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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?"
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.
No.
It isn't even worth $0. I don't want it near me.
No, really, I'll get a restraining order.
====
Crudely Drawn Games
There are choices for consumers and if they refuse to vote with their wallets, I have little pity on them,.
Windows may take $45 dollars per year, but trust me... it certainly takes a lot more, when you factor in all of those lost papers, doomed databases, and the dozen hours each of us loses from meddling with its problems.
(I'm posting the text because the online access will go away in 7 days for non-subscribers)
Do We Get Enough In Innovation for What We Give to Microsoft?
It's 2004; do you know where your computer dollars are going?
One can learn a lot about the computer industry by looking at the breakdown of manufacturing costs in an average desktop PC, as compiled by iSuppli Corp., a market-research firm. Excluding labor and shipping, and leaving out the costs of a monitor, keyboard or mouse, the typical desktop PC these days costs the Dells or the H-Ps of the world roughly $437 in parts.
The biggest portion of that -- 30%, or $134 -- goes to Intel for a Pentium processor. The disk drives, including whatever CD or DVD is installed, cost around $104; the RAM memory is $54; and the remaining hardware items -- power supply, case, circuit boards -- total $100.
The final 10%, or $45, goes to Microsoft for the Windows operating system.
Because these prices are never disclosed, the figures here represent best guesses. But you can start to see the contours of the computer industry in that bill of fare. Specifically, you begin to understand how Microsoft could amass its $61 billion in cash and other assets. It's easy when you collect nearly 10% of the cost of every PC that's shipped, while having no manufacturing costs of your own.
Most technology companies that do well justify the money they make by saying that is what is required to fund innovation, that were it not for all the profits they were accumulating, the industry would be standing still.
The claim is suspect. The disk-drive industry, for one, manages to release drives with ever-larger capacities while often barely breaking even. And the technical challenges they face are among the most formidable, involving squeezing more and more bits of data onto ever smaller portions of a rapidly spinning magnetically charged platter.
Intel is no stranger to big profits. Analysts estimate the Intel CPU costs more than a comparable product from rival Advanced Micro Devices. What about the added charge? Think of it as an Intel tax on each PC.
Even if you're not an Intel shareholder there's arguably a benefit associated with that tax. Intel is like a research-and-development operation for the entire semiconductor industry. The manufacturing processes it uses for its latest-generation Pentiums are the most advanced in the world and cost billions of dollars. Eventually, though, these processes become widely available to everyone in electronics. This is one case where trickle-down economics seems to work.
That leaves Microsoft, and the question: What does the world get for the 10% Microsoft tax on every PC?
No one could ever say Microsoft is sitting idle. That was clear last week at a Research TechFest the company held at its Redmond, Wash., campus. Microsoft has an advanced research operation that employs about 600 people all over the world. These are some of the smartest people around, and they don't work on specific Microsoft products, but rather on long-range ideas, usually matching their own interests.
The TechFest was like a science fair. Researchers set up booths, and the managers of Microsoft's many products milled around, looking for useful ideas they could deploy in future products. The number of people doing the milling was in the thousands.
But is the innovation from Microsoft commensurate with the awesome resources it has been given? The average Microsoft customer probably wouldn't say so. Indeed, the advances the company lists for its new products all too often involve fixing shortcomings of earlier products, such as security and reliability in the case of its operating systems, and ease of use with its Office suite.
In fact, you can argue that genuine innovation is the last thing monopolists want, since it threatens to upset the very applecart that made them rich in the first place.
When asked which research from its labs has made its way into M
if you had an option to either pay it, or buy a PC without an OS. that it's forced upon you when you buy a PC (via OEM agreements) isn't fair regardless of the cost. I bought and iBook just because I wouldn't pay for Windows, since I would never use it. Yes, I pay a little for OS X, but it's something I may actually use (via MOL in Linux).
CBV
free ipod and free gmail!
So either you get users pissed off that they have to spend MORE to get similar functionality, or you get them bitching about how user-unfriendly Linux is (though free).
Not much of a choice between all three, really. What there ought to be is a free OS that is as comfortable an environment as MacOS and supports as much software as Windows.
They say I'm a dreamer, but my heart's of gold...
I have been pwned because my
I'd pay $45 for Windows. I'd pay $60 if they let me not install most of what I don't want.
It seems to me that essentially what Microsoft does is wait for someone else to come up with a cool new idea and take the risks of making sure it works, and then implement the same concept themselves in an integrated fashion so that the lazy and/or uninformed will just use theirs. I think a prime example of this is ICQ, which of course was followed by MSN.
