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.

Comments

Re:This is NO surprise.

[MrEd]

which is worth more than a few measly bucks per computer sold....

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.

Re:Selective discounting?

[AndroidCat]

DiDio said that in some cases, the discounts could be as high as 50 percent.

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...

In the case of OEMs shipping M$ products

[Rareul]

From the Good ol' DOJ

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:

1. the schedule may specify different royalties for different language versions;

2. the schedule may specify reasonable volume discounts based upon the actual volume of licenses of any Windows Operating System Product or any group of such products; and

3. the schedule may include market development allowances, programs, or other discounts in connection with Windows Operating System Products, provided that:
   1. such discounts are offered and available uniformly to all Covered OEMs, except that Microsoft may establish one uniform discount schedule for the ten largest Covered OEMs and a second uniform discount schedule for the eleventh through twentieth largest Covered OEMs, where the size of the OEM is measured by volume of licenses;

   2. such discounts are based on objective, verifiable criteria that shall be applied and enforced on a uniform basis for all Covered OEMs; and

   3. such discounts or their award shall not be based on or impose any criterion or requirement that is otherwise inconsistent with any portion of this Final Judgment.

Re:Selective discounting?

[spacefrog]

The selective pricing rules concern OEM's, not corporate licenses.

Re:My thinking

[NineNine]

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).

Re:Is this true and legal?

[sholden]

Undercut?? Undercutting is when you sell something for below cost so that the competition cannot compete at that price.

I've never come across such a definition of undercut.

The plain old dictionary (ie. the non-economic general definition) gives me:

"To sell at a lower price than or to work for lower wages or fees than (a competitor)."

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.

Re:Price of Linux drops to compete!

[dillon_rinker]

But dividing a non-zero number by zero is different from dividing zero by zero. They are undefined for two different conceptual reasons.

Re:Don't waste your breath, Microsoft

[ahaning]

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.