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Will Microsoft Subsidize WinXP For Lindows Buyers?

kinema writes "Ars Technica has an interesting little article about Microsoft's alleged "dumping" of Windows XP. It seems that Microsoft is selling XP through TigerDirect for only US$50 to customers who have purchased a Lindows computer." Note that Tiger says nothing like this on their site (No, you can't buy WinXP for $50 there); Lindows CEO Michael Robertson says (in the linked column) that "Microsoft's latest offers to TigerDirect are extremely lucrative and I wouldn't be surprised if they ultimately cave to Microsoft's pocketbook." PR ploy or reality, you decide.

36 of 644 comments (clear)

  1. dumping? by Washizu · · Score: 4, Informative

    Price dumping implies Microsoft is selling it below cost. It costs far less than $50 to produce a WindowsXP CD.

    --
    OddManIn: A Game of guns and game theory.
    1. Re:dumping? by SkArcher · · Score: 2, Informative

      To burn a CD, yes, but they have development costs and (in theory) an ongoing debugging effort (ahem), and I belive they have previously quoted $100 as their 'break even' price due to these factors and support costs.

      Selling at below cost to break your competitors is illegal in at least some places, im sure.

      --

      An infinite number of monkeys will eventually come up with the complete works of /.
    2. Re:dumping? by horza · · Score: 4, Informative

      Dumping - Export price that is "unfairly low," defined as either below the home market price (normal value) (hence price discrimination) or below cost. With the rare exception of successful predatory dumping, dumping is economically beneficial to the importing country as a whole (though harmful to competing producers) and often represents normal business practice.

      Phillip.

    3. Re:dumping? by nelsonal · · Score: 2, Informative

      Traditional economic theory fits quite well thank you, see natural monopoly, or returns to scale. (You could argue that traditional economic theory doesn't fit any business very well, and you could make some good points, but software isn't much worse than anything else) Software is the best example of a product where the initial costs are very high, but the marginal costs of production are very low, so the average cost is always falling. In those cases, there is almost always a single company that gets a monopoly, because the single producer is much cheaper than two or more competitive producers, even after the single producer gets their monopoly rents.
      What this economist finds positivly facinating about software is that there is now a producer who is pricing at marginal cost, software should be very interesting to watch for the next decade or so, and the first economist to figure out the market and write it up in an article, will cement a pretty solid reputation.

      --
      Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
  2. Trustworthy reporting? by m00nun1t · · Score: 4, Informative

    Now, this might be right and it might not be. But I wouldn't take Michael Robertson as a reliable source on things Microsoft related, particulary with (at this point) no evidence to back him up. The man who put up a large sum of money to effectively sponsor the XBox hacking competition doesn't seem to be especially objective.

  3. monopoly practice by Deathlizard · · Score: 0, Informative

    Since MS is declared a Destructive Monopoly in the courts all Lindows has to do is the following.

    1) Gather Information on what MS is doing to Stifle Competition.
    2) Sue.
    3) Win.

    It's That Simple.

  4. TigerDirect are SCUM by Jah-Wren+Ryel · · Score: 4, Informative

    No surprise that TigerDirect would do something like this. Bill is probably giving them a hefty profit margin on the sales too. TigerDirect would sell their own mother into slavery if it would turn a profit. About 6 years ago I bought some rinky-dink thing from them and got on their spam-list. Ever since then, I get spam about once a day from them. No matter what I do, phone, email, snail-mail, "unsubscribe" via their web server - nothing will get me off the list.

    Not only that, but they sell (er, "Rent") their spam list to other spammers. I know this because I have my own domain, so I can track who does what with my addresses - for example, amazon thinks my address is amazon@mydomain.com and tigerdirect things I am tigerdirect@mydomain.com - so when I start getting non-tigerdirect email sent to tigerdirect@mydomain.com I know they gave away my address. I wouldn't be surprised if Bill has bought a list of TigerDirect's lindows customers to use for targetted FUD. Hell, if he has their email addresses, they may end up being the recipient of the world's first linux email trojan...

    I've long since put any mail addressed to tigerdirect@mydomain.com into a direct-to-devnull kill filter, but according to my logs they still keep sending me crap. Don't trust them for a minute.

