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Does Microsoft Cause Lower Software Prices?
AngusSF writes "OK, slashdotters, , so is this FEE article Antitrust Benefits Consumers? It Just Ain't So! true?" AngusSF quotes from the article: "... as Stan Leibowitz and Steve Margolis have shown in their book, Winners, Losers and Microsoft, in virtually any market that Microsoft has entered (financial software, spreadsheets, etc.), the effect has been a dramatic reduction in prices and an expansion of output and innovation. Software products that do not compete with Microsoft's products fell in price by 12 percent from 1988 to 1995, but by 60 percent where there was competition from Microsoft.", and writes "I'd really like to see some on-line evidence of this. Has Microsoft competition in office suites really cut prices there?"
Ever since Microsoft entered the desktop OS market, Linux felt so threatened that it's been giving away free source codes!
Rock that crushes, Paper & Scissors that don't matter.
Wars often reduce overcrowding.
No, they don't.
Are they the cause of cheaper software? Yes, they are.
OpenOffice is real cheap. You can't get cheaper than free!
If someone says he and his monkey have nothing to hide, they almost certainly do.
this relationship looks correlational rather than causal. as the market for a certain type of home software expands, the price goes down. the same market force also attracts microsoft. both are the result of a common cause: the market.
2 1337 4 u!
MS is a monopoly. When they enter a new market, they sell their products at a loss, with the express purpose of driving their competition out of business.
The question is, does the price stay down and the innovation keep up? Not unless basic economic theory is fundamentally wrong.
-- Hello_World.c: 17 Errors, 31 Warnings
"I'd really like to see some on-line evidence of this. Has Microsoft competition in office suites really cut prices there?"
;)
Oddly enough... the price dropped 100% in the office suites arena.
That green slime had it coming.
Because after MS runs the competition out of business (or out of that market), the only software in that segment is MS's overpriced Office suite (though the student edition of office isnt too bad).
The Doormat
If you're not outraged, then you're not paying attention.
I am sure that during the initial phase, Microsoft's prices are so low that it drives competitors' prices down too. As with the Xbox, where they use their monopoly rent to pay for losses in the console area. This is called price gouging. Unfortunately. once their competitors are driven out or into niches, do not expect the prices to stay low: there is no longer any market pressure to do so. This is one of the ways monopolies operate.
I guess what I'm trying to say is that the people who develop and/or use the alternatives, tend to be of a different mindset to those who use MS offerings.
The Mothership
From one perspective, yes, Microsoft does indeed cause lower software prices. Competition in a given market area (Office Suites etc) will reduce prices among different vendors. However, once a particular vendor has asserted dominance over a particular product area, they are free to raise their prices again. Thus, competitors in the Office Suite area (Staroffice, Wordperfect Office) are much less expensive, while Microsoft's product (especially full "Professional" versions) is much more expensive. Net effect: More expensive software for the consumer, because everyone "needs" the de facto standard.
Well this is ignoring other factors.
When you look at it you will see MS enters markets that already exist. They pick and choose and go in when things are getting popular
The thing this article misses is that also when things get popular open source people come in too and write their own versions for free. And they do it better than propriterary software usually.
Which is the real thing that drives prices down.
High margins and high profits only exist in really tiny niche markets that dont have many competitors.
Microsoft is just entering markets that also other competitors such as open source teams are entering and thus it is not just microsoft who is making prices lower. Somebody has not thought this through properly.
Net's Best Online Nude Anime Gallery's
Didn't competition from the Xbox cause Sony to lower prices for the PS2 and then further innovate to stay on top?
Everybody knows that having MS as a compeditor is terrible news for a company. But if you're producing a product, say quicken, and MS comes along with Money, then you can hardly close up shop without a fight. And that means better prices for everyone buying commercial software.
That's not to say there is no compertition without MS, but everybody knows they're targeting the lower end of the market and that they'll fight dirty--being happy to lose money on a product for a few years. So it is really no surprise their more severe form of compertition results in better prices.
That's not the point. The point is whether Microsoft has used its monopoly position in the market to stifle competition. The same argument is always used by companies accused of dumping in a market, and it doesn't hold up in court.
___
Cogito cogito, ergo cogito sum.
Microsoft lowers prices in a software sector the same way Wal-mart lowers local prices: by leveraging the large amount of cash they have on hand.
Dumping product in an attempt to rule the market is nothing new.
Rather than look at the short-term (Word is cheaper than WordPerfect), look at the long-term (Nobody think it's worthwile to engineer a $200 competitor to Office.)
A monopoly produces and prices according to it's production possiblities curve (I think that's what it's called) whereby it produces the most for the least cost and charges to maximize profits. But because there is little competition, they are able to charge less and make more money. Thus, any company trying to compete with the monopoly would have to lower its own prices, reducing its profits, just to keep up. Correct me if I'm wrong; it's been a while since I took economics.
Esoteric reference.
The classic behavior is that a company drives down prices to get rid of the competition (if its internal costs allow that), then raise prices after the competition is gone.
While MS has competition within a market (Word Processing comes to mind) their prices are very low. I recall Word selling for $99 back when it was competing with WordPerfect. Today, with essentially zero competition, it's $299.
Of course the counter-argument is Excel vs Borland's Quattro Pro: Excel was at $495 and QPro at $295, but despite great QPro reviews vs Excel purchasers thought QPro was not in Excel's league because it was too cheap!
Take a look at software prices from around 1986. Lotus 123 was around $495, Wordstar was around $295, and DBase II was around $495 if I remember correctly. That was in 1986 dollars as well. Even if you look a the cost of OS's Microsoft pushed that down as well. They are not all bad. Just mostly.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
I remember the average game title selling for around $40 in the 1980s, but most releases today are $50-$60. Or is Microsoft claiming their entertainment titles don't qualify because they're not entertaining?
(I'm just kidding, before any Halo lovers start a flame war).
https://www.eff.org/https-everywhere
The average price for a full fledged office install is around $300 (i think) unless you have an educational discount. a 60 percent reduction in price would be $180. You wont find an office product other than ms higher than that.
As to the pricing thing, well. Where I lived in England (really England, not meaning "any part of Britain"), Stagecoach (a bus company) rolled into town and set their prices at zero until all the other bus companies went out of business. Then they stuck their prices up to something slightly less than the old prices.
Sure, prices were lower but in getting there all competition had been destroyed and Stagecoach is no longer (especially since they got control of the trains too) under any pressure to ensure quality. So they don't.
It's the same with Microsoft: after they crap all over a market to kill all the competition they simply sit around and look for new ways to screw the trapped clients. Sure, the prices are lower, but quality is non-existant and customer service is some sort of joke.
IE is a good example: until Firefox came along it had basically been left to rot. It still doesn't actually manage CSS level 1 or 2 to anything like a decent level, or display PNGs correctly. Sure, browers are bloody cheap (free) but if you'd been waiting for MS to innovate you'd have been dead and buried before it happened.
TWW
"Encyclopedia" is to "Wikipedia" what "Library" is to "Some people at a bus stop"
Apple's doing the same thing right now with the mac mini. Once they get a mac on every desktop, they will sell more high end macs, and more people will be happy. This is very similar to M$'s Server 2003 web edition. They just want to sell a cheap server platform so people can try it out without much initial investment in hopes that they then want to purchase more high end server platforms. They are doing this because they are trying to get market share, not because they like to sell things for cheap, or enjoy taking a loss.
Or maybe I'm just crazy.
~/.sig: No such file or directory
It's a classic fallacy of logic. It's been 20 years since I took that stuff in college, but even I remember that.
The thing is WHEN they competed prices fell. That is good. Who are they competing with now?
After, therefore because of.
Maybe Microsoft only markets software products whose prices are bound to drop?
Maybe it's just coincidence?
Mike van Lammeren
It will challenge your head, your brain, and your mind.
Let's say this is entirely true: that Microsoft enters a space and this forces third-parties to lower the prices of their competing software.
Does this naturally translate to a consumer benefit?
I don't think so.
One major problem, methinks, is that Microsoft has complete Brand Recognition. For some folks, having Microsoft on the box means instant compatibility with everything else that is Windows and, furthermore, instant compatibilty with THEIR computer. Sheesh! For some, Microsoft means "PC."
Microsoft's brand-name alone is enough to crush the third-parties.
Ultimately this leads to less choice in the marketplace.
Until consumers become so well-informed that the Microsoft name doesn't immediately translate into quality for them, I think it's irrelevent that, for example, Microsoft Antispyware causes Webroot to lower the price on Spysweeper. Microsoft still has a large advantage.
If Nalgene water bottles are outlawed, only outlaws will have Nalgene water bottles.
Like statistics, findings like these need to be highly qualified. For instance, would not prices have been brought down anyway by healthy competition between software companies?
Does this study look at pricing in medium sized and large corporations, their back office costs and support?
Does the same study compare and contrast other companies and technologies and their affects in similar markets? Like for instance, Linux & Open Office, or IBM & Lotus Notes?
These kinds of conclusions could be hard to make, depending on the study, even if they were true. When made in a highly polarized Linux vs. Microsoft climate, the study had better be rigorous and highly conclusive, to say the least. - Andrew
Somebody comes into your little town, kills the only decent auto mechanic and takes over the business, charging insane prices for utterly incompetent work.
Everybody else in town becomes a "home auto mechanic" to cope. A couple gas station owners start charging to fix cars.
This is a "benefit" of monopoly?
Well, yeah, the fact of the matter is that a monopoly can't exist without government coercion. Because a monopoly by definition means excessive profits, which causes competitors (including producers of other products which compete in function with the monopolized product) to enter the market in search of the same monopoly profit.
So in that sense, MS is an asset to the world - but ONLY if it eventually gets knocked off and replaced by something better.
Saying that we need to keep it around for this "benefit" is basically saying we need murderers and rapists around to keep us "alert".
The case can be made but it doesn't sound so good phrased like that, does it?
Richard Steven Hack - This sig is TOO GODDAMN SHORT TO DO ANYTHING USEFUL WITH! MORONS!
BUT... price isn't everything. Instead of having 3, 4, 5, or more products all competing against themselves and one-upping eachother for $60 each, you now have 2 products, at $50 each. Which is better?
Now certanly $50 is easier on your wallet. But what about the OTHER effects? MS products tend to rapidly get better untill they are better than everyone else and therefor "good enough". Then then stagnate. They stagnate like time stopped. So you have one product that's good enough, and another that will try to get better. But once that other product gets better, it will reach a point where it's better than MS's. Then what? Well since by now they probably have a much smaller market share, MS can sit by comfortably. Thus the second company doesn't have to work too hard because their product is already the superior. They can keep trying to make it MORE superior, but it probably won't change things. Firefox changed IE (a little), but that took HOW LONG? Things stagnated since IE 4 or 5 (and IE still has serious problems). And other than adding a popup blocker (which does work) and more warning dialogs (which never work), IE is the same. Consumers lost. Hopefully Firefox will get accepted enough for the cycle to repeat.
What about other products. How 'bout financial software. You have Quicken and Money for the home. That's it. Money works but I find a large number of annoyances in it (it's what I use). Quicken works, but I don't like it's interface at all (Money's is nicer IMHO). So I'm stuck choosing between the two. There is no third party to force them to improve against eachother, they are are usually considdered about the same quality (from ratings I remember seeing). No one will enter this market because it already has 2 juggernauts and they'll never get in (open source excepted). This isn't very good for the consumer.
Unless you use a Mac. If you use a Mac, MS doesn't MAKE Money for Mac. So you can choose between Quicken and... Quicken. What a buffet of options. Fantastic. The situation on the Mac is even worse (from what I know, there may be some other piece of software out there, but from my perspective (a rather highly educated consumer when it comes to computers) there are two options). And the Mac is considdered a small market with a monopoly product (Quicken) so no one will enter that market and provide competition. You just have to hope improves from Windows move over. And even if someone DOES enter the market, MS can always walk in and sell Money if they see you doing good, and you're gone. Quicken can survive, you little product probably won't.