Usually I would be the first in line to bash Microsoft, as would the vast majority of the slashdot group.
However, I do have to give them credit for Microsoft XP, being the best thing they have done in a long time, and for allowing me to use a form of Windows that can actually have a nice interface if you tweak with it a bit.
And for making a Windows that is easier to install, and doesnt crash quite so often, as Win98, WinMe, Win95, ad nauseum did.
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 and Bill Gates will just have to wait before becoming a quadro-gonzo-bobillionaire.
Post apocalyptic gaming goodness
I think their estimates are off a little. $45 for a copy of Windows seems a little bit underpriced. I know an OEM installer, and he says that every copy of Windows they get (and they have to get multiple ones) costs on the order of $99. Granted, he's not a _big_ OEM builder, but he's still an OEM builder.
He also has a monopoly on the area's new PC market, but that's okay.
I've paid a Microsoft tax on two of my 11 PCs. Five of the others are too old to run Microsoft software, two of them are relics that will never leave my house. One is incapable of running any Microslut OS and it would be preferable if it stayed that way. One is a hunk of silicon which I didn't pay microslut taxes on. One other, my Quadra 630CD, runs a Microslut OS, but I didn't pay the taxes on that one, AAPL did way back when. (consequently, that thing runs Windows 3.1 on its 486/66 processor better than my native 486/66 did, with less RAM)
This is not the sig you're looking for.
It's a lot more than that, when Dell is selling it's low-end machiens for around $399. XP Home costs over 25% of the cost of that new PC. Pro is almost half!
You see? You see? Your stupid minds! Stupid! Stupid!
I recently was on the hunt to purchase a laptop. I had no use for Windows as Linux suits all my needs. I went immidetly to the pro-Linux shops: HP, IBM, Dell.
I was very disapointed to find out that not ONE of the vendors would sell me a laptop without an operating system. ESPECIALLY IBM! I eventually gave up and went with my first choice which was IBM.
I guess my point is, sometimes you don't have a choice. You're stuck paying the MS tax.
Daniel
To everyone who's saying that the 45$ price is way out of touch with reality... READ CAREFULLY... The 45$ is what the WSJ is guessing that the computer manufacturers (eg: HP/Dell/Gateway) pay microsoft due to custom liscencing agreements. We may not be able to buy windows for 45$, but the computer makers wouldnt stand being charged full retail price when they use so much in terms of volume. Read carefully the article and the subtleties you will soon understand.
I have always wondered what the world would be like if a company with
...
better technical leadership had been handed the PC operating system
monopoly by IBM oh so many years ago. Perhaps it would not have been
possible for that company, whoever they might have been, to achieve the
level of domination that Microsoft achieved because such a company might
have put too many resources to the task of technical innovation and left
the business (i.e. monopolization) side of things to falter. It is quite
possible that the only company which could achieve the kind of dominance
that Microsoft has achieved would be one which, like Microsoft, cannot
innovate or excel technically, because it would take too many resources
away from the business side of things to focus on the technical.
I guess this would mean that the companies which achieve monopoly status
are by definition technically inferior? This would certainly seem to be
the case
Some people would argue that Microsoft is not a monopoly because it does
not in fact have 100% complete control over the operating system market.
But Microsoft does have a monopoly in one *very* important market -
operating systems capable of running Microsoft Windows software. You
see, I think that the fact Microsoft's operating system's are the only
ones which literally trillions of dollars worth of software can run
on means that Microsoft is by definition monopolizing an absolutely
enormous market. While it may sound flippant to say that Microsoft
has a monopoly on Microsoft operating systems, I think there is something
really important behind this. No one company should be the producers
of a commodity which so many other companies depend upon to sell their
product. It's not healthy for the market and it's certainly not to the
benefit of consumers.
No, but Microsoft is worth 45 stories on Slashdot every month. That has to count for something.
Well, what do you know? A Dell machine with Linux on it, and another with FREE DOS. Just because you are an uninformed consumer who can't be bothered to look for a machine configured with the software you want (from the same vendor no less!), don't waste the time of the FTC.
Buy from the Dell Business site, rather than Dell Home, and you can get machines without an OS. There are some great bargains on the low end Poweredge 400SC servers.