    --
    When information is power, privacy is freedom.
    1. Re:TigerDirect are SCUM by nutznboltz · · Score: 2, Informative

      I gave them up after I found:

      http://www.resellerratings.com/seller2121.html

  5. TigerDirect Microsoft Survey by 2cb · · Score: 5, Informative

    I recently bought a bare bones, no-OS system from tigerdirect. I later received a survey from them via email that was a thinly veiled survey direct from Microsoft. They offered an $80 gift certificate off the purchase of XP if you filled it out. I filled it out anyway. It basically asked what OS you use, how many computers you have, what word processing program you use, and why (i.e. price, performance, features, etc.)

  6. ars has good discussion on this already by Anonymous Coward · · Score: 5, Informative

    For several days, the Ars crowd has been discussing this. The discussion is worth reading through

  7. Re:Why by SpikyTux · · Score: 2, Informative

    Excuse me, if you want to open Words, Excel, etc, you can use Open Office. It works fine for me.

  8. Re:Why by Anonymous Coward · · Score: 4, Informative

    If you buy one, expect to be serving time in custody (under section 15 of the Theft Act 1968 for obtaining products by deception, if nothing else). (That is unless you intend to build computers and install this copy onto such a machine.)

    The correct price for XP Home is over GBP 160 (at dabs.com, GBP 163.32 excluding carriage)! For our European friends, that's EUR 231.13, and for any Americans among us it is a bargain at just USD 270.39.

    It's not really surprising that people are lookin elsewhere when faced with these prices, product activation and loss of features (such as a watering down of the command line).

  9. Re:Are Microsoft really that bad? by BenjyD · · Score: 2, Informative

    Firstly, this could be seen as price dumping - deliberately charging low prices with the intent of driving competition out of business and extending a monopoly.

    Secondly, this isn't so much an anti-MS story as a "Hey look, MS is hurting" story.

  10. $50 price after rebate & sale of information by James+McP · · Score: 2, Informative

    You won't find XP for $50 on Tiger's site. According to the article and the associated web page, Tiger sends MS a list of customers who bought Lindows machines and MS will give them a rebate towards the purchase of XP for "taking a survey"

    This bothers me on two levels. First is the dumping factor. MS will get out of that because in this case they are "buying market research data" from the customer with that rebate. Second is how yet again personal information is sold between companies. I'm very close to forming an LLC just to act as an "agent" for all my purchases.

    --
    I've been on slashdot so long I'm starting to get out of touch with the cool stuff if it ain't on slashdot.
  11. Re:look by HowlinMad · · Score: 3, Informative

    http://slashdot.org/faq/editorial.shtml#ed200

    Look at that for an explanation on why stories are sometimes picked, sometimes not. Its not perfect, but thats the way they do it.

  12. Re:sigh by JWW · · Score: 3, Informative

    Please do some looking into what they've done. They are not just "Doing what everyone else does."

    Places to start:

    "Dos isn't done 'til Lotus won't run."

    Strange error messages for DR DOS users starting windows 3.1.

    Claim for Windows NT Sever that there will never be "evil" per client licensing for the file server. (my favorite one, of course they just ment for version 3.51 )

    IBM essentially dumping OS/2 in order to be able to preload Windows 95 (Microsoft waited until the last minute to give them permission.)

    Any of the pay for a copy of windows per machine you ship deal they have with PC manufacturers. (Primarily as a barrier of entry for manufacturers shipping Linux PCs) (On topic to boot!)

    The entire sordid mess with stac over drive compression.

    The original deal with IBM for licensing of DOS. (Yes it was truly IBMs fault for letting them have this, but its Compaq's fault that Microsoft is what they are today.)

    The licensing scheme for XP.

    Their dealings with Corel re: linux.

    What they did to Netscape with IE. (I still can't believe people willingly gave up browser choice so easliy. Please don't reply about Netscape screwing up, I know they did that too. But think about it, if Microsoft could completely get rid of the internet, would they? You bet, it wasn't in their plans at all and it would have never been developed by them. IE was a scramble to regain control of PC's and people fell for it.)

    Is that enough detail (I know I missed some too). Feel free to look up and study any one of those.

    Microsoft doesn't play dirty, they live dirty.

  13. Re:What happened to the Law? by SerpentMage · · Score: 3, Informative

    Price dumping is not selling at a loss. Dumping is defined as follows URL (
    http://pacific.commerce.ubc.ca/john/baim503/dum p.h tm)

    Dumping is the act of charging a price to the export market that is less than the normal (fair) value. The dumping margin is the percentage difference between normal value and the export price.

    In other words you are not charging a fair price. Well in terms of MS charging only 50US for an OS in contrast to the regular 299 USD is definitely price dumping.