I'll take $10 to $20 more and a better selection and more improvements from healthy competition over the cheaper stagnate price.
If that's all it takes to make things "better" for the consumer, lets have the Government make everything and sell one brand and price it 5% less than the old commercial products were. There will never be improvements, and quality will probably suffer without competition, but IT COSTS LESS!
Prices are better, quality isn't. And I contend that prices are better only through last ditch efforts to stay alive. If they little guys go out of business after MS enters a market and MS is left the only game in town with over 5% market share, they are free to never cut prices again or even raise them. Do you think Windows would cost $200-$300 per PC if MS had competition?
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
Explanation: Microsoft discovered the popular application markets. So did a lot of other companies, quite independantly. There would have been price competition between everyone else, even had MS not entered those markets. The markets in which MS did not invest money aren't as lucrative (being more niche markets). There are fewer players in side markets, and as a result there hasn't been as much competition in those areas of software development.
Lesson: correlation != causation. If you're claiming causation, you better have damn good evidence. Would there not have been drastic price reductions in the spreadsheet market without Excel? Put it another way, what would the market look like without MS ever being involved? I have no reason to believe it would look any different than it does now.
Mark the article (-1, Troll).
This post expresses my opinion, not that of my employer. And yes, IAAL.
Microsoft thinks that it caused Open Office? No matter what, there would be a free office suite. Not all people only care about making a buck. Some people like stability and open-code so you can fix things on your own.
"Time is an illusion, lunchtime doubly so." - Ford Prefect
Going to be making some porn software!
The existance of MSPaint doesn't seam to be making Photoshop more affordable.
UK Laptops
If there weren't a Microsoft, we'd still be paying annual subscriptions to Giant, but with that healthy competition, now I get Giant software for free!
I would say that yes, it has caused price reduction in office suites. Amazon lists Corel WordPerfect Office Suite 12 at $250, the home edition at $90. I guarantee you they wouldn't be selling for those prices if WordPerfect had retained the dominance it had over the word processor market in the late 80s to early 90s.
But there's the catch. I don't think the market for office suites is a really good example, because it's one area where Microsoft's products really did get out into the market and kick ass. The competitors simply failed to keep up. Early versions of Word sucked compared to WordPerfect. These days, no matter how many irritating gripes I have with Word, I can't see switching to WordPerfect for any reason.
On the Mac, Office totally dominated. The Mac version of Word has always been, and remains to this day, superior to the Windows version. In ten years of working with Macs and running IT for Mac shops, I've never seen a product for the Mac OS that could really compete with Office.
OpenOffice? Sure, I'd like to make that my main product. But it still needs some work, and there are more reasons why I'd like to use it than just price and/or features. If OpenOffice retailed for the same price as any version of Microsoft Office today, I'd say no thanks and good luck to 'em.
The point: if you're going to compete with Microsoft Office, you have to think about keeping your price low, because you just can't compete on features alone. Believe it or not, there are countless reasons why people keep buying Office besides just "vendor lock-in." Even if WordPerfect packs every single feature you personally could want in a word processor, how about Access, just for starters? Has anyone even tried to compete?
And don't say Microsoft doesn't continue to innovate. OneNote is a pretty promising newcomer to the Office family. The stuff Microsoft is doing with XML export and BizTalk Server is all pretty interesting.
So, OK, you'll maybe say that competing with Microsoft hasn't driven prices down in the overall market because Microsoft's prices haven't come down -- only everyone else's have. But I say that's fine. If you're far and away the market leader in your category and you do brisk sales at the prices you charge today, why on earth would you lower your prices? Are we asking for fair markets here or just a hand-out?
Bottom line: There are other examples out there where you could argue against Microsoft, but I just don't think you'll win talking about office suites.
Breakfast served all day!
So Microsoft just realised that competition gets the prices down? What they don't talk about is how their monopoly in other sectors does just the exact opposite. This is probably the most simple notion in economy, where theres competition, the prices go down and the innovation goes up. Microsoft is good for innovation? Explain to me why IE hasn't changed a bit since a couple of years then? I call bullshit on this one, what drives innovation is competition, not microsoft, but their anti-competitive approach to the market is not AT ALL a benefit to innovation and prices, because as soon as they have the market share that suits them (usually around 90%) they basically halt development while putting strategic barriers to possible rival entry by forcing their propriety standards onto the whole industry. The only reason the prices go down when microsoft enters a market is because they practice market dumping using their huge financial power. Basically the Microsoft strategy goes like this: - Enter Market - Make loses on low priced products - Kill competition because They cannot afford in long term to keep in business at current price. - When Competition is killed stop development while instauring barriers. - Stop development - Profit repays "investement" of market dumping. - Pure Profit. Happened to Netscape, Happened to Word Perfect, tried with WMP, tried with XBoX. This is just typical figure manipulation.
Microsoft lowers prices and therefore it is ok for them to break antitrust laws? Is that really the logic we're supposed to believe? Even assuming Microsoft does lower prices, the fact is that they probably would have lowered prices even more had they not broken any laws. That is why we have such laws and why they should be enforced.
Microsoft enters a market, so there is more competition so the prices drops.
The question is do the prices continue to drop once they have monopolised a market?
If yes then you can say it it MS causing the price drop, if not then it is the principle of competition that does it.
"The obvious mathematical breakthrough would be development of an easy way to factor large prime numbers." Bill Gates,
The data is probably meaningless since the only markets in computing not penetrated by MS are either niche and hardware. This article compares niche software and mass produced software, and comes to the suprising conclusion that the sale price of a mass produced product is lower. Even more astounding when you consider that software has as near to zero marginal cost as can be imagined. A better comparison might be MS vs. the hardware market. In this context MS is massively over charging. While hardware has dropped to a small fraction of previous cost, MS has stayed relatively static.
Sorry, but with MSFT charging outright offensive prices of their office suite, why would the competition charge less????
.doc file from a lawyer? I suggest hiring a different one, that lawyer is not a good one.
forst off the MSFT fanboys here claim that nobody would buy anything but microsoft office because of 100% compatability requirements, so who would spend $225.00 for Wordperfect???
nobody. wordperfect is marketed to people that WILL NOT use microsoft office, specifically Legal firms.
wordPerfect is very ingrained in the legal field, so well that miucrosoft couldn't GIVE away their office suite to lawyers to get them to switch.
and only the wannabe lawyers use something other than wordperfect, so it also works as a simple litmus test.
get a
Microsoft does nothing but encourage overpriced software.
XP PRO is not worth a dime over $70.00 (XP pro is NO DIFFERENT than XP home. it's one fricking line change in the installer ini file to change between XP home XP Pro and XP pro CORP!!!! I can make any XP home CD install as XP pro in 30 seconds.)
Microsoft does NOT encourage lower software prices. they certianly encourage piracy and peole doing things to get their software at sane prices. like LYING to get the student discount.
that is the price their crap needs to sell at, not the obscene prices they think they deserve at the retail level.
Would this same author argue that the dramatic drop in the price of CD players in the 1980's was because Sony or some other particular company entered the marketplace? Microsoft doesn't target in specialty markets like CADD software. If 50 million consumers suddenly decided they needed professional CADD software, the price of AutoCAD and other existing products would probably plummet. If Microsoft suddenly issued WindowCAD, would this author give them the credit for the drop in price?
...only 6 percent [of adult computer users] said that "reducing Microsoft's influence" was a "major issue" to them. Most consumers love Microsoft's products. In my personal experience, only about a tiny fraction (6 percent, perhaps?) of computer users have any significant experience with competing products; the ones who love MS products mostly haven't used anything else.
The only way Microsoft is responsible for any price drop is by their aggressive marketing, contributing substantially to the expansion of the consumer computer market. From TFA:
I figure by 2030 or so my 6-digit UID will be something to brag about.
Microsoft is just a transitionary force from UNIX back to UNIX. UNIX used to be expensive, with software licenses in the thousands of dollars per seat, etc. Microsoft was a reaction to that, certainly, but Microsoft just doesn't do it well. They replaced an expensive predatory software business with a less expensive predatory software business. It's just a fact that people really don't like Microsoft, even if only indirectly through bad software design leading to worms, viruses, and crashes. Now, enter the FOSS systems. It's freer and cheaper than anything Microsoft can turn out. It's getting as usable. It rivals Mac OS in market share. Game producers are taking notice. It's more secure. Even the big bad old UNIX vendors are coming around with OpenSolaris and IBM's Linux. Think of Microsoft as a transitional phenomenon, nothing more.
-- Microsoft is the most expensive commodity operating system and office suite vendor in the marketplace.
No?
Basically the Microsoft strategy goes like this:
- Enter Market
- Make loses on low priced products
- Kill competition because They cannot afford in long term to keep in business at current price.
- When Competition is killed stop development while instauring barriers.
- Stop development
- Profit repays "investement" of market dumping.
- Pure Profit.
Happened to Netscape, Happened to Word Perfect, tried with WMP, tried with XBoX. This is just typical figure manipulation.
They cut prices in a market only until they drive the existing players out of business. Are you telling me Office is cheap? List price is $499, street price more like $350-400. They can charge this much because they no longer have any effective competition in this market due to their file format lock in (yes, I know OpenOffice is free and good enough for many geek users, but it's still not really viable competition in most people's minds).
Step 1: Sell software at lower prices than those of your competitors.
Step 2: Outlast your competitors with your vast funds garnered from years of market dominance and a certain bad budsiness decision by IBM.
Step 3: Once competition falters, snap up their company and slap a "Microsoft" logo on it. Resell to consumers at inflated prices.
Step 4: Profit! "Billyuns and billyuns" of dollars, to borrow a phrase from a certain Mr. Carl Sagan.
I'd really like to see some on-line evidence of this. Has Microsoft competition in office suites really cut prices there?
Yeah, in everybody else's software! MS Office Pro has become the most expensive component of a new PC, more expensive than the CPU, the display, or the hard drive. Granted, if you amortize that cost over an expected three year lifespan, $599 isn't so bad ($200/year, essentially, which is less than what you'll pay for electricity for the PC during that time period) but it's still damned expensive.
However, if you look at current and past competitors, you see Lotus's SmartSuite being so cheap it was almost sinful. WordPerfect's suite was similarly cheap. OpenOffice and StarOffice are essentially free. So, yeah, you'd have to say Microsoft's entry into any market does reduce pricing, because everyone else is forced to drop prices to fire sale levels in order to compete against the Beast.
In the end they will lay their freedom at our feet and say to us, Make us your slaves, but feed us. - Fyodor Dostoyevsky
This is not just exclusive to Microsoft. It happens whenever a new company enters a market and starts getting business from existing companies.
The same can be said about Linux entering the OS market. Microsoft is not only marketing around Linux but they are also putting lower cost alternatives on the market. No real news here, competition is good for consumers except when it is monopolistic behavior
[End of diatribe. We now return you to your regularly scheduled programming...] - Larry Wall in Configure from the perl
AC comments get piped to
The traditional logic is that once Microsoft has attained enough market share prices will go up. Well, nope that is not what I seem to see happen. What I see happening is even more devious.
Microsoft enters a market and calculates a sweet price, a price where people will buy the product. Then it keeps that price and increases to cover inflation. Is there anything wrong with this? Absolutely! The problem is that Microsoft does not lower their prices after that.
In a normal market prices drop once new versions enter the market, etc, etc. Take a look at computers, cars, houses (not the properties, but building materials) and prices do drop.
Where prices do not drop is in controlled markets, like what Microsoft has, and what the music or film industry has. Also want to see another thing about these markets? There are some who make damm big bucks and tons of people who are just eecking out a living.
How do you change this? Consumers have the power to choose and they should use Open Source, buy "B rated" DVD's, and buy directly from unknown artists.
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
.. its computers. anywhere you start to computerize, things get cheaper and more efficient.
to say its 'microsofts fault, specifically', is to say that "computers are as good as they are because IBM made computers".
