Is Windows Worth $45?

bgelb writes "This article from the Wall Street Journal questions whether Microsoft really innovates enough to justify the enormous amount of money (nearly 10% of the cost of every PC!) it takes from consumers each year. Hard drive and chip makers innovate constantly, but what about Microsoft?"

Comments

Who actually pays?

[LlamaRama]

I'm not a Windows user, but all of my friends in my networking class pirate, even the ones who are Windows enthusiasts. Of course, they all build their PCs, I suppose it is really people buying OEMs getting hosed.

Re:Who actually pays?

[drsmithy]

That's just dumb. I have bought Windoze many times in many different ways ranging from the Microsoft tax to computer shows to computer software stores... if I use windows on 4 machines and I have 3 licenses why should I be given this highly inflamatory label as a pirate?

Same reason people who download an MP3 of a song that plays on the radio every other hour get called "pirates".

Not that I agree with it, that's just how it is...

Re:Who actually pays?

[Ianoo]

Their differential pricing model in general hints at monopoly abuse - by this I mean the fact they can charge different prices for 7 different versions of Windows (XP Home, XP Pro, the various Server 2003's), which ultimately aren't very different under the hood, combined with the fact that they'll practically give software to anyone with a good enough excuse (governments, universities, the third world...). Clearly their mark-up on Windows is pretty huge, given that they don't need to be making lots of money on every single copy.

Re:Who actually pays?

[Anonymous Coward]

They're the copyright owners they stipulate how it can be distributed or whether it can be copied to multiple copy's. People get pissed when large companies break the GPL why shouldn't microsoft get the same people being irate for them? Don't give me that whole microsoft is monopoly deal, morals are morals. If you think its wrong to break the gpl don't go doing the same for windows.

Re:Who actually pays?

[Deusy]

I suppose it is really people buying OEMs getting hosed.

Not at all. Most OEMs get it massively discounted, for something like $1 per machine. It's one of the major leverages Microsoft have had over the OEMs.

Basically if an OEM is pissing MS off by, say, negotiating with another OS inventor, then they pull on the leash and threaten with making the OEM pay the normal $45 price. $45 is a lot to OEMs who are constantly trying to undercut competitors in order to maintain market share.

Just ask Be Inc who couldn't get a single major OEM to even consider BeOS. Even IBM suffered from this as they struggled to get OS/2 onto the consumer/coporate desktop. Hell, Linux is free yet no major OEMs properly push a machine pre-setup with Linux. Or are you going to tell me there never was a desktop market for any of those (or other) OSes?

Only recently have OEMs started to flaunt a little disregard for the desires of Redmond because of all the Antitrust hoo-haa. But now that all the states have been bought... I mean, have reached settlements, things will soon return to normal.

Re:Who actually pays?

[jproudfo]

That has nothing to do with being a monopoly. Practically every hardware/software vendor in the world does the same thing.

Sun and IBM, for example, price their hardware and software all over the map depending on what type of customer you are. Everyone gets a different level of "discounts" or slightly different SKUs, depending on the audience/purchaser, even though it's all the same under the hood.

Re:Who actually pays?

[lee7guy]

Because it runs Adobe Acrobat, Adobe Photoshop, Adobe Illustrator, Microsoft Exchange/Outlook, Macromedia Dreamweaver, Miranda IM, Microsoft Internet explorer (yes, it is still neeeded sometimes, good as FF is), Opera, Steinberg Cubase, drivers for any hardware available and most games you would like to play.

Not saying these are reasons not to use linux, just mentioning some of the stuff I miss when I choose the "alternative" option when I boot my box.

Re:Who actually pays?

[texas neuron]

OK you convinced me. Mac OS X answers all the needs. Runs the mainstream stuff and has the *Nix underpinnings.

Re:Who actually pays?

[kfg]

Indeed, and I have long publicly held that $45 is right about the fair price for the retail version of the "greatest" version of Windows. Rather less for the "lower orders" and OEM versions.

Particularly over the past few years when the legal street price for a functional OS has been $0. All Microsoft is really selling these days is value added above that which is available for free, and that added value shrinks daily.

The same goes for pirated versions as well, were XP Pro $45 retail and XP Home $25 I dare say you'd see 90% of the pirate market dry up over night and Microsoft revenues either hardly dip at all, or perhaps even rise slighttly.

Those who would still pirate it at those prices are those that will pirate it anyway, notwithstanding price.