If it was worth a dollar every time some Windows user asked me a question that made my nose spontaneously start bleeding and then followed up by saying "What do you mean you don't do Windows? I thought you were supposed to be good with computers!" (Which more or less spontaneously forces me to make THEIR nose start bleeding) Windows would cost ME a hell of a lot more than $80 or $90, and I don't even USE the goddamn thing.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
This is the most on-target article on the subject I've seen in a long time. The only thing he didn't emphasize enough is that there is a deference between software research and hardware research. The sort of research that Intel does CAN'T be done by small companies or people working at home (for the most part). Intel, IBM, AMD and a very few other companies have the capital to do these kind of hardware innovations, and they may be helped a bit by government funded universities etc.
Software research can be done at all levels, by individuals, small companies, groups of individual working together. There is, and always will be Open Source software. I can't forsee there ever being an "Open" architecture CPU, that could be manufactured on a small scale (it would be a great thing if there was though!).
Microsoft's day are numbered unless they find a new business model. I don't hate them, love them, or feel sorry for them, thats just the way it is. A free economy will eventually favor value. It moves at a snails pace sometimes, particularly when impeded by monopoly practices and governmental indifference. But one way or another things will change, and anyone or anything who blocks that change will find themselves bypassed or submerged.
The article "does the math" that I'm sure even Bill Gates is capable of following. I just don't' think Microsoft has figured out how to respond yet. The stock market will punish them until they offer a response, and this article wouldn't be appearing in the WSJ if that were not the case.
Which is somewhat ironic when you consider it's just Yet Another MP3 Player App bundled/tied to an online store and a portable MP3 player - none of which were particularly "new technology" at the time.
And look at OS X... think of how fundamentally different it is than OS 9. Then think of XP versus 2000 or 98. Not that much of a difference.
Windows 2000 and XP (which are roughly analagous to OS X 10.2 and 10.3) are just as fundamentally different to Windows 95, 98 and Me as MacOS Classic and OS X are to each other.
"It's easy when you collect nearly 10% of the cost of every PC that's shipped, while having no manufacturing costs of your own."
this guy is a total asshat. how can he say that windows has no manufacturing costs? 3-4 weeks ago on slashdot after the windows source code leak, folks were saying "holy shit guys - look at the 4.5 million lines of code that becomes windows! what a crappy, bloated OS!". now this dumbass claims that it costs nothing to manufacture. how many man-hours did it take to write windows 2000? windows xp? the media it is shipped on costs very little, but one-time cost of writing is also counted in the total-cost. so unless it was written by non-paid interns (which we know is not the case), this guy is grossly underestimating the profit.
i bet he's just another disgruntled mac user...
Wave upon wave of demented avengers March cheerfully out of obscurity into the dream
How's this for a kicker: the sysadmin at my current gig purchased about 10 PCs with Win XP Home Edition preloaded, and now we need to pay $179 EACH just to upgrade them from XP Home to XP Pro. (The 60+ systems were all in "Workgroup" mode, moving them to Active Directory so I can have security on the file shares. XP Home won't join a domain.)
Yes, I know there are some hacks to make XP Home join authenticate to a DC, but they're just that, hacks (and work about as well.)
The only window I know that is worth $45 is the one used to keep the snow out of my house during the winter. But seeing how I live in Florida, a $10 screen in the summer and a $5 sheet of plastic in the winter seem a better way to go.
I would rather pay to purchase a copy of a linux distro and support an open source cooperative than pay to purchase a liscence for a microsoft product and put another gold toilet in the Gates' House.
If more people felt the same way then maybe, just maybe, we wouldn't have to put up with another IE popup asking us if we want to enhance some random body part......
That really is my homepage, no kidding.
Actually, if windows xp home was available for a mere $45, it'd be a steal. the $45, i guess, represents what the OEM pays for it, not the price that consumers pay for a boxed copy. nonetheless, even $100 ain't bad. let's review;
red hat enterprise liunx workstation starts @ $179.00.
mac os x is $129.00.
i know there are free (beer) variations of linux and bsd, but you don't get much support. i know everyone rags on MS for the extent of their support, but let's face it, they do still support their software. MS just recently ended support for windows 98. windows 98, people. six years of downloadable updates.
when you grab the cheapie pc @ best buy for $400 that comes pre-loaded w/ win xp home, i don't care if emachines is paying $4, $40, or $400 to microsoft. i know i'm getting a pc w/ a legal os, and i'll get support for several years.
is MS evil?
sure.
is $45 too much to pay for an OS?
no way.