    Price dumping applies to everybody and not just monopolists.

    --

    "You can't make a race horse of a pig"
    "No," said Samuel, "but you can make very fast pig"
  14. Price Discrimination by IsaacW · · Score: 4, Informative

    There have been a lot of posts claiming that Microsoft is "dumping" XP on the market at below cost to drive away competition. There is a problem with this: as another poster has mentioned, "dumping" is defined as selling an item below the variable cost (i.e. per-unit cost). A full XP box set costs less than $50 to produce, so this is not "dumping."

    Secondly, Microsoft is doing exactly what every company does when presented with competition: they are lowering their prices. They see Lindows as a competing product to their own, so they are lowering the price. Now, their ability to offer that discount only to buyers of Lindows machines is a result of a tool called "price discrimination." Under perfect price discrimination, each consumer of a product would be charged exactly the maximum that he is willing to pay for the product. There is nothing inherently bad about this, it simply creates several prices for a single product, similar to what Amazon was accused of doing in an earlier article here.

    Microsoft has simply lowered the price of XP to customers of Lindows only, because they know that other consumers will continue to pay the higher price. This is textbook price discrimination and nothing more.

  15. Re:Why by joebp · · Score: 4, Informative

    That's the non-OEM versions. The OEM versions are around £65 inc VAT or £106 inc VAT for XP Pro. £65 is around $99.

  16. WinXP OEM price is not $200 by blastedtokyo · · Score: 4, Informative
    According to Froogle it's $90. So the actual price to a large volume computer manufacturer is roughly half that...that means with the usual retail markup the base cost is $40-50.

    no conspiracy here. Just the simple fact that OEMs pay less for Windows than Joe Schmoe would at retail.

  17. Re:Why by bleh-of-the-huns · · Score: 4, Informative

    XP Home Upgrade Edition, $99
    XP Home Full edition, $199
    XP Pro Upgrade Edition, $199
    XP Pro Full Edition, $299

    The prices may fluctuate a lil up or down, depending on where its being sold, but thats about the going rates on XP for the various versions, the upgrade being identical to the full install, but it looks for a previous version, easily fooled by sticking in any old windows cd, or even dos bootdisk.

    --
    I came, I conquered, I coredumped
  18. Wintergreen Connection by Anonymous Coward · · Score: 4, Informative

    Not many people know of the the wintergreensys.com connection with Lindows and Tigerdirect.

    A little history ... back in October wintergreen started making budget PCs similiar to Microtel/Walmart machines ... but with a Duron processor,modem,and floppy drive. Making money on these machine is hard due to the almost non-existant margins. Needless to say the quality of these machines was poor ... and due to the inexperience of the manufacturer the quality control was poor. This all equates to one of the highest return rates that Tiger Direct ever had for a system ... though the hardware and software problems are lumped together in that rate ... the excessive hardware problems helped to inflate that number alot. Over time the hardware situation has improved greatly and the system that wintergreen put out are much less likely to fail. But all of this has left a bad taste in Tiger's mouth. Another thing you have to understand is that Tiger Direct gets money for promoting a product ... Lindows hasn't paid and left a prime positiion open for Mircosoft. Microsoft has given money to Tiger in return Tiger will give the names of past Wintergreen/Lindows system owners and send them a rebate for XP home to put on there machines. So that is some history directly from a Wintergreen employee.

  19. Re:Why by cerberusss · · Score: 3, Informative
    I already completely switched over, and I'm using CodeWeavers' CrossOver Office. It runs MS Office 2000 stable and quicker than on Windows. As an added bonus, it also runs IE and Outlook.

    Of course you could use Wine, but this is a next-next-finish install and it runs VERY stable. They offer a trial version. I loved it and then bought it. It's only $55, and you prolly have an MS Office license anyway from the corp. where you're working.

    --
    8 of 13 people found this answer helpful. Did you?
  20. Re:Why by 1u3hr · · Score: 4, Informative
    ...in violation of the Microsoft EULA, and probably several other laws

    A EULA is not a law. Legislatures make laws, not companies.

  21. Re:Why by molarmass192 · · Score: 2, Informative

    If you're serious about looking into OO, take a look at 1.1 Beta 2. They've done significant work on the filters. My parent company uses MS Office extensively (I'm sure most do, they're a monopoly after all) and I *used* to have problems with Excel macros in particular. I've been saving these "problem" ones for testing in OO and they all appear to work in 1.1 B2. I realize it's a beta release but it gives you a good idea of what the next point release will be capable of. MS had better start thinking of repricing their Office suite to $99 soon because the next release of OO looks like it's going to be able to handle their doc formats pretty much perfectly.

