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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.
(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
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.
'unfriendly' is such an ugly word. We prefer the term 'user-indifferent'.
I think you underestimate just how much I just dont care.
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.
Javascript + Nintendo DSi = DSiCade
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
"Buy a Mac," while it is a good solution for some people, doesn't work as well for those on a budget. Pirating windows is not a legally friendly option, and it wouldn't save Joe Sixpack any money if he's buying a new Dell anyway. As much as I think Linux should become more widespread, I'm not sure if the masses are quite ready for it yet.
The issue is not that Windows costs money, but that there is no choice in the matter for the average user when they buy a new PC.
No no no. Linux is most certainly "user-friendly." But it's very picky about who its friends are.
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...
24 beers in a case, 24 hours in a day. Coincidence? I think not!
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?
Regardless if you like them or not, weither they need your money or not and weither you have pity or not for MicroSoft, no software developer should be punished by pirating their work.
If you dont support MS, then fine. Don't buy their product. But using their product (pirated or otherwise rented where legal), you're just indirectly supporting them by telling your friends and relations that it's OK to send you MS -formated documents (Word, XCell etc). You're not accomplishing much, in a show of disapproving their products or business model, by using their products.
The best protest you can make is categorically not using their stuff, and returning send documents to the sender and asking them to save it as an open format (RTF or PDF to name just two).
I don't use any MS product--even those that came with my Macs (including but not limited to Explorer) for this precise reason. For those very rare occasion where I simply can't escape it, I resort to an open source product that can read or convert said documents.
Act, on your beliefs.
To paraphrase:
How much is it if I install Windows?
$45.
How much if I don't install Windows?
You can't afford it.
What?
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.
WWJD? JWRTFM.
I wouldn't accept a Windows CD for less than $100.
You gotta pay me to keep that coaster safe.
You are being MICROattacked, from various angles, in a SOFT manner.
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.
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.