Any company that can, at those prices, cry that they're only making about 90% clear profit on their wares had best not cry to me. I shall likely be entirely deaf to their entreaties, knowing, as I do from personal experience, that squeezing 20% overall profit from commercial trade is doing rather well, both by one's self and by reference to the profit margins of others.

Take GM, for instance, who must deliver to you a car for the same profit margin that MS makes on Windows+Office, and who must invest billions of dollars in research, regulation compliance, manufacturing facilities, distribution channels, liablility etc, in order to deliver that car to you.

Microsoft's vauted "R&D" costs are peanuts compared to what it takes to make a simple change to an existing auto design, let alone the cost of designing and certifying a wholely new model. Their manufacturing costs are virtually nil, as are their distribution costs.

This is why they have been able to gather their unparalleled vast fortune in only a couple of handfuls of years, and why they must now resort to extraordinary actions to maintain their sales, even though their vast fortune would allow the company to live quite securely ad infinitum without conducting any overt commercial trade whatsoever.

Yes, for Windows XP Pro $45 seems fair, to a bit less than fair, as a retail price.

Let's say $19.95 for Office.

KFG

Re:Who actually pays?

[bluekanoodle]

Sorry, not to be a Microsoft apologist, but if you bought that license with your machine, you didn't buy a full license, you bought the OEM license, which is intended to be used on that machine and that machine only. Because of this restriction, you did not pay the full retail price of Windows.

Many people pay much more then $45 dollars for their OS, hell, even Mandrake and Suse cost more then that if you buy it.

Nobody forces you to buy a computer with Windows on it, yet. If you don't like Microsoft's practices, buy a computer with no OS, or build your own. The vast majority of people would rather pay extra and not have to worry about loading the OS manually. And those who know how to load an OS also usually know where and how to build or buy a system without an OS.

Re:Who actually pays?

[mgv]

I would have to disagree with this. In your example a license to use the music wasn't paid. In his he paid for a license to use Windows.

He's paid for *3* licenses, to use on *3* PCs, not 4.

Except, if he had the OS installed on a removable hard drive and moved it from one PC to another. Lets assume we are talking about win 98 here to avoid product activation issues.

The point being is that he (presumably) doesn't ever use more than three computers at once.

If he does it one way (with a removable hdd) its probably ok(and maybe microsoft, with 3 licences, has had more licences than it should have), but if he does it another way (4 installs) he is breaking the law.

I have problems mostly with the arbitrary way that microsoft licences stuff, and changes it with minimal notice. Internet explorer - first its for sale (I know, I bought a copy of IE 1.0 in the plus pack), then its free. Hyperthreading CPU's - how many processor licences do you need? Remember that windows NT4.0 came with a 4 cpu licence, but a hyperthreaded P4 uses up all of XP's (2) processor licences, and if you want to run even a dual processor motherboard its deemed a server. Even if it was on the same hardware. Can you install a copy of office on your laptop as well as your office machine (Sometimes you can). Oh, and yes, lets not forget the debacle of licensing 6.0 for business users, or how open source software is making microsoft drop its prices for no apparent reason.

You can say that microsoft, as the owner of the software, can charge what it chooses. I suppose so. But doesn't this say something about the value of the software? If microsoft can change the price arbitrarily, what is the true production cost of windows? Alot less than they would care to admit, and probably not much more than the cost of a linux distro. In other words, very cheap.

So when you say that someone is a microsoft pirate, yes, that is true, but dont forget the underlying legal system is unable to deal with microsoft, a convicted monopolist, leaving the average user in a position of overwhelming inferiority.

The solution is simple - and its not about breaking copyright. Get an alternative, like mandrake linux, or bsd, or just buy a mac. If the law cant stop a monopoly, then the best solution is to stop it being a monopoly by using something else.

My 2c

Michael

Re:Who actually pays?

[Fermier de Pomme de]

You can say that microsoft, as the owner of the software, can charge what it chooses. I suppose so. But doesn't this say something about the value of the software? If microsoft can change the price arbitrarily, what is the true production cost of windows? Alot less than they would care to admit, and probably not much more than the cost of a linux distro. In other words, very cheap

The biggest hint that windows is priced much higher than production cost would be MS's cash reserves and the number trailing zeros in Gates' net worth.

That being said, what you pay for a product only has something to do with production cost when there is real competition.

Re:Who actually pays?

[Montreal Geek]

Except, if he had the OS installed on a removable hard drive and moved it from one PC to another. Lets assume we are talking about win 98 here to avoid product activation issues.

That's a different (and legal, AFAIK) situation. The only exception would be OEM licenses which, I believe, are only valid for the machine they were sold with.

Ooo! Ooo! You opened the Can of Worms!

What exactly are "the machine they were sold with"? If I change my mouse, does it invalidate the licence? What about the harddrive or the video card? The motherboard (or maybe just the CPU)?

EULAs are nothing but attempts to indimidate and control. They have managed to twist the meaning of "copy" so that the use of the software is a "copy" (from medium to ram) claiming then that their right to limit copy is in force.

Let's hope someone does bring an EULA to court someday in front of a judge that can understand that a "copy" necessary in order to use something is not the kind of copy meant to be limited by copyright law.

After all, when I read a book, I make several intangible copies. Light reflected off the pages create a copy on my retina. My brain processing that image certainly makes many symbolic copies. I might even retain a long term copy for future reference (it's called, you know, memory).

Obviously, the copyright holders shouldn't be able to sue me. Those copies were necessary and unavoidable to even use the book to begin with. Why should software be any different?

If I buy a book, I'm allowed to read it as often as I want, where I want, and I'm perfectly allowed to let someone else read along too! I can lend it, or give it. And a bookmaker certainly could write any sort of conditions on the cover "if you read this book, you agree to foo-bar-baz" and they would be laughed out of a court.

Some time in the past, some evil business-type paid some lawer-type to go and confuse a non-tech savvy judge that being able to use what you buy is making a copy because of some technical detail. That judge got swindeled and we are paying the price.

Let's hope nobody goes to a judge explaining the evil copy that we make optically every time we read (or indeed look) at something.

-- MG

Re:Consumers do have choices

[AKAImBatman]

There are choices for consumers and if they refuse to vote with their wallets, I have little pity on them,.

Patience young one. This is a Wall Street Journal article, not a computer focused article. This is just a sign that Wall Street is waking up to the fact that Windows isn't worth the money they've been spending. Ever since Microsoft released XP with these new tighter contracts, businesses who hadn't previously cared about alternatives now care. We've already seen some Microsoft replacing going on, this article is probably a harbinger of more.

Re:Consumers do have choices

[The Snowman]

If consumers don't like paying for Windows they can buy a Mac, use Linux, or pirate it.

There are choices for consumers and if they refuse to vote with their wallets, I have little pity on them,.

Easy for you to say, but most people only know what is on display at CompUSA, Best Buy, Circuit City, WalMart, etc. As soon as the big OEMs with retail distribution stop giving in to Microsoft exclusion deals (I forget the economics term, when a monopolist refuses to sell its product to a middleman if he sells competitors' products too). Dell employees came out of the closet and told the world about these deals, we know it goes on. Do you really think any OEM will stand up to Microsoft and risk losing Windows? Only WalMart has been able to do this, one juggernaut battling another...

Re:Usually..

[Coryoth]

So basically Microsoft needs to just wait, work on Longhorn, make it stable and release it once it is completely finished, with much much more stability

That's a bit of problem though, because a lot of the timelines are now starting to place Longhorn at around 2008. That's an awfully long time for Microsoft to be sitting on their hands really.

Yes, there are plenty of promises of wonderful new features in Longhorn, but then MS was promising a OO filesystem in "Cairo" the update to WinNT that was perpetually delayed and never quite arrived. As long as Longhorn is several years away they can promise all the amazing innovations they like - we have to wait to see what they actually deliver

Jedidiah

Re:In a word...

[BigDumbSpaceApe]

I think this shows how much of Microsoft's success depends on being preloaded onto computers. The home version of XP is $200. And thats with no Office. With Office, the combined price is $600US, more than the cost of some full computers.

Thats a pretty good indicator of how important OEMS are to Windows. I haven't ever got 80% off for buying in bulk, much less 93%. If it wasn't for OEMs choosing peoples OSes for them, Windows would be losing a lot of market share fast.

Re:Consumers do have choices

[ergo98]

This is just a sign that Wall Street is waking up to the fact that Windows isn't worth the money they've been spending.

The real assessment is much more sobering to those of us in the software industry -- this is just another bit of proof that the general perception nowadays is that software should be free, or damn close to free. No one groans about $600 for an LCD monitor, $200 for a hard drive, or $250 for a new video card every two years, but $45 for tens of millions of lines of code that is the single most important element of the PC (how great is that PC minus software)? Whoa, that's just unacceptable!

Consider this a win if you're blinded by your anti-Microsoft rage, but the reality is that this is yet another step towards the caveman mentality that only physical objects that you can hold in your hands have value. Of course I realize that's the going philisophical argument in these parts, so I'm preaching to the wrong crowd.