    --

    Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws-Plato
  22. Re:WinXP subscription / Lindows Purchase by cygnusx · · Score: 3, Informative

    > IIRC with WinXP you are only purchasing a subscription for a year or so.

    YRI. (You recollect incorrectly.) When you purchase a full copy of WinXP ($199 MSRP for the Home edition) you *own* it. MS will support it with free patches and updates 'til Dec 2006. (Corporate customers will get free security patches 'til 2008.)
    After that, you are on your own. If you wish to continue to use it, you're welcome.

    Note the free updates+patches thing. That entitles you to free downloads (patches, software) from Windows Update. If you purchased XP Home for $199 ($99 if you upgraded) in December 2001 when it was released, you would get patches and updates 'til Dec 2006. Compares pretty well with Red Hat's $60/yr RHN sub (= $300 for updates). But hell, with Red Hat, you have to upgrade the OS every year or so because Red Hat doesn't support non-AS releases for more than 1 (or is it 2?) years.

    MS' Lifecycle policy webpage is here.

  23. Re:$50!? by uncadonna · · Score: 2, Informative

    I don't think you're getting a license. I believe your university has a site license. You are getting the distribution disks only, and the license belongs to the university, so the situation isn't comparable.

    --
    mt
  24. Re:Why by TheRaven64 · · Score: 4, Informative
    Then you haven't tried to put motion video into your talks. I do alot of talks, and they have alot of video's in them - 1 second repeating loops to be precise, for technical reasons. But the problem applies for any video. (I have actually though of reencoding some of this stuff as an animated gif, which would be a really ugly solution ....)

    Hmm, I just fired up a copy of OO, popped the MIB2 trailer onto a slide, and set it to loop no problem. I think your problem is that Linux doesn't really have a COM analogue (or rather it has several, which is the problem from the point of view of application support) so you can't just embed a copy of QuickTime player into your presentation (well, you couldn't anyway, since QT doesn't run on Linux). If you run OO on Windows, then you don't have this problem.

    --
    I am TheRaven on Soylent News
  25. I got this from the lindows mailing list by manifest37 · · Score: 5, Informative

    This is what Micheal had to say about microsoft paying off TigerDirect:

    After my expose piece on Microsoft last week, I promised one reader that I wouldn't write about Microsoft again for awhile. Unfortunately, I think I have to break my promise and here's why: As I've written about previously, the real key to desktop Linux gaining momentum is to get retailers to sell computers with Linux preinstalled. Sure, some people are smart enough to download software from our web servers then burn a CD and install it, but the majority of people want to buy a computer, plug it in and have it ready to go. Getting Linux computers onto store shelves sounds easy -- what store wouldn't want to stock computers for $200-300? (I just bought a computer for $249 and upgraded the RAM from 128MBs to 256MBs for 30 bucks and it is a solid little performer!) Consumers really want affordable computers and any retailer who stocks them sells large quantities of them. It seems like it would be an easy decision, right?

    There's one additional dynamic that comes into the equation - Microsoft's money to discourage retailers who start selling large numbers of LindowsOS computers. Microsoft routinely offers financial inducements to computer companies to not carry LindowsOS computers. With $40 billion in the bank, it's an easy decision for them to use a few million dollars to block Lindows.com from major retailers. Every month that Microsoft keeps their monopoly position, it is another billion or so in profit. You've probably heard rumors of such behavior in the past and maybe you're skeptical because the tales are, not surprisingly, light on facts. So allow me to give you the facts from one such retailer to convince you.

    LindowsOS computers have been available from TigerDirect, a popular mail order technology business, run by a savvy CEO, Gilbert Fiorentino. After selling thousands of LindowsOS computers in the last few months, TigerDirect describes their experience with LindowsOS in their most recent catalog, saying they have found it to be "faster, leaner, and more stable than Microsoft Windows," mentioning how "...LindowsOS never crashed, even in extreme testing situations," and then go on to say that they are "more enthusiastic about the LindowsOS than ever."

    We've met with TigerDirect in the past and they've remarked what great sellers the LindowsOS computers have been for them and how they were surprised at the demand for Microsoft alternatives. However, at these same meetings, they talked to us about e-mails and phone calls from Microsoft attempting to bribe them to stop selling LindowsOS computers.