; -- the corruption of government starts with its secrets. a truly free people keep no secrets. --
let's talk cause/effect here, and other possible explinations for the data:
from the article: Mr. Litan, like his former employer Janet Reno, simply ignores that Microsoft has provided incredible benefits to consumers. He rests his case on the lame notion that, in his opinion, the company's management had "anticompetitive motives." Economic analysis may not be Mr. Litan's strong point, but mind-reading apparently is. He claims that such a malevolent "intent" has harmed Microsoft's competitor Netscape by keeping it from competing in the Web browser market. In fact, Netscape has distributed more than 150 million copies of its browser since 1995.
besides the fact that any data offered is couched in cheap ad homs directed at mr. litan, no possible explination, other than "microsoft is the beneavolent peace angel" are offered
how about this: netscape has distributed more than 150M copies of its browser? how many are still in use? how many were end users able to install without difficulty? how many *could* it have delivered if not for microsoft's anticompetitive practices?
Second, as Stan Leibowitz and Steve Margolis have shown in their book, Winners, Losers and Microsoft, in virtually any market that Microsoft has entered (financial software, spreadsheets, etc.), the effect has been a dramatic reduction in prices and an expansion of output and innovation.
okay... how about this: those in competition with microsoft may have *had* to dramatically lower prices (perhaps even to marginal or sub-proffitable levels) to try to keep their businesses afloat in the face of anticompetive strategies? an expansion of output and innovation? perhaps output means "giving it away for free or for less than proffitable cost in a losing attempt to regain some market share"... as for innovation, that one was probably pulled from where the sun don't shine
let's all remember back to our first statistics or uni-level science class, and recall how numbers and data are collected and presented, and be mindful of explanations
Microsoft causes reduced prices the same way driving an SUV causes lower gas prices.
But this misses the point - if the XXX billion dollars of software investment and the XXX thousand MS programmers actually worked for other competitors, the pricing/quality "advantages" we now have would be far better than the MS solution/products we have now. The investment that MS has sucked up would have provided a better product(s) than MS has produced.
So yes, competition is good - but open (i.e. non monopoly) competition is even better.
Iain.
I provide hosting for both ASP.NET and PHP/MySQL. The cost of providing hosting for ASP.NET is not significantly higher if you know what you're doing. The most expensive part of running an ASP.NET website is the cost of Microsoft SQL Server, which is easy to fix, just use MySQL instead, it works perfectly fine with .NET.
As for as support, I've found the ASP.NET community to be very helpful.
There's such a war mentality when it comes to "Microsoft vs. Open Source" that people forget that they best solution might be a combination of the two.
As far as losing money on goods in order to offer cheaper prices and do away with competition, this is nothing new, and there is nothing stopping a small business from doing the same thing. I run a -very- small company and I've done the same thing on occasion. Granted, it's a riskier move when you're a small buiness, but like the Ferengi say "The riskier the road, the greater the profit".
Remember the episode when Homer meets again the same "nerds" that "helped" him pass (actually forgot the episode..) Geek: I invented a program that downloads porn off the internet one million times faster. Marge: Does anyone need that much porno? Homer: :drools: One million times...
I've been using Linux for the last 11 years but I have also kept Microsoft on the family system because it has been more user friendly and familiar than Linux and cheaper than Mac. However.... this weekend after getting so frustrated at XP and the way it thinks it knows better than I do about what I want to do, and the fact it's o bug/virus/scumware/spyware/leachware etc.. I decided I would finally go completely M$ free. Wiped the hard drive on y laptop and installed Mepis Linux. Ordered a Mac Mini for the family. As soon as it gets here I'm going to install MythTV on the old XP box (ATI AIW 9600). It feels almost like I quit smoking.
Zoid.com
Let's see, a right-wing, anti- government regulation think-tank says a monopoly is a good thing and you wonder, "Does Microsoft Cause Lower Software Prices?"
That's like asking, "Do liberals want nothing more than to burn the flag and have gay sex?" based on a Heritage Foundation report.
1.Force entry into market 2.??? 3.Profit for once the three step plan actually worked
It is worth noting that from 1995 onwards (MS era of Windows 95/98/ME then 2000/XP) though it has been others (including Linux and OpenOffice) that has been keeping software prices down. Not microsoft.
Web Sig: Eddy Currents
Heck, for the price of a copy of MS Office you can buy the whole company of some competitors/innovators that fell victim to MS unfair competition.
As soon as a new competitor enters a market with a hope of taking a big chunk of the market the compentitions gets harder for all in the market and the buyers always wins. Price is an important factor to gain marketshare. Another is to innovate and has the best produkt in the market.
So yes as soon as a major players enters a new market the price will get lower and the pace of innovation will rise.
Its easy to see that in markets where Microsoft has managed to get an large market share - a monopoly - the innovation has stagnated a lot. I.e. Internet Explorer. This is also fundamental - no need to spend resources to innovate when one has a monopoly - most of the resources are instead used for featurebloat and nice new interfaces.
So what they are observing are the natural way a market works when a big players enters. Initially all is well for the buyers in the market - but if it escalates into an monopoly the long term result are innovation stagnation.
Just saying it like it are.
Suppose the figure cited in the summary is true, most software prices have fallen only by 14% but areas microsoft has entered have fallen by 60%. Does this mean microsoft is making prices lower? Not at all!
If Microsoft picked software markets to enter at random this would be a strong argument. However, they most certainly do not which means that a statistic like this must be taken with caution.
Suppose microsoft's strategy is to break into a market gain dominance and then extract money once competition was crushed. Then microsoft would choose to enter those markets with overpriced software which they could undercut explaining the correlation between microsoft entering the market and lower prices.
In short the statistic we really need to see is a size weighted average of price reduction.
If you liked this thought maybe you would find my blog nice too:
Not unless basic economic theory is fundamentally wrong.
Unfortunately, all economic theories are wrong -- just ask any economist (other than the economist who proposed a given theory).
-kgj
-kgj
If you look at the office market, this may indeed be true. If you look at StarOffice and SoftMaker Office, they both sell under $80. This was unthinkable some years ago. However, Microsofts own prices are still up in the air. So the only explanation I can think of is that because Microsoft monopolized the market, there's no way to reasonably compete with them unless you offer a *much* lower price. Now to say consumers benefit from Microsoft's precense is a bit risky as many consumers (think they) can't use these lower-cost products because of lock-in effects.
Consider an area with many small bakeries. A big company goes in and opens bread shops with lower prices so the small shops have to close.
Good for the consumers? No.
After the small companies close down, because of the lower prices from the big company, the prices are increased to higher than the small companies had before the big company went into the area!!
The profit from the high prices is used to undercut small businesses in the next area the big company takes over...
Now, replace a geographic area with a type of application (spreadsheet, writing, etc).
When Microsoft goes into a new area, they move their investments there. The speed of development in the old area goes down. (But while Msoft takes over an application area -- the speed and development is faster!)
The development speed for new revolutionary features of Internet Explorer or Office isn't high...
When there is competition in an area taken over earlier, lots of developers (paid by the monopoly profits from some other controlled area) are moved back into that place -- until the threat is gone.
So now, with Firefox, there will be development on Internet Explorer.
At any given time, it's better to use the monopolist product -- but in total it's never good for anyone, except for the monopolist.
Karma: Excellent (My Karma? I wish...:-( )
Basic OS 1986: $10, 2004 $200.
I hate to imagine how much it would be if MS wasn't there to keep the price down.
The usual pattern is:
1) Software companies drop their prices on products competing with MS products.
2) MS then drops its prices to a point where the company cannot compete. They don't care if they take a loss because other business sustains them while they're strangling the competition. (In the case of Internet Explorer when competing with Netscape they dropped their price to zero)
3) The competing company typically diversifies as it needs other sources of income. It's often difficult to do this successfully, but if the company does it may even pull out of the competition all together
4) Microsoft either buys out the competitor, or continues to sell at a low price until the competitor is no longer in the market.
5) Once Microsoft has dominated the market, prices go up. Have a look at the price of MS Office since it has dominated.
It's a proven business strategy. Unfortunately it kills competition and therefore innovation. It makes no sense to keep prices low if you've effectively cornered the market either.
These posts express my own personal views, not those of my employer
Mr. Litan commits what Hayek called the fatal conceit of believing that government bureaucrats, rather than entrepreneurs and consumers, are in the best position to decide what constitutes a legitimate business purpose.
By adhering to this false maxim antitrust regulators are attempting to supersede the informed judgment of millions of consumers with the opinions Janet Reno and her former antitrust sidekick Joel Klein.
So... they start by saying that no monopoly should be regulated, or indeed no business should be regulated at all. And then they base their case off of this.
The idea that a free market is a perfect market has been shot down so thoroughly and so repeatedly that it doesn't deserve comment. But I'll just throw a few things out there anyway. Patent Law. Copyright Law. Upton Sinclair's The Jungle. "The" phone company. The California Power Outages. Mad Cow Disease. Bovine Growth Hormones. FDA. The whole "government is bad for business" is a religion, not an economic reality. And most of the people who feel that way still want government protections, just on things that they expect, like racketeering, protection against unions, contract violations, dishonest business practices from their suppliers, police protection, etc.
That is not to say that the author cannot have any correct ideas because he subscribes to a popular but completely illogical set of beliefs, but rather that because the completely illogical set of beliefs are the basis for this particular article that the article itself can be only viewed, at best, as suspect.
The ______ Agenda
A good example of how Microsoft is effecting prices is in the consumer media formats.
Microsoft undercut MPEG-4 consortium's prices by offering licensing charges of 10 cents per encoder for its codec.
The MPEG-4 gropup charges 25 cents.
This led to protests from the MPEG-4 group including attempts to belittle Microsoft's codec in the press.
I'll start with the No first.
Prices don't come down in areas where Microsoft is traditionally strong, specifically Office and OS areas. If that were the case, then Office and Windows would be two of their cheaper products, not so. The cash bought in by these products allows them the leverage to enter new markets without much risk and some cushioning against failure (the fabled 'right by version 3.0' theory).
Now the yes answer. Where they do bring prices down is in areas that they don't lead in; finance, server-side software, CRM, etc. This has two effects; firstly they can compare on price against non-comparable products (let's say Oracle and SQL Server) and corporations start to use those kind of figures as bargaining chips to lower vendor pricing and get a better deal. Secondly, if you are a niche software manufacturer, you can't afford to have MS hoover up your market share, so the price gets lowered and eventually you get priced out of the market, or bought by them. And funnily enough, MS usually buys a company if it wants to enter a market - and usually a cheaper one (Great Plains anyone?). Suddenly the MS branding machine can make a low-end product look much more attractive.
However the argument should be looking at more than the price of the software, it should be looking at the quality of it too. What use is cheaper software if it doesn't work as well as it should?
Monopoly.
Walmart.
Lower prices? You bet. Competition? I doubt so.
Just because Microsoft has the resources to lower prices on their product (dumping, anyone?), doesn't make it better for the industry.
No-one can or will re-enter the market because at that point you can just lower your prices again. As it actually takes investment to enter a market, the immediate undercutting by you will blow them out of the water.
How we know is more important than what we know.
This is just basic market mechanics, and the tone of the poster's question seems mostly to be one of disbelief that any participation on any level in area by Microsoft could ulimately benefit consumers. Ignoring that prejudicial orientation, it's worth asking what happens when any large, well organized, highly market-savvy company enters into a particular product area. Without fail, competition (in features, price, and mindshare) happens. This isn't exactly a shock, and I can't imagine needing to dig for numbers to see the basic truth of that.
All of those that will now talk about MS squeezing other players out of dominant positions in a given software niche are, I think, often in sour grapes mode. I've also always been amused by the people that are screaming from the rooftops about "free" tools like Firefox, but were aligned with the camps that were so quick to pile on MS for including a "free" browser in with their OS. Sigh.
Don't disappoint your bird dog. Go to the range.
Statistical analysis cannot tell you factor A caused result B. It merely states that two things tend to occur together.
