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Linux Spurs MS Price Cuts
jimb writes "Yahoo!
reports:
'What's happening is that Microsoft sales reps have been instructed to be on the lookout for any businesses that are migrating some of their machines to the Lindows OS,' Yankee Group analyst Laura DiDio told NewsFactor. 'If [the sales reps] think there's a real threat of some pretty large numbers of defections to open source, they can request authorization from Microsoft higher-ups to offer steeply discounted pricing."' I wonder how many businesses will now start pondering aloud the possibility ... I'm sure OS X is on MS's mind as well.
Don't forget the MS balance sheet that was released a month or so ago - it showed their leading source of revenue was Windows, followed by Office. Everything else was negligible or lost money.
A prime example of why their monopoly is so important, subsidising and providing a vehicle for all their other projects, but it also shows how important that revenue stream is! Making Windows free beer would leave them only Office to make their money. Investors no like.
Wah!
Given that Microsoft can stand to make a little less profit on its sales of Windows. Is this really all that surprising?
Fear trumps hope and ignorance trumps both
I recall correctly (and I'm probably slightly off base here) they couldn't selectively charge different OEMs different rates (ie, they couldn't alter the 'MS tax' just to get them more OEM deals) .. but I'm not sure about end user software.
"Old man yells at systemd"
The article has it wrong. Microsoft normally slaps a 100% gouging charge on top of the real price. For especially good customers, they sometimes remove it for no reason, resulting in a 50% reduction. This has nothing to do with Linux. Nothing to see. Move along...
One line blog. I hear that they're called Twitters now.
DiDio said that in some cases, the discounts could be as high as 50 percent.
Go read this.
Then do the math. At full price, MS has a profit margin of 85%. If they discount to half price, their profit margin drops precipitously to 70%. Other businesses should be so lucky; if my business had a profit margin that high, we could all retire after one contract.
Office v.X, IE, etc. are cross-compatible.
Virtual PC runs Windows.
B. Microsoft's provision of Windows Operating System Products to Covered OEMs shall be pursuant to uniform license agreements with uniform terms and conditions. Without limiting the foregoing, Microsoft shall charge each Covered OEM the applicable royalty for Windows Operating System Products as set forth on a schedule, to be established by Microsoft and published on a web site accessible to the Plaintiffs and all Covered OEMs, that provides for uniform royalties for Windows Operating System Products, except that:
The selective pricing rules concern OEM's, not corporate licenses.
This article is about their site licensing for business customers which is already double-dipping. They already pay the MS tax once when they buy computers with OEM preinstalled Windows. Then they pay again for the site license. The Open and Enterprise license agreements let you upgrade to the current version and save you the hassle of tracking all those CD certificates that came with your computers.
No, they wouldn't have any more volume. People want Windows. People really, really want Windows. There aren't any really, really good alternatives right now, other than OSX, which is overpriced when the proprietary hardware is taken into consideration. MS is charging as much as they can get because that's what businesses do. There's very little switching to alternatives right now, so MS would probably see a net loss in revenue by dropping prices (especially on the desktop pieces).
Read the article ...
First paragraph
"Microsoft (Nasdaq: MSFT - news) has unveiled a new policy to discourage its business customers from switching to Linux (news - web sites) or other open source alternatives. Called Open Value, the new offer is part of the software giant's Licensing 6 volume licensing program."
I've never come across such a definition of undercut.
The plain old dictionary (ie. the non-economic general definition) gives me:
In economic writing I've only ever heard the term undercut to mean, sell for less than your competitor is selling, nothing to do with cost.
Dumping is the term I've seen for selling below your cost (predatory dumping if you are doing so to remove competition, but usually because government subsidies make it worthwhile for you), and you use that further down.
But dividing a non-zero number by zero is different from dividing zero by zero. They are undefined for two different conceptual reasons.
Actually according to Apple's polls, a significant number of first time Mac buyers are coming from Windows (about 30% I believe).