    While TigerDirect has resisted Microsoft's pressures in the past, recently Microsoft has stepped up orders to their staffers to increase the financial incentives to impede LindowsOS sales at TigerDirect. At some point, Microsoft's monetary inducements become so large that it makes economic sense for just about any retailer to abandon LindowsOS - no matter how many computers they might be selling. TigerDirect is in the business to make a profit and if Microsoft will guarantee them a profit, nobody can begrudge them for taking it.

    Microsoft's latest offers to TigerDirect are extremely lucrative and I wouldn't be surprised if they ultimately cave to Microsoft's pocketbook. Microsoft is giving TigerDirect unheard of discounts on Microsoft software, allowing them to sell Microsoft Windows XP for just $50 to all of their customers who have purchased LindowsOS computers. TigerDirect is paying less for some copies of Microsoft Windows XP than even the largest Microsoft customers like Dell. Besides radically discounting their software, Microsoft is agreeing to spend a lot of marketing dollars to advertise their products through TigerDirect and more specifically to past LindowsOS computer buyers. Additionally, Microsoft is paying TigerDirect to collect market research on Li

  26. Re:Why by A+nonymous+Coward · · Score: 2, Informative

    Assuming you're not trolling ... it's called abuse of a monopoly position, predatory pricing, probably some legal term I don't know, and it is distinctly illegal for a monopoly to price its products to drive the competition out of business. This is about as basic a monopoly abuse as there is.

  27. Re:Why by sogoodsofarsowhat · · Score: 2, Informative

    Not if it is targeted only at that specific market and is designed only to DUMP product to run Lindows outta the game. That would be product dumping...and is currently against the law. BTW should anyone be able to make this stick (dumping) you would be entitled to 1/2 of the dumped amount $$$...

    --
    . I love the sound of burning women and screaming rubber....
  28. Re:sigh by Schnapple · · Score: 2, Informative
    Any of the pay for a copy of windows per machine you ship deal they have with PC manufacturers.
    Your post makes this sound current, but they had to cut this out a while back. I know recently some allegations have said that this is still the case but it isn't (you think places like Dell would tolerate it?)
    Their dealings with Corel re: linux.
    Corel bonered Linux themselves, along with most products they've ever done with the exception of Draw. They also screwed the pooch over a Java WordPerfect without Microsoft's help.
    The entire sordid mess with stac over drive compression.
    I remember hearing that Stac sued Microsoft since "DoubleSpace" sounded too much like their product, so they changed it to "DriveSpace". This got Stac purchased by Microsoft, which given what I know of the world now, may have been the goal all along.
  29. Windows != XBOX by Anonymous Coward · · Score: 1, Informative

    Windows has near-zero marginal cost. Even at only $50, Microsoft still makes a profit. $50 is a very good deal on Windows, so if that's your goal it's good advice. But buying Windows at $50 to 'screw da man' is silly. It's damn near impossible to sell Windows at a loss. According to this and other stories, windows could be sold at $28 and still not lose MS any money.

  30. Re:Watering down of the command line..... by The+Infamous+Grimace · · Score: 2, Informative

    The Network Utility app for Mac OS X provides a decent, intuitive GUI for a few *nix utilities; netstat, ping, lookup, traceroute, whois, finger, and it also has a Port Scan (not sure what the *nix equiv. is; I'm a UNIX novice, and I can't find my copy of "UNIX in a Nutshell"). It's a tabbed interface, and basically all you do is select the util, enter an IP address (or whatever), and hit return. It's in /Applications/Utilites. It's basic, but nice for us newbies/wannabes.

    (tig)
    "We do not inherit the land from our ancestors"
    "We borrow it from our children"

    --
    Ignorance and prejudice and fear
    Walk hand in hand
  31. Re:Full version XP for $93, Pro for $143-NOT Legit by RumpRoast · · Score: 2, Informative

    Methinks a cable is not a peripheral... The agreement needs tweaking.

    --

    My Ass hurts.
  32. Re:Watering down of the command line..... by drsmithy · · Score: 2, Informative
    In Explorer, it would involve hunting through and finding all the Vorbis files, and then Ctrl+clicking each one, and then cutting them, and then going up a level, and then pasting them in the ogg folder.

    A better way would be doing a search for *.ogg in that directory, clicking once in the resultant search window, hitting Ctrl+A, Ctrl+X, navigating to the destination and hitting Ctrl+V. Or sorting by type and selecting all the .ogg files from the nice contiguous group that should create.