The study would have you believe that Microsoft's decision to enter certain markets CAUSES price drops and greater innovation.
Consider the alternative plausible interpretation of the same statistics--Microsoft likes to enter markets where it feels it's considerable research and development arms can give them an advantage (i.e. markets where the pace of innovation is high) and also markets that are new or growing rapidly (and so would natually see decreasing prices.) Same statistical correlation.
You can't say statistics "prove" one assertion and not the other. You can't say that they prove anything at all. At best, they are not unsupportive of "Microsoft entering a market is good for consumers" theory, but they don't (and can't) prove it.
Look at the Internet browser market. Five years ago Internet Explorer was considered on top of its game. Look what has happened since. Microsoft has rested on its laurels and IE is now considered a steaming pile of dung. So much for innovation.
What about output? I would be very surprised if Microsoft had anything to do with that. The computing market is one that would have experienced huge growth with or without Microsoft. So sure, output has gone up in practically any computer related market, but that is just like any other new market.
Consider, for example, the market for cars or aeroplanes. Both were effectively monopolised early in their US history due to patents. However, because the products were so revolutionary the market grew dramatically. It would be facile to argue that Ford and Wright stimulated output growth. No, the market grew in spite of them. Same deal with Microsoft.
Consider what happened to the market for TCP/IP networking software when Microsoft entered. In 1994, there were probably a dozen or more companies publishing and selling TCP/IP stacks and applications to run over those stacks: FTP Software, Beam & Whiteside, NetManage and others.
Then, Microsoft cobbled together their own TCP/IP support in Windows for Workgroups 3.11, and made it almost usable in Windows 95. By 1997, the industry segment had effectively disappeared along with all those little networking companies.
Netscape, like many other vendors in the server market, was crushed by Microsoft's superior sales effort; just like IBM customers could safely buy what they needed from IBM ("no one ever got fired for choosing IBM"), corporate buyers can always safely choose a Microsoft "solution".
However, everything changes and now you can't buy an IBM PC anymore. Eventually, corporations will get hip to the fact that Microsoft-sponsored TCO "studies" are a load of crap and do their own due diligence before committing their company's future on feeding Microsoft's cash cushion.
Men who molest preteens prevent teen pregnancy!
Tell me someone who makes better software for the price. Anyone?
...works out like that. A company will produce cheaper, lower quality products the moment it's done away with any real competition. This allows it to maximize profits, as it isn't really forced to expend anything on innovation and yet it sells a huge number at low prices. The low prices also serve to lock out future competition.
*NOTHING* about a monopoly ends up being good for consumers, ever. Even apparent gains in prices are only made up for by poor quality and lack of innovation.
Fight for something better: www.socialistalternative.org
Or else do you think Microsoft would jump into a market that has no profit or no strategic connection?
Does it mean Microsoft benefits consumers? Initially yes, but we don't know in the longer time frame. Once MS dominates the market and using it's market power, they do not have incentive to innovate and to improve their products' quality.
A sig is redundant.
These people have been paid to support the right-wing position that monopolies are beneficial, and fundamentally that there is no such thing as market lock-in. So who benefits from lock-in and monopolies? The rich. Mostly the rich that can form these companies to start with (ie, Bill G getting $20,000 gift from his lawyer father after dropping out). Of course, if you are poor and happen to stumble yourself into a monopoly then you get lots of money, which makes you rich.
For example, they say the reason we use a qwerty keyboard is not because the switching cost is high since everybody else uses it, but because no keyboard is significantly better. That is complete hogwash since dvorak keyboards have been shown with essentially all of the anecdotal reports and with significant proven advantages on metrics that common-sense indicates are better in a keyboard (alternating hands, not using the same finger excessively, etc). The fastest and most accurate typers in competitions use dvorak, not qwerty. In fact, there is NO CREDIBLE EVIDENCE that qwerty is even on par with dvorak. Read their paper "The Fable of the Keys" and specifically look for evidence -- there is none. The whole mission of the paper is to create fear, uncertainty, and doubt.
Now they say Microsoft is good for prices. I would be shocked if they aren't doing some extremely fuzzy math (ie divide by zero for example). Are they just liars? Are they payed shills? I think the real truth is M&L probably just want attention, and crackpot theories and FUD (ie flamebait) can get you that sometimes. They don't even understand the fundamental economiccally-based segregation they are being used to support.
No matter whether you get suckered by these hack-jobs or not (maybe you are a republican and so are not thinking very honestly), just keep in mind that anti-trust should not ever be about optimizing the market, it should be about making it more fair and giving some leverage back to the little guy, whether that is a small(er) corporation or a person with a good idea. Even if that means making the market less efficient. You can probably get your beef stew a little cheaper if they can throw rat carcasses in with the beef, but ultimately the almighty dollar should not ever be that important.
Peace
~1995, there was a healthy market in selling web browsers. Microsoft recognised that Netscape was threatening their monopoly by introducing the possibility of cross-platform applications. Microsoft bought a web browser, developed it at a cost of millions, bundled it with their operating system, and gave it away for free. Netscape's revenue stream was cut off, and Internet Explorer became the dominant web browser.
But hey - at least Microsoft caused lower software prices. Right? Right?
This may be redundant -- and if it isn't I'll be surprised.
/.-er you.
Every project that I have worked on where a Microsoft "solution" has been used has dramatically increased costs. It requires more software purchases to support it (anti-virus, networking, remote control, etc.). On top of that M$ products require more people to maintain their products. More people = more cost. Project overhead is also increased by the often terrible user interfaces that Microsoft and companies that only produce Windows-based products create. Bad UI = more cost spent on product and customer support.
*nix-based systems historically have less downtime, less outside costs associated with them (not as much extra software needed to support it), and not as much staff to create products using *nix systems.
But, you already knew that didn't you -- you
I didn't think it necessary to split that hair on SlashDot -- surely most of us understand the point -- we have widespread agreement about many of the physical principles of our world. If new observations make the old theories less useful, we'll work out new theories that better suit the facts. That's science, baby; and it's been my religion for many years.
But we don't have widespread agreement about economic/social phenomena. Quite the contrary -- we've got bazillions of theories, and damned near no common agreement about which are right versus which are wrong.
I'll go further -- it's not possible to prove most social/economic theories, in the scientific sense, because there's no way to do proper science (hypothesis, test, controls, etc.) with society at large.
As to your comment about "conspiracy theories from European left wingers that is very similar to the creationist writings on paleontology"
-kgj
-kgj
Back around 92 there weren't "Office Suites". Productivity apps sold separately. There were moves to get them to work together. Word processors and spread sheets retailed for $495. Databases,
business graphics systems, desktop publishing... were $595. People could get upgrades cheaply (usually about $100) but the initial cost was high. There were inexpensive much more feature poor
versions of these products at roughly the $100 and $30 price points (so even a bad office suite would run over $100) as well as integrated suites with low power apps for about $100 (like works).
Microsoft offered the first competitive upgrades at $129 for Word and then soon thereafter for Excel and Foxpro. The terms were so easy to meet that for all practical purposes they were cutting the
retail cost. They cut there standard upgrade price to $89 and $99. Everyone else followed suit.
This made it possible to price an entire suite of applications at the $400/500 level and Microsoft office, Borland Suite... were born. Microsoft followed up with another big price cut with cheap OEM
pricing for people who bundled their office suites (essentially a 3rd major price cut).
So in answer to question about the price of office suites I don't think anyone can dispute that Microsoft started the price war and has continued to drive it through the decade.
Until they force everyone out of the market, at which point they are free to rape their victim^H^H^H^H^H^H^HValued Customers any way they please.
Though DiLorenzo does discuss the technology industry in this article--as an example--I am at a loss as to how this article is especially relevant to a site that purports to be, "News for Nerds. Stuff that matters." This article comes from the self-proclaimed Foundation for Economic Education, which I am assuming is some kind of libertarian-oriented organization. In other words, the author has no need to present alternative points of view because his publisher's (i.e., the FEE's) purpose is not merely to inform but rather to persuade.
DiLorenzo is by and large preaching to the choir. He provides only a trifle of evidence to support his anti-antitrust opinion and instead relies on the classic logical fallacies of ad hominem attack, among others: "The antitrust laws provide a means by which sour-grapes competitors can achieve through politics what they fail to achieve in the marketplace." Such an argument is insulting to the intelligence of an informed, objective audience.
Admittedly, my politics do lean liberal, but I do consider other points of view. Actually, I believe considering a variety of viewpoints is necessary to a liberal worldview. However, arguments that only belittle opposing points of view have no power to convince me. I would like to believe my fellow Slashdotters of all politcal stripes would be outraged by this pandering as well.
On vit, on code et puis on meurt.
In Soviet Russia, low prices cause Microsoft!
Oh OK, I'm going to buy B quality movies and directly from unknown artists. Sounds like a great idea! Only one problem...
There is a REASON why those artists are unknown and those movies are B movies.
dumbass
Correlation is not causation.
Microsoft products are "good enough" and "cheap". When MS enters a given market, their products are never as good as what is out there, but they are cheap. Some example:
- DOS 1.0 was both significnatly worse and cheaper then CP/M
- Word v. Wordperfect, AmiPro, Wordstar... just about everything
- Excell v. 123, Quatro
- Windows 3.11 (for workgroups), NT 3.5, Windows 95 v. Netware, Banyan
- IIS v. *NIX w/Apache, BIND, etc
- Exchange v. Groupwise
- MS-SQL v DB2, Oracle, (flat text files)
- IE v Netscape
- Hyperterminal v everything else
This is not to say that these MS products have not since passed the quality of their competition, some have. Of course, in many of these cases it is because MS has driven the competition out of business compleatly.A recent review of OOo, the author made the comment "OOo will out Microsoft Microsoft". Compared to MS-Office, OOo isnt very good. But its good enough. And its a hell of a lot cheaper. Thus OOo will out Microsoft, Microsoft. The same is true to some degree with other projects like Samba.
So in response to the articles question: Duh. Thats what Microsoft does. They sell good enough crap for less, forcing companies who produce good stuff to reduce their prices, reduce their marketshare, or die.
I would be curious who performed the research and
how it was sponsored/funded. At least then I would know
if there were any biases involved.
I think there is at least one truism though and that technology
levels many playing fields of any culture or country.
The internet is proving that already in most instances right?
Blog away...
On the Mac, Office totally dominated. The Mac version of Word has always been, and remains to this day, superior to the Windows version. In ten years of working with Macs and running IT for Mac shops, I've never seen a product for the Mac OS that could really compete with Office.
As a whole, yes, you are correct. However there has always been Nisus Writer which has been the choice of many writers for a long time. It has 90% of Word's features for a fraction of the cost, disk space, and CPU usage.
The last versions for "Classic" Mac OS supported System 7.1 all the way up to Mac OS 9.2.2 and required only 2 MB of RAM.
The Mac OS X version, Nisus Writer Express, is still an excellent word processor and makes for a great complement to Apple's page layout app, "Pages".
http://www.nisus.com/Express/
This article is an oversimplification. Mozilla didn't develop and give away Firefox because IE was cheap, they did it because IE is junk. Beating up the competition may drive down prices, but it is no guarantor of quality. Quite the opposite, in many cases. Any business crippled by malware would, in retrospect, wish they could have paid more for their browser and gotten something safer. Well, now they can, and they don't have to spend a cent! Thanks, Bill Gates, for stimulating open-source development by flogging junk.
Economic History Services (EH.net) review
Seems a much fairer review to me, though the author states at the outset that he may be biased since he's a Linux user.
Check those assumptions! Fee.org is a regular contributor to the WSJ, and we know how unbiased THAT rag is... [snort]
Sometimes I have to say to hell with it and just eat my jellybeans.
"How do you change this? Consumers have the power to choose and they should use Open Source, buy "B rated" DVD's, and buy directly from unknown artists."
If they're unknown, how do I know about them to buy their music or films? Do I want to only buy B rated movies?
There's a difference between movies/music and computer software. While I can get by just excellent without buying a DVD or some music CD, I *can't* avoid Microsoft at work, at home, and just about everywhere else.
See the difference? It's not as simple as "just don't buy it" like so a lot of people seem to think. While, yes, if there were a complete boycott on Microsoft software, they'd be forced to change. But I'd like to see how one would organize such a thing? You need to find a way in, a good reason for switching, and an easier path to do so. And it's a very slow process.
- It's not the Macs I hate. It's Digg users. -
...dated 2001? Um, any chance its conclusions might be out of date as well?
Sometimes I have to say to hell with it and just eat my jellybeans.
Microsoft enters a field when the field starts to develop. Sometimes it enters the same time as the other players, sometimes a bit earlier. During that time, *anyone* who enters that field will sell stuff for cheaper prices. Whether Microsoft enters or not other companies will enter and make stuff cheaper anyway. It's just that Microsoft always manages to enter at the exact time when it starts to get cheaper, kill everyone else and become a monopoly in that field, so it *looks* like Microsoft made it cheaper, while in reality Microsoft didn't do anything or it even made things costlier.
Actually, 'cheaper' isn't the right word. 'Lesser price' is more appropriate. Microsoft doesn't sell the same things as were available earlier at a cheaper price. It sells worse/inferior things at a lesser price (which is what the thing is worth), so, in effect, nothing is actually cheap. Oh, and BTW, we get inferior stuff and we get screwed.
This doesn't necessarily reflect the state of competition. Maybe this just reveals what we all knew anyway -- that Microsoft's software was overpriced to begin with, and other companies are finally figuring that out!
Punctanym: alternate spelling of words using punctuation or numerals in place of some or all of its letters; see 'leet'
Show me an American consumer with a sense of discipline and self-reliance, and I'll show you a much freer market.
The underlying premise is that where microsoft enters a market and increases competition prices will fall. This is basic economics and has nothing to do with Microsoft's monopoly in the operating system market.
Microsoft does not have a monopoly in some markets, but they have a huge war chest and don't need to recover their investment in the same short term as other competitors. With this kind of money behind them (from their monopoly), they can compete very successfully and this competition naturally drives down prices.
This will often lead to less competition in the future as others drop out of the market and prices can be adjusted (usually up) to meet the new supply/demand conditions.
--Keith
No-one can or will re-enter the market because at that point you can just lower your prices again. As it actually takes investment to enter a market, the immediate undercutting by you will blow them out of the water.
Very, true, but it's worse than that, for at least two reasons.
First, most goods have a significant marginal* production cost, which provides an opening for an innovative competitor who finds a way to significant reduce that production cost to operate at a profit even at a price point that is a net loss for the monopoly. Since the marginal production cost of software is nearly zero, this cannot happen with software. Anyone who wants to enter the market faces a huge up-front investment (developing their competing product) which they then have to defray, while the monopoly can simple continue shipping their existing software at a near 100% profit margin, regardless of how low they have to price it.
Second, there's the well-known "lock-in" effect so obvious in the world of office suites. Because everyone has Word, everyone must have Word. Competitors have to attempt to be compatible, further increasing their investment, and odds are high that they'll never succeed completely, which means that their products will inevitably be deficient in one area (compatibility with the rest of the world) even if they're superior in every other area.
Microsoft, of course, has an even better position because of their control of the operating system. Every other application provider is working at a disadvantage.
All of this would seem to make it possible for Microsoft to charge exorbitantly high prices, which this book seems to contradict. What gives?
I think there are two factors at work here.
First, Microsoft's domination is so complete that it is in the position of having to compete with itself. Or, more precisely, with its old products. Because software doesn't get used up or wear out, customers who are happy with Office 97 see less need to shell out additional money to buy the latest. Setting prices too high will discourage users from buying copies of the latest package. Of course, Microsoft partially addresses this by offering lower upgrade prices, but in many cases people actually buy a new license when they could get an upgrade license just because it's too hard to keep track. Pricing the software too high would make it worthwhile to track all those old licenses and result in a net decrease in revenues.
Second, I posit that Microsoft *does* charge exorbitantly high prices, even if they're lower than they were years ago. Why? Because looking at the absolute dollar figure is misleading, what you really need to look at is the profit margin. In a healthy market you would expect the price of a given class of software package to decline dramatically because all of the costs are front loaded. There's a period of time in which the software continues to get significantly better through additional development investment, but eventually the amount of ongoing development will decrease, and costs will drop. In a competitive environment, prices should decline as well, so that profit margins never become astronomically high.
IMO, Microsoft's prices are much higher than we should expect to pay. The existence of free alternatives that are very nearly as featureful (and in some areas better) is a very strong indicator that the software Microsoft is raking in billions for should actually cost very little at this point in time.
* (If you don't know what "marginal production cost" means, it's the cost of producing more units. If it costs $X to produce N widgets, and $Y to produce N+1, the marginal production cost is Y-X. Obviously, stamping out another CD, printing another tiny manual and putting them both in a box costs very little. Providing the contents of the CD for download over the Internet costs even less. Allowing others to provide the contents of the CD for download costs basically nothing).
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
1) A company comes up with a novel computer idea.
2) Microsoft ignores it while it is a 'fad', so the original company can more or less charge what they want.
3) The 'fad' becomes a trend, and Microsoft gets interested.
4) Using their overwhelming resources, Microsoft develops a competing product, at a much lower price. (This is in lieu of getting the technology by 'other' methods).
5) The original company laughs it off, since any Microsoft product version 1.x or 2.x is not really competitive, and sometimes horrible.
6) Over time, the Microsoft product gains technological and marketing credibility.
7) The original company tries to hold on, but the lower prices of the Microsoft product (plus the creeping featuritis of the Microsoft product) eventually lead to the companies demise.
8) The original company gives up, and releases all of their people. Naturally, Microsoft swoops in to skim off the cream of that crop.
9) Microsoft now owns 100% of the market.
10) Microsoft freezes development on the product and starts looking for another victim company to screw.
11) Rinse, lather, repeat.
While I don't know if Apple was the inventor of these technologies, MacOS had a control panel and a main desktop menu (admittedly, it's labeled by an Apple logo instead of the word "Start" but that hardly qualifies as innovation) when it came out in 1984, before Microsoft Windows existed.
Ah well there ya go. Another U.S.-hater from some inferior country. Another politically motivated mindless drone who is blinded by his nationalistic envy. Yep, we've seen this one before. YAWN.
He didn't even mention the US or anything political in his post. If anything's politically motivated, it's your jingoistic comments above.
If Microsoft did help lower software prices, doesn't that just prove how having monopolies (not necessarilly MS) is a bad thing? Competition brings down price. If the software was interchangeable, I'd predict fiercer competition.
This article seems like one of the worse excuses for journalism I've seen in some time. The author writes:
Competitors will always whine and cry about how the price-cutting, product-improving, and customer-satisfying practices of their more successful rivals are "unfair." This in fact is the modus operandi of antitrust: The antitrust laws provide a means by which sour-grapes competitors can achieve through politics what they fail to achieve in the marketplace.
This is a dreadfully dishonest characterization of anti-trust laws. Microsoft wasn't accused of success through fair competition. They were accused of a series of dirty tricks that have nothing to do with competing on a level playing field. These tricks include giving their customers discounts if those customers would design their own web sites so that non-MS browsers wouldn't work with them, and pushing PC makers into deals where they had to pay for MS licences, even for machines that were to be loaded with non-MS operating systems.
Neither economists nor politicians nor policy wonks are capable of deciding the most "efficient" size or configuration of any business enterprise. As Ludwig von Mises once explained, "The question to be decided is: Who should determine the size of the enterprises, the consumers by their striving to buy what suits them best or the politicians who know only how to tax away and to spend?"
This is a strawman argument. Anti-trust laws aren't designed to limit the size or market share of companies; The are designed to limit companies from using monopolies or near-monopolies unfairly to exclude competition. As such, they are only targetted at companies that actually have monopolies or near monopolies. But I supposed it's easier for the unscrupulous to simply make up non-sense positions for their adversaries and to claim that their adversaries hold those non-sense positions than it is to argue against the positions their adversaries actually take.
By adhering to this false "maxim" antitrust regulators are attempting to supersede the informed judgment of millions of consumers
Even if we assume, for the sake of argument, that most consumers are informed enough to exercise informed judgement, those consumers can only use there judgement to decide among the choices they actually have. If I offer an OS at the same price as MS's and if customers can choose which one to purchase, customers can make a simple judgement about the qualities of the OSs. But if MS has strong-armed vendors into making my customers pay for MS-Windows in addition to my OS for any machine they buy, even if my OS is the only one loaded, then the consumer's choice isn't just about OS qualities, anymore.
Third, the government is clearly unconcerned about consumer welfare in its prosecution of Microsoft: In Judge Thomas Penfield Jackson's November 1999 "Statement of Fact" he devoted a mere five out of 412 paragraphs to the issue of consumer welfare.
This is just plain stupid. The point of Judge Jackson's "Findings of Fact" document was to describe the facts of the case, and not to concentrate on the social consequences of the facts. And in any case, the proper focus of a Judge is on the law and on the facts of a case. The author of this article is either showing his ignorance or his dishonesty.
He rests his case on the lame notion that, in his opinion, the company's management had "anticompetitive motives." Economic analysis may not be Mr. Litan's strong point, but mind-reading apparently is. He claims that such a malevolent "intent" has harmed Microsoft's competitor Netscape by keeping it from competing in the Web browser market. In fact, Netscape has distributed more than 150 million copies of its browser since 1995.
The author completely misses the point, and we are left to wonder if he did more than skim the "Findings of Fact" document. MS used the browse
Microsoft as a large company producing off-the-shelf software have introduced into many markets the considerable benefits of off-the-shelf software.
Mircosoft, as a monopoly, have not and cannot introduce the benefits of competition.
It is true to say the advent of Microsoft in a given market has had beneficial effects; but also that those effects would be that much greater if there existed proper competition, rather than the Microsoft monopoly.
--
Toby
I have found numerous articles which state the opposite of what these people are saying. They basically say that if you were to consider the following:
1) Take Microsoft out of the picture in regards to the software market.
2) Consider the changes, as well as strides, that open source has made for years now in numerous different areas, such as usability and compatibility.
3) Account for the problems that Microsoft's monopolistic activities has caused to other software vendors as well as developers for a long time.
I am kind of generalising, but the article shows that these key issues have an overall effect on the software market as a whole. I suggest reading it if you want to get some more information on exactly how Microsoft negatively effects the market, as well as how they might do so in the future by using their stranglehold on the market and monopolistic practices.
I wish MS would enter the fields of GIS / Mining / and CAD software.
If the trend is true, then the days of spending anywhere from 4 to 80 THOUSAND dollars for a ONE seat license on these specialty softwares would end.
You think the MS monopoly is bad? you pay nothing compared to what Autodesk, ESRI, and others charge.
George Bush + Linux = "I will not let information get in the way of the fight against Windows"
One area where Microsoft's entry into a market does result in price pressure is in the high-end enterprise markets. Some examples of this are SharePoint and CRM. Prior to the delivery of SharePoint as a Microsoft product, vendors like Bechtel and EDS were able to charge for custom solutions in the $10k/s to $100k/s range for customized versions of their sharing apps. Afterwards, a decent section of the market on the lower end went to SharePoint. As a result, Bechtel, EDS, and for that matter even IBM now have to do the whole price/benefit dance around MS.
If you look at the history of MS's products in the enterprise markets, they have a clear (or reasonably so) strategy of acquiring or building 'adequate' low-end enterprise software and entering the market at a low price point. This has let them immediately gain market share in that market. Their follow-on strategy has always been to add the top requested features only, putting IT managers in a 90/10 bind... MS is delivering 90% of what's needed for a low price point, does the other 10% justify the higher-price spread?
Consumers have the power to choose and they should use Open Source, buy "B rated" DVD's, and buy directly from unknown artists.
Says you.
I am a consumer, I have a real job that's not in IT, and I have a limited amount of time. I am not going to fiddle with Open Office and the godawful UI, I am not going to buy a DVD that has an IMDB rating below about 7/10 (or something favorable on rottentomatos.com, if I still went to theaters), and I am not going to diamond mine for some pantheon of independent artists amongst the heaving throngs of crap (i.e. garageband.com).
Popularity is one of a plurality of filters that I use to manage my life. Even then, popular software/movies/music follow the 80/20 rule, but so be it. You may be on a crusade -- and by all means, go nuts with it -- but your cause can rot before I am going to sacrifice my time for it. I have my own causes, my own priorities, and my own limited lifespan to spend.
You should grow up and realize that large numbers of people aren't going to just get up and do what you think they should do because you've convinced yourself of the truth of your argument. You should consider that people are generally rational, and, maybe, just maybe, they get it enough to realize that there's a mortal flaw in that envisaged utopia, instead of snuggling up with some comfortable notion of superiority.
Geesh.
It is clearly a crock that ms brings lower prices. Mr. Gates has expressed his admiration for J.D. Rockefeller, so the practice of lowering price to achieve domination, then attempted control follows from that. But, even where there are a few dominant players, there often comes to be agreement to achieve prices where everyone profits, if a single company cannot achieve domination. This has happened recently in the wood panel(plywood, OSB) market. It is in the music industry, in the car industry, too. SerpentMage wisely observed that ms comes to a spot where people will pay for its products after it achieves domination some way, but then the price stays static, or about so, where they make a healthy profit. The consumer ultimately controls the market, it is what we buy. We are not helpless, even if we are manipulated.
Thanks for playing.
Karma: Excellent (My Karma? I wish...:-( )
That article was written in January 2001. Does anybody else feel we live in a different world now?! Hello?!
The problem with monopolies is that they control the environment in which others compete. *They* set the rules of the game, and the rules will always favor them.
In the case of Microsoft, they were able to control distribution channels, making it impossible for a competitor to even get installed on a new PC. This happened with the OS itself, office suites, and then the web browser. Now it is also happening with media players.
"Customer choice" only works when the customer *has* a choice. Yes, a technically-savvy user can download and install Firefox. But, if they have Internet Explorer (which will always be "good enough"), why should they bother?
In the case of office suites, I remember when a full-fledged office suite was only about $250, new retail. Now it's more like $400. And, when you compare that with the price of a new computer, it's gone from 10% the cost of a new computer to 50% the cost of the new computer.
Since software benefits greatly from economy of scale, it doesn't make sense that the relative cost should go up as computer sales have gone up.
Anyway, the point is this: in certain areas, the monopolist has a distinct advantage over competitors. In the case of Microsoft, that advantage allows Microsoft to provide more regulation of the industry than any government.
Does that seem right to you?
Microsoft is to software what Budweiser is to beer.
OK we'll say it's true and every other vendor has to cut prices to compete with microsoft at every price point.
But what happens is that those companies cut their prices too deep, they don't develop investment properly and then they are eaten by microsoft whereby prices go back up to microsoft monopoly levels.
Microsoft's latest move should be a challenge to other software makers as well. They've decided to count dual-core cpus as a single processor for pricing purposes.
This article is 4 years old - why do you zealots mind about something like this ?
I mean you always tell us that the sun shines out of your a***oles because you are THE superior race in IT.
So why then do you mind about a right-winged website ?
The profit from the high prices is used to undercut small businesses in the next area the big company takes over...
Certainly, this is the conventional wisdom. Too bad there aren't any actual examples of this happening.
ever since MS came out with solitaire, a deck of cards now can be had for less than a dollar.
I do like the PS vs Xbox competition.
until ms starts paying me (and it would need to be a substantial amount of dollars, like enough for me to quit my effin job) to use their stuff, i'll slog along with my debian powered home LAN.
Serenity now, insanity later.
Yup its all becasue of us stupid Americans. I mean nobody else in the world buys Microsoft software /sarcasm
Obviously, lots of people don't like MS Office because of its inefficiency and high price-point, ans apparently some people don't like OpenOffice much better, since it does too good of a job of mimicking MS Office's mistakes (UI, bloated, , though I can't quite agree with the bloated bit, since OpenOffice is about 45 meg download, while MS office has multiple install CDs). For those of you unsatisfied with the mentioned Office Suites, what applications do you use?
You know over the years, Microsoft has made me more money than any other company. I have made tons of money fixing PC's, writing Windows programs, buying MSFT stock, and just general consulting. I am sure the majority of slashdotters out there are in the same boat. I for one do not want to bite the hand that feeds me!
On one hand, you could argue that in order to compete with Microsoft, the only advantage anyone could offer is lower cost.
On the other hand, before Microsoft, software was mostly FREE.
As close to anon as can be! :-)
I wrote the answer to your question somewhere else.
Consider profits. If you move most developers to other products and quit doing serious work on the application, your profits go up (costs are lower).
So without competition there won't be any new features, the same price -- and high profits. The loser is the customer that won't get new functionality or lower prices.
Karma: Excellent (My Karma? I wish...:-( )
If the Japanese did the same thing. There would be a Restriction of Import. Or a Dumping ruling. But if is American is the market law.
"Has Microsoft competition in office suites really cut prices there?" Yes! By 100% in some cases, those that are still in the market!
Every 2 sentences the author takes a stab at anything left of the current republicans:
- socialist-minded policy wonks
- The antitrust laws provide a means by which sour-grapes competitors can achieve through politics what they fail to achieve in the marketplace.
- Mr. Litan commits what Hayek called the "fatal conceit" of believing that government bureaucrats, rather than entrepreneurs and consumers, are in the best position to decide what constitutes a "legitimate business purpose."
She then goes on to argue that it is monopolies, and not everybody else, that have the right to judge their own conduct! What a load of trash! I'm sure Microsoft upper-end will be flogging over this one for months to come.
She also completely ignores the fact that lower costs aren't the only factor to take into consideration when ascertaining what is best for consumers. You have to take into account things like:
- choice
- quality
- support
- interoperability
- whatever else consumers say is important
The article is so right-wing I would have told you it came straight from the Project For a New American Century" if I didn't know better. Or Microsoft. In fact I'd be pretty damned surprised if Microsoft weren't behind this 'article'.
It takes half an hour to do an install of Mandrake Linux on modern hardware. Updates are set to happen on automatic, so zero time there. Presume you spend an hour every two years doing a distro upgrade. Mandrake Linux therefore costs you $100 up front and $100 a year.
There is no virus scanner. We just saved 15 minutes downloading and installing it. Installing XP takes at least half an hour as well, so we're up to $100 plus the cost of XP plus $50 for the initial virus scanner download, plus anything we pay for the scanner.
Additional software packages for Mandrake (or SuSE or Debian or Xandros or Ubuntu or... well, you get the idea) are a few clicks away rather than a major grovel around in cyberspace followed by DLL roulette. Presuming that you install either OpenOffice or MS-Office from CD and nothing else (unlikely), that's at least another 15 minutes ($50) down.
The Mandrake Linux machine does not get compromised, mail out your documents all over the ether, or instill in the operator a terror of clicking on new mail or links. I don't know how to cost that. Maybe a major intrusion every two years, at one hour for a careful reinstall plus three hours to clean up and migrate stuff? Kiss another $800 goodbye, but how do you cost out fear and hesitancy? How do you cost out embarrassment over revealed secrets? Lost goodwill? Random crashes? Shrug. Too hard for me, let's ignore it.
Anyway, we're up to $1000 plus the sticker price of software plus some difficult-to-quantify losses vs $300. The $1000+ install has access to a far wider range of software but it's harder to install and you have to pay for most of it. The $300 install has instant access to four thousand packages at no extra cost.
And the harder you look at it, the worse it gets.
For example, factor a Mac into the table, and even with higher hardware costs it might beat both other contenders in the long run (or maybe it'll only pound Microsoft into the financial sand), depending on how much use you make of Fink vs pay-for/black-box software.
Got time? Spend some of it coding or testing
Now go and get a life. (-:
Got time? Spend some of it coding or testing
Hi gang -
I hate M$FT more than most people, but in the great book "Everything You Know Is Wrong" (roughly a collection of 50 generally liberal essays about various topics) the chapter on U.S. antitrust regulation is pretty revealing. As I recall, the main claim is that its origin had little to do with protecting the "little guy" but was actually the creation of local and regional business interests in the late 1800's as national companies first started to gain real power. That is, it was created by established powers in an attempt to use the U.S. government to help fight newer competition. (Gee, does that sound familiar?)
Further, the chapter discusses how some famous U.S. antitrust cases (Standard Oil, etc) were really far less drastic in their results as people often claim or believe.
Tom (the FoxPro guy)
Either that or you're smoking something unseemly.
This box only stops for hardware faults (specifically, dust deposited on the memory sticks by the CPU fan), and it runs DNS, web and other services for scores of domains and fends off at least three attacks a day. As well as being a workstation. It's x86 and very little effort has been put into locking it down. Updates are done rapidly and semi-automatically.
Microsoft are definitely chasing tail-lights here. Distant ones, too.
Got time? Spend some of it coding or testing
Well-crafted sarcasm deserves a rating that contributes to its karma.
Got time? Spend some of it coding or testing
When I compare my workstations, from now and ten years ago...
1. 2005. My Windows XP desktop, running MS Office 2003. Total cost, hardware and software, ~$2000.
2. 1995. IBM Unix workstation, running Interleaf and emacs. Total cost, > $10,000
There's no comparision. And, I am convinced, if it weren't for Bill, I'd most likely still be using a $10,000 IBM workstation, running Unix, Interleaf and Emacs.
Bill has done something right.
I'm a software visionary. I don't code.
The monopoly also undermines the quality and the variety of the baking ecosystem, and killing off the local bakeries also kills of the local suppliers to those bakeries, diverting the demand to only distant bulk suppliers so it hits the whole economic ecosystem from keel to crowsnest.
Got time? Spend some of it coding or testing
And no I did not RTFA.
This is a stolen sig.
Another +1 Insightful for the parent please!
Got time? Spend some of it coding or testing
Got time? Spend some of it coding or testing
Yes, please, a +1 Insightful for the parent, if you would be so kind? (-:
Got time? Spend some of it coding or testing
correlation is causation. correlation is causation. keep telling yourself that.
Otherwise, we'd still be using Netscape for $30 to $50 a pop.
Not directly, at least.. my ISP gave it to me as part of their software bundle.
You pay those high prices because the market for the software is small. Niche software can't be economically produced at mass market prices. Even if they sold the software at cost, it would still be expensive.
Mea navis aericumbens anguillis abundat
You are forgetting that copyrights are not a natural law property right, but straight and pure coercion over what people can freely copy backed by the full force and might of the federal government. Nobody uses force and coercion to copy something, but to controll copying they certainly do exercise force and coercion at every level of society, both personal and business.
The fact that they leveraged this in other markets was made possible by copyrights, and thus by government force.
I think perhaps it would be more accurate if one said, that in any market MS enters, they force the existing players to lower their prices by either selling cheap 'good enough' software (that has wide open holes, but the PHB types buying it don't realize that until later) or even giving it away, until those existing players are first forced to lower prices, and then are lucky if they arent forced to abandon the market completely.
MS isn't about making better products at reasonable prices, or even about fair competition.
MS has the unfair advantage of having a near stranglehold on the 'consumer' desktop OS (and that includes business 'consumers' as well), and if they decide they want to control a market, anyone currently in that market is doomed. (With one exception being if they decide to buy one of the existing companies, in which case the owner(s) will make a few bucks, but the employees will eventually be shafted - and any other competitors will still be screwed)
Microsoft might lower prices, the way WalMart lowers prices when it brings its huge economy scale to a market. But they also turn the standard quality level to crapola.
--
make install -not war
I think that Microsoft *has* caused prices to go down dramatically to the point where the *only* viable competition can be open source. Here is my reasoning (I am a businessman, not an economist but the two have some overlap sometimes).
When you develop proprietary software, you absorb the entire cost of R&D as well as marketing in advance, and then you sell licenses in order to make that money back, along with a profit margin. The actual boxed sets only cost a few dollars to produce, but the research and development is where the major costs are, and these dwarf the production costs pretty heavily.
So, if you can sell twice as many of something than your competitor, you can actually sell the product at a lower cost than your competitor's break even point. I believe economists call this "economy of scale." You can even do this at the same that you use some of the profits to subsidize research and development of other projects. Whether this is predatory or not I will leave to lawyers and the courts (I suspect the answer is "it depends").
Now, if you are a company which is smaller than MS, you cannot compete with Microsoft on the basis of volume. So Microsoft is able to develop (often better) software faster because they already have achieved scale in these markets. The other companies cannot compete and they slowly sink into obscurity (re: Corel, etc). Some of this may be predatory, and the rest is the fact of the market. So, the result is that you cannot beat Microsoft at their game if you play by their rules. They are bigger and they will *always* win because they can make money on a more marketable product at a lower price than you can.
So, what about competition? Is there no hope? Actually there is. Open source actually is more efficient at spreading the development effort around so that needed features get added with less general expense. Therefore the pace of popular open source projects easily dwarfs Microsoft's, the total cost of ownership is lower, etc. Linux, OpenOffice, Mozilla, etc. actually beat Microsoft at their own game by reinventing the rules (which is what all successful businesses and projects do anyway). So open source will reduce costs even further to the point where Microsoft cannot be profitable and compete.
LedgerSMB: Open source Accounting/ERP
Funny, the anime galleries haven't loaded for over a month. Perhaps the site admin took them down because his 1.1 mbps SDSL connection couldn't handle the the continual slashdottings ?
From what I can tell, FEE is not Republican funded, though it certainly is pushing a free market capitalist agenda. It's a libertarian think tank that is basing itself around the ideas of an obscure Austrian economist, Ludwig von Mises. They sound somewhat similar to the Ayn Rand worshipping Objectivists, but perhaps milder. Perhaps.
While there's a definite kook factor involved (they're against public education), I think they're sincere, unlike your typical Ken Brown type stink tank which spreads it's collective legs for the highest bidder.
It's not offtopic, dumbass. It's orthogonal.
While this guy has some pretty shoddy logic in a few places, I agree by in large with his point. The goverment should not be in the business of regulating these things. First off, they shouldn't because they suck at it, (did the punishment have teeth in the end?). Hardly at all, because, the second reason they shouldn't be in the business of regulating this is because in the end, the gov't has a vested interested in having strong global companies, and regulating them in this way creates a blatant conflict of interest.
Anyway, if Sun, Netscape et al had taken their huge IPO bucks and spent it on making better products instead of attorneys, they might be in better positions now than they are. If Netscape had a better product with 4.7 than IE 5, people would have continued to use it. Firefox is better than IE 6, and lo and behold, its gaining market share. The ipod is the best mp3 player, and wow look at that, its winning. Linux is a solid and arguably better server system than windows and wow look at that, it's gaining market share.
In 96-97, you could pay 30,000 to Sun for a unix system, or you could pay 3-4000 for a small windows server system. If you're a small business of 10-15 employees, you don't have 30k to drop on a file/print server. That is why MS won, and it's why they are losing now. Now I can go to a small business and sell a linux server for 1-2k and a comparable windows server still costs 3-4k.
Now, MS can look back and say "we would have won if we didn't have to waste millions on antitrust litigation" and even when we win politically we'll lose. And the antitrust litigation didn't mean squat, the punishment doesn't have teeth, and doesn't change anything, it was just a big waste of time and energy just like this guys said, that could have been used to innovate, market, execute, instead it all ended up in the pockets of attorneys...
Hi. Let's look at the boom of home PC usage from 1995 to the present that wasn't really there from 1988-1995. When you sell a much larger volume because you have significantly more customers, you can afford to reduce your price.
If you mod me down, I shall become less powerful than you could possibly imagine.
Just look at Linux vs Windows. Can't get much cheaper than $0.00.
Imagine if MSPaint didn't exist. Photoshop would cost even more!
A free graphics editor (think the GIMP rather than MSPaint) allows/causes the professional quality software to have higher prices. When Photoshop is the only software available, Adobe has to choose between high prices or market penetration, and market penetration usually wins. Do you want 10 sales at $10,000, or 1,000,000 sales at $100? With some of the functionality available for free, Adobe has already lost most of the low end of the market, but potential customers needing more will pay more, resulting in higher prices.
When Microsoft enters a market, they compete on price, because (until recently) they had little interest in profits from products other than MSWindows and MSOffice, but they had great interest in destroying competitors. They could not compete on functionality because their software is barely functional. The downside of MS entering a market is:
1. A very poorly designed application from MS.
2. Removal of competitors means there are fewer good applications.
3. The quality of all software suffers.
The other downside of their monopoly was many good ideas were discarded because they either:
- competed with a MS product, or
- MS could easily enter the market,
so there was no chance of funding. MS proved this the only sane choice by destroying the existing software companies (Lotus, Ashton-Tate, WordPerfect, every other PC software company existing in the 1980s) and the few that tried anyway (Netscape, Real). Yes, I know those companies made mistakes, but who owns each of their markets today? Why isn't there any commercial competition? The only method to compete with MS is to give software away, and even then MS will do its best to conquer.
I dislike the lack of alternatives. I dislike poorly designed software. MS's lowering prices is the cause of this, and should not be celebrated.
I spend my life entertaining my brain.
Xbox 2 software rumored to cost $55 per game. That doesn't seem to be a price decrease from $50, now does it?
"It takes half an hour to do an install of Mandrake Linux on modern hardware. Updates are set to happen on automatic, so zero time there." You are joking. If this is true you would be the first unix luser, ooops lunix user, sorry, my bad, linux user in the history of the world to not endlessly tweak their config files thereby losing several years of their lives.
Suppose one company gets a commanding position in a market where network effects are significant. Then, maybe, this lucky company pumps those network effects by making compatability with their product a constantly moving target. And suppose they take advantage of their larger share of the market - not necessarily a majority, but larger than any one of the handful of their competitors - to cut their prices (or to not raise them while adding features). In short, they use every dirty trick to undercut their competition.
Now, suppose you're not Microsoft but one of those competitors being extinguished. Do you raise your prices in hopes of losing market share yet more quickly?
D'oh! This is basic economics so simple that even a slashdotty (is that you , Chad?) can understand it if it's fed through a straw. For your homework assignment, look up "how to lie with statistics" on google. Those of you who are too good for the dot can go on to think about laying hands on a copy. I doubt Timothy will bother to read it, though his lack of attention when posting "news" shows that he could stand some mental exercise to tone up that gray matter.
Yes, Chad, you can go shopping if this has given you a headache. That's right, moo like a nice consumer, and lay pats of bux all over the stalls at the mall.
This article is just a troll. Sentences like this:
"this is a recent invention of socialist-minded policy wonks like Mr. Litan"
"The antitrust laws provide a means by which sour-grapes competitors can achieve through politics what they fail to achieve in the marketplace"
Not even worth reading after the first paragraph.
meh
I see a lot of comments here talking about how Microsoft "got into" markets at such-and-such a time. It's worth mentioning something about this: Microsoft was ALREADY IN the two markets where they dominate, right from the start.
PC operating systems? Heh, yeah. Word processors? Word 1.0 came out in, I think, 1983... with mouse support, yet. Graphical spreadsheets? The spreadsheet that you could buy for your Mac the day it came out was Multiplan, and Excel was only a year or so behind that.
Microsoft has always had software available for all of the obvious "everybody has one" apps. Most of those programs laid around being unprofitable for years before they went anywhere; does anybody else remember the old saw about not buying anything from Microsoft with a version number less than 3.0?
Not that this makes 'em any less bastard monopolists... but they don't "jump into" markets at some magical "right time." It's just that they're in all of the markets, ALL of the time, waiting for the market leader to stumble.
They seem to be making the logical fallacy of assuming a specific causal relationship between two events which are merely related. Just because MS is often involved in market segments in which prices fall doesn't mean that MS has itself caused the prices to fall.
I think it more likely that MS generally enters markets which are new, but growing -- and that the natural pattern in such markets is that they start out as specialty niches (thus expensive), but move toward commodification (and lower costs) as they become more mainstream.
Which probably just means that MS is just good at jumping on existing market trends.
On the other hand, I do think an argument could be made that the entry of MS into an already-commodifying niche market speeds the commodification, and thus speeds the lowering of prices -- when such a widely-recognized brand name moves into a market, it validates it and possibly makes it seem safer. Which is important to a lot of consumers, especially PHB-types..
This space intentionally left blank.
Netscape died and created Mozilla now firefox is fighting again.
Microsoft destorys StarOffice StarOffice become opensource ie OpenOffice and starts fighting back.
Seeing a very bad trend here.
It is not killing its competion that is become OpenSource just winning a short term victory because they are coming back. Linux has control of the markets they have wanted. If it stays the way it is linux will get control of the desktop market like it is starting to take control of the Media Centre market that was ment to extend Microsoft revenue base.
Please note Microsoft is lossing the IIS vers Apache to.
Just like place with the blue bibs
When you have free market, people complain, when you don't have a free market, people complain. Make up your minds.
P.S. I don't like linux. *Shrug*
Sure, Microsoft's entry into those markets caused prices to tumble: Microsoft knows how to undercut competitors. But those markets were ripe for the picking: some company would have entered them quickly.
The problem is that with Microsoft's entry, prices have stopped falling. Microsofts undercuts competitors to drive them out of business, but once they have a monopoly, they hold prices constant or even raise them. It's standard monopoly behavior: first, you give up profit for acquiring the monopoly, then you reap your rewards many times over. Internationally, it's known as "dumping". While in the short term, it may cause prices to fall, it is not something that's good for customers.
OpenOffice with StarOffice is the strongest competion they have ever seen in Office Suit.
Number one OpenOffice is forcing Open standards by using the EU.
Number two OpenOffice cannot be undercut ie Zero Price tag.
Lack of features is a short term problem. If OpenOffice get to big of a foot hold microsoft will loss a market.
with over 90% of the office products market, 95% of the OS market in MS hands, I don't see MS prices dropping by and real percentage. Which would be a benefit to consumers.
There was an unknown error in the submission.
Not that I don't agree with you, but I can't help concluding that this kind of thinking directly undermines the justification of the capitalist system. Consumers who keep choosing what's popular instead of what's good create unduly powerful monopolies instead of the ideal of healthy competition.
1. I don't think, say, the price of a Windows file server, any way you want to configure it, has yet come even close to what the price for a Novell server used to be. So the "but MS will raise its prices sky high and ruin us all!!!" scare scenario shows no sign of happening.
In fact, au contraire, some products are actually getting cheaper versions than before. E.g., XP Home Edition is cheaper than what you used to pay for Windows 2000. Yeah, it has some features cut out, but they're features 90% of the home users never needed. (And the other 10% can buy the Pro version at the same price as Windows 2000 used to cost.)
2. I know "TCO" is a swearword among us nerds, but that's a part of the price too. And with MS it's another reason why it's cheaper. You can use more common skills and need less work to use more than one program from them.
E.g., with Novell you pretty much got _only_ that: a file server. E.g., you used to get a bunch of disparate programs instead of Office, that didn't even have the same interface or talk to each other. (Good luck embedding a Lotus 1-2-3 table and chart in WordStar.)
3. "But IE doesn't innovate!" I keep hearing that, but it's the most piss-poor argument. First of all, IE is their free product. Second, it already works, and it has all the features that a browser needs.
You know, at some point it's time to stop bloating a progra. It's a browser, not some enterprise swiss-army-knife platform that does everything including version management, bug tracking, and is its own widget set too. It just has to be a window into the web, and let you see web pages. Much like a TV just has to let you watch TV programmes. No more.
4. You have a very warped idea of how a monopoly works. In your bakery example, there's nothing to keep a new bakery from opening once the "monopoly" raised its prices. The world isn't an immutable autistic nerd fantasy where nothing new normally happens, and nothing can be undone. IRL it's damn hard to actually get in a situation where you can rise the prices again sky-high with impunity.
5. Ah, but maybe the entry prices are too high? Not for another big corporation. A lot of other big corporations are busy trying to do the same price undercutting to MS.
E.g., OOo is mostly paid for by Sun. E.g., most of the work on Linux comes from people paid to do that, not from lonely bored nerds. Etc. They just pack it into a nice lie, instead of saying "we're undercutting MSs prices too". But it's the same thing. OOo is Sun's attack on Office in the _exact_ same "we'll give ours for free" way as MS killed Netscape.
6. And most importantly, as was said before, MS has to compete with itself all the time. Unlike, say, Coca-Cola (as another near-monopoly) which can sell the exact same product for eternity once it got the market, MS must give you enough reason to upgrade from your old Windows 98 SE to Windows XP, or from the old Office 97 we still use at work to Office 2005. That's what really keeps them maybe not "innovating" spectacularly, but trying to make a better product and keeeping the prices sane.
A polar bear is a cartesian bear after a coordinate transform.
Does microsoft cause lower software prices? at the expense of the cometing company, yes. the only way to make your product sell is to over something better than what microsoft has and offer it for next to nothing. then again, then just buy out the company and their own products' prices appear to be about the same. its $100-300 for a copy of windows (for the desktop) no matter how long ago you bought it ( this goes back to the win95/98 days).
Lizard "Never let them set limits on your mind!"
Amiga office productivity software used to cost the half or less than Microsoft Office in the 1989/1990, and on the whole the Amiga TCO was way lower than any IBM compatible PC.
I seem to recall that was even a big part of the the whole todo about illegal tying. For those of you who obviously weren't born yet:
Netscape was dominating the browser market which MS saw as a strategic risk. They introduced their own browser (IE) but couldn't compete on price or quality. In order to control the market, so they illegally leveraged their monopoly on the OS market by making it economically impossible for a distributor to install Netscape and making it as difficult as they could to remove IE afterwards.
The above is on the record. Below is the product of my fevered imagination:
I believe they also used their leverage to introduce proprietary html extensions and badly formed html which were designed to break Netscape. As evidence, Front Page adds a lot of very peculiar crap which has no reason to be there but does cause older Netscapes to crash. When used in advertising, these would cause browsers to crash apparently at random.
Just check out the price of games. Halflife2 and Halo2 and Doom III are just so cheap due to Microsoft entering the games market some years ago. Certainly down by more than 60%.
Seriously: it could be argued that prices of game consoles are cheaper due to Microsoft's presence in the market. But not the software. And i suspect that Nintendo and Sony would be at eachother's throats anyway.
they are absolutly correct. where there is competition, prices will fall. where there is none, there will be little incentive for a decline in prices. This will happen until the larger company uses its monopolistic power to sell below the competitors cost.
There is an example related to microsoft. Borland drastically reduced the price of quattro pro and paradox to ~$30 in order to compete with access and excel. microsoft did not appreciably lower prices to match borlands act of desperation, so this is a good example of competition if not monpolistic power.
A rental model may sound good from both the standpoint of Microsoft and of most corporations (who'll switch often) but it also introduces a risk to Microsoft which could turn out to be a great benefit to both the clients and the competitors; investment.
Users of rented software are not investing as much in the new software, they aren't making the commitment to use it for a number of years before ROI pays of. If a competitor comes out with a good product, they could switch any time they want (as long as implementation costs are reasonable).
Then again; Microsoft will probably turn the rental-licenses into tranglehold-licenses like they normally do.
Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
Yeah, I've not read the reference, but I'm pretty sure that in those sectors Microsoft's been involved in, prices has gone down but, why?? It seems to me that this is more or less a 'spartanian tactic' (sorry for the bad english). There's a myth we've all heard of about spartanian guys who dropped ther childs to a hole with wolfes (I'm not pretty sure, indeed , of where I've heard of this. Maybe it was on a Conan comic, or in the great '300' from frank Miller). Anyway, you drop your childs into a hole with wolfes, and a few days later, you rescue the survivors. You can be sure those survivors are 'the best of the best' (from that point of view). Microsoft simply gets in as a tank in the middle of a hardware store. It buys the other companies, ir it simply bundles everything with his OS, or whatever, so, the tiny amount of software companies that survive this 'wolfes hole' has done so because of ther so low prices, or so high features. This is just evolution , but the wildiest one.
I haven't tried it, but can't every version of Office that is still supported open documents from later versions if it is updated with the free Office Converter Pack?
Maybe you meant that Office Converter Pack does a lousy job of letting Office 2000 users open Office 2003 documents, but you weren't very specific. However, Microsoft seems to provide updates for older versions of Office that allow them to work with newer versions.
TO START
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Where's the 'ANY' key? I see Esk, Kitarl, and Pig-Up...
No, this isn't a troll.
Granted Emacs isn't in the modern idiom. But in its day it was one of the most powerful and sophisticated bits of software anywhere, and it is still vastly more capable than many modern 'Integrated Development Environments'.
Emacs, and the GNU project of which it is part, predates Microsoft. And it has always been free, as in beer as well as as in speech.
Then there are the BSDs. And the X Window System (and most of its window managers). And Linux. And Postgres. And so on and so on. All of these are big, complex and very useful bits of software. None of these were 'caused' by Microsoft, or arose as a reaction to Microsoft. And all of them have always been free. And now we have KDE and Gnome. You could argue that KDE is a conscious reaction to Microsoft, and Gnome is certainly a conscious reaction to KDE, but once again these things have always been, in both senses, free.
Microsoft didn't make them free. Microsoft didn't drive their prices down. They are free because they exist as acts of creativity and generosity, not of commerce. And the market can't compete with that.
I'm old enough to remember when discussions on Slashdot were well informed.
You see, real life monopolies are more complicated than the bakeries example. The price undercutting on individual items is the facet that the monopolist _likes_ you to see.
In reality, a workable monopoly is made of several interlocking parts. Where if anyone wants to compete with part A, they get part B and C brought against them. _That_ is what allows a monopoly to rise prices again, not the fact that the old bakeries closed down and new ones can appear back at any time.
E.g., let's say I'm a telecom monopoly, and control both the phone network _and_ the physical phone manufacturing. Let's say you're a bright young entrepreneur, you've invested a lot in R&D, and you try to challenge my handset business, by selling your own cheaper and better handsets. Because I also control the network, I can block your phones from connecting to it. Congrats. You have a ton of great phones to sell, except noone can use them. Sucks to be you. Your company dies.
That's the kind of interlocking combination that allows one to stay a monopoly even while offering less value for the money.
Or to give a MS example, consider the following classic example: in the days of NT4, Novell wanted to make their servers too able to act as an NT domain controller. Sure, you could go ahead and buy your workstation OS from MS, but you would also be able to keep your old Netware servers for the login.
Microsoft didn't even pretent to play fair. It simply informed Novell that if Novell ships such a product, Microsoft _will_ break it. And they did. They did every dirty trick to stop the clients from being able to use a Netware server for that. Novell eventually gave up.
This incidentally also shows why such an interlocking monopoly is bad for the consumers, even if they undercut some of the prices a little. It's used so that if you want product A, they can also use it to force you to use their products B and C and D too. Each part not only protects the others, but also serves to push the others down your throat.
If you want to use NT clients, hey, can we also interest you in an NT server to keep your network still running? You don't want NT clients? Well, then good luck with those Office docs you get as attachments from your business partners, 'cause we're not porting that to some other OS. Etc.
And such an interlocking nut is nigh impossible to crack without government intervention.
Even for a big corporation, the effort and cost to compete with that is entirely unreasonable. E.g., if you wanted to compete with Windows, you don't just need to write a good OS, you also need Office, you need server software, you need client software, etc. (Just think of all those people who asked "but will I still be able to run MS Word?" when you told them to switch to Linux. QED.) The entry barrier is lifted a helluva lot higher than just opening a new bakery.
A polar bear is a cartesian bear after a coordinate transform.
It's interesting with all the M$ bashing about bundled, that when the Macintosh includes a basket of (not bad) software it's considered a good thing. Microsoft basically includes the same package of software that's bundled with the Mac: photo editor, video/audio player, movie maker, word processor (either word pad or cheap version of Word), chat client, etc. In many cases, some may feel, that these aren't as good as the Mac version but it's the same bundle that the Mac fans point to as one of the advantages of the Mac.
You can't have it both ways (or maybe you can).
"Most consumers love Microsoft's products."
I guess they love them for the facts:
1) Spyware
2) Viruses
3) Not secure by default
4) Proprietary file formats that prohibit making changes to any other office suit.
5) Proprietary protocols.
I guess 4 and 5 are good for the market because they DON'T let others into the competetition game. How about open formats and protocols and let the best product win.
I would argue that competitors in the Office Suite area are less expensive because they lowered prices in response to Microsoft's dominance. When Microsoft wasn't dominant, they charged just as much as Microsoft. Don't forget that Microsoft was the first company to bundle a word processor and spreadsheet into an "office suite" that was cheaper than buying each app separately.
If I remember correctly, WordPerfect and Lotus 1-2-3 were still big players when Microsoft Office made its debut in 1993. Remember, most users still used DOS apps in Windows or used DOS as their main OS at the time. The price for individual apps like WordPerfect, Lotus 1-2-3, Word, and Excel was around $500. Microsoft, in a brilliant marketing strategy, bundled Word, Excel, and PowerPoint for only $800. MS Office was an instant hit. When WordPerect and Lotus responded with their own office suites (after buying or partnering with other software companies), they weren't much cheaper than MS Office. It was only after MS Office had the dominant market share that competing office suites and individual apps (like WordPerfect) lowered their prices significantly. Too little, too late.
TO START
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Where's the 'ANY' key? I see Esk, Kitarl, and Pig-Up...
Of course there is going to be lower prices where Microsoft is competing. If you have to compete with someone who breaks all the rules it is hard. One of the things you are going to have to do is lower prices.
Microsoft is a large company. If you are competing with them then you are facing a lot of competition (a significant proportion of the total marketing budget for the whole software industry is Microsoft's) so of course there is more pressure on you to lower prices.
"First, in a poll of adult computer users taken by USA Today, only 6 percent said that "reducing Microsoft's influence" was a "major issue" to them. Most consumers love Microsoft's products. " As much as 6% of computer users think reducing Microsoft's influence is important? In other words most people who have actually used a computer that is not running Microsoft software (windows) think Microsoft is a bad thing, so bad in fact that reducing their influence is a "major issue". Hardly anyone thinks reducing Esso's influence in the oil market is a major issue but there is a whole campaign to boycott them, people hate Esso. Sounds like people hate Microsoft's products to me.
Just because prices fall because a company exists it doesn't make it good. It is well known that companies with too much market power lower prices to squeeze out competition so they can raise prices later and stop innovating (predatory pricing). This is a problem where there are barriers to entry in a market. Computer software has some of the highest barriers to entry of any market. You have to spend almost all of your costs (development costs) before you make a cent and there are proprietary standards that mean it is very hard to compete with an established rival since everything uses there standard.
This guy actually doesn't believe in market failure. Of course he thinks anti-trust laws are bad.
Has java/linux/gimp/gnu/kde/openoffice/firefox/thunder bird :
.net was a direct response to java)
a: lowered prices
b: caused a quick price gouge and longer term tie in (tick)
c: caused innovation (look at microsofts efforts now -
d: caused lots of law suites (that is SCO true!)
Microsoft do not cause lower prices in markets they go into. They go in and try and choke the competition, running at a near loss if they have to (or a loss!) until they can bully other companies out, and then sit on their fat sluggish ass and absorb the market wealth.
So in one sense, Microsoft entering a new market does cause competition, the kind of competition Microsoft doens