:-(
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Just a quick configuration check of low end PCs compared to the 15" iMac we have (trying to match configurations at 256M memory, 40G HD, DVD-ROM/CD-RW, 15" LCD display, optical mouse, ethernet, moddem, network capable OS (XP Pro), movie, photo and music software, etc., using the lowest cost alternitives such as Intel integrated video, lowes cost DVD drive, lowest cost software, etc.) Always used the Pentium 4, no Celerons and didn't add extra warrantee or install services. Won't even get into the megahertz issue so I used the standard CPU for each model.
HP Pavilion 700 $1,413.00 (after rebate)
(Claimed to start at $669)
XP Pro comes with Office, No movie,photo or music software, no Firewire, standard PC box design
Dell Dimension 2350 $1,228.00
(Claimed to start at $699)
60G HD, no Firewire, standard PC box design
Gateway 500 $1189.00
(Claimed to start at $999)
Comes with MS Works, No movie, photo or music software, no Firewire, standard PC box design, ASP ordering site kept crashing so I had to do the math myself
Apple 15" iMac $1439 (after rebate)
(Claimed to start at $1199)
Has firewire, iTune, iMovie, iDVD, iPhoto.
If you add $50 to each PC to add Firewire you find that the price variance from highest (HP) to lowest (Gateway) we only see $200 which if you added the Apple supplied software to the PCs would quickly eat up the $200 difference.
So you see that the PC hardware is really no better priced than the Apple hardware. If you are one to be misled by the "Starting at" prices then I have some swamp land that starts at only...
Not to discount what you said, but I thought this article was about Microsoft trying to keep people from moving to *Lindows* which, AFAIK, is a DESKTOP setup. You patted yourself on the back for replacing Microsoft servers.
Many people know that Free/opensource software can hack it on the server side, but many (myself included) need convincing that Free/opensource software can hack it BETTER than Windows on the desktop. (I would even say that, rather than just BETTER, it has to be much much better -- enough to make relearning many things worthwhile. Avoiding the occasional reboot is not worth it. Avoiding thousands of dollars of software licenses is not worth it. Avoiding the wrath of the BSA is not worth it. Getting your work done better and faster and making people say "Wow. That's awesome! How'd you do that?" will make it worthwhile.)
Right now, Microsoft and the software that runs on Windows is hacking it better, thus Microsoft can afford and be expected to do whatever it can (including lowering its prices) to keep their position.
Withdrawal before climax is very ineffective and those who try this are usually called "parents."
"Microsoft first drove Digital Research's superior DOS to near-oblivion by allowing IBM XT buyers to choose MS-DOS for free or to pay for DR DOS via a very low priced bundle deal (read nearly free) with IBM. "
What year were you born, kid?
Until us old timers are dead, maybe it's best you leave the history tales to those of us who actually remember using CP/M-86.
You would be surprised at how much most CIO's are afraid of MS. Some of them actually hide the linux servers so that the MS reps won't see them. I really don't know what they are afraid of but they are definately afraid of MS.
War is necrophilia.
Isn't dropping your prices a fairly normal way to deal with increased competition: supply and demand and all that? A couple of weeks ago we were complaining that MS's margins were too high. Now we're complaining that they are cutting their margins...
Sure, they are doing it selectively, but, if they did it across the board, it would really be bad news : does anyone think that Corel or anyone else could compete with XP Office for $50? That's cheaper than Star Office 6 in a box. And this is exactly what will happen if open source ever starts to dent their desktop market share.
Note in passing that breaking up MS would have made things worse in this respect, as the highly profitable OS and Office departments would not even had to carry the loss-making departments anymore, so they could slash prices even lower and still make a respectable profit.
The postings about Linux for $0 are funny, but miss the point that no OS change is free for a company with existing staff and data. If you take discounted MS products and set them against free Linux products plus the number of man hours needed to reskill your staff, the figures are closer than we might like to admit.
Virtually serving coffee