Don't think about the cost of the Microsoft OS - think about how it drives hardware obsolescence - the average user only buys a new machine because they need a new version of Microsoft Office, which needs a new version of the latest Microsoft OS, which needs a faster CPU, and more memory. (Or, more recently, getting the latest Microsoft OS because they can't keep up with the patches).
This drives computer sales - versus what would happen with Linux - users would still buy better peripherals, but Intel wouldn't be where it is now - because the peripherals would use embedded processors, and Intel doesn't rule there. Memory wouldn't sell as much, because without OS bloat, we wouldn't need as much memory. So in summary, I'd say that Microsoft does serve a purpose - marketing of new computers.
> That has nothing to do with being a monopoly.
I see where you're going with this, but I don't know if its that clear cut. For instance, three weeks ago I was talking to one of our NOC guys at school and essentially they're going to phase out Novell because MS is giving them so much free software (upgrades to XP and server2003) they can finally shift to AD and drop Novell.
Now how is MS able to pay for this generosity?
1. They abused their monopoly and are arguably paying for this kind of thing with their ill gotten gains.
2. They're just a good company. *snicker*
I'm leaning towards 1. Novell has money and doesn't want to lose customers either, but they can't afford to supply an entire 20,000 person campus for 2 or 3 grand.
The question I think should be asked isn't whether it's worth it, but rather, "How many times do I have to pay for windows?".
Several people purchase computers to replace the computer they already have. The old computer gets junked. Lets forget about the possibility of people switching from windows to linux. Lets just ask an even more clear issue. Why can't the user use his old copy of windows on the new dell? Can't resellers ask for proof of previous windows version to not get billed for the software?
A little while ago I spent roughly this amount on a game called Uru. (For those living in caves, it's the latest in the Myst series.) I seem to remember paying quite a bit more for Windows, but maybe the price has come down since then. No matter.
When I'm playing Uru, I wander through a variety of odd (but usually very pretty) environments, often sitting for hours on end contemplating alien mechanisms that I don't understand. Sometimes I click on a control or two (or ten), and sometimes things start working as a result. Other times I wander for days, trying every knob and button I can find, peering suspicously behind doors, retracing paths I've been down dozens of times, and in the end I still haven't figured out how to make some odd machine power up or work properly.
Which pretty closely parallels many of my experiences trying to get Windows to do things.
So...ummm...I guess by analogy, if Uru is worth the money, then surely Windows must also be worth it. ;-)
A marriage is always made up of two people who are prepared to swear that only the other one snores.
I am on smaller OEM and typicaly buy XP home OEM for $50-54 and XP Pro for $65 or so. I purchase 10 packs to get a price like this and go through 2 or 3 packs of home a month and a pack of Pro every six weeks or so. Dell buys direst from M$ while I go through a middle-man. I am pretty sure that since the big OEMs are buying 10000 the volume I do they get a better price.
"I am, it's Windows that isn't!"
I see even classic Slashdot is now pretty much unusable on dial up anymore.
You like XP, and that's perfectly fine. But suppose you went to your local computer store to buy a new machine and found that every machine there came pre-installed with Redhat Linux. Also suppose you found out that $45 of the cost of each computer is going to the cost of Redhat. So you grudgingly buy one of these machines, remove Linux and install XP. In this scenario, was Linux worth $45 to you? Keep in mind this is what people like me are forced to accept. I had to pay some undisclosed amount for XP on my laptop, yet I have never used it (and never will). To me, that copy of XP was not worth $45. To me, it's not worth anything, yet I was forced to pay it to get the laptop.
For every post, there is an equal and opposite re-post.
Microsoft will always, always have a monopoly on the PC Operating System market. The simple reason for this is that VERY, VERY few people or companies would ever take the risk of installing an O.S that doesn't run the vast majority of software products already available and demanded on the market. After all, when it comes down to it, isn't a free economy all about choice? This gives consumers two initial choices A: Install and use Linux (forget for a second that for many people this is going to have quite a steep learning curve compared to Windows). What does the consumer get? More money in his/her pocket, but FAR less choice in software applications. B: Cough up a wad of cash and use Windows XP. Rest assured you can go online, or go to your local "software supermarket" and have millions of choices concerning software, compared to a much smaller number for Linux et al. Given the fact that a huge number of people choose "B", software developers aren't really encouraged to support Linux, but instead keep churning out new programs for Windows machines, thus repeating the cycle. I don't think any of us will ever live to see Microsoft as anything other than a monopoly. Sad, but true.