I can figure, Sega tried this trick again with the 3rd - 3 1/2 generation consoles... it initially released the Saturn which was in competition with the N64. However, it failed to gain any real market share, and so they tried to jump the competition again with the Dreamcast... unfortunately, this failed miserably and basically spelled the demise of Sega in the hardware market.
"Unlike most of you, I am not a nut." - Homer J. Simpson
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.
First, the design costs are spread out over a much smaller number of items. Then once the product has been designed, the raw materials are almost inevitably much more expensive than the raw materials used on less exclusive clothing. Now you need to make the product, and you don't see Made In Italy on tags for free, those workers are expensive, not like the Made In Taiwan crap. So now you've got an expensive bit of clothing... that must sell in it's designated season, or it's quite likely just expensive trash.
I'm not saying there's no profit in the designer game, far from it, but it's not the racket that a lot of people make it out to be.
Shoot all the moderators.
So? Microsoft took an existing OS (DOS) and bought it... then took another existing OS (Mac OS) and copied it's interface, rather ineptly.
You see? You see? Your stupid minds! Stupid! Stupid!
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
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
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
When I bought this computer (it's not worth my time to hunt down parts at OEM prices and build it myself)...
Yeah, we get it. You could have built it if you wanted to. And you could also have made the football team and dated the prom queen. Too bad you didn't want to...
Slashbots and their insecurities. Who can NOT troll them? >:)
You either lie, or you're stupid. It's very easy to buy a computer without Windows installed.
READ WHAT I SAID.
I did not claim that it is impossible to buy a computer without Windows installed.
What I said was that
it is impossible to buy the overwhelming majority of computers models without getting Windows shoved down your throat. This fact is what eliminates free choice by consumers.
The fact is that if I want a computer without Windows my choice is SEVERELY limited. Suppose I want that nice Sony laptop with the 16 LCD"? Can't get it without Windows. Ditto a Gateway or a Dell or almost any other brand. Sure I can get one of a few WalMart models, or I can build my own. Or I can maybe get a Dell server model. But the FACT is that my choice is severely limited.
Real choice in the computer market? I can have just about any computer I want SO LONG AS I PAY FOR WINDOWS TOO.
Don't tell me that users have choice. That's HORSE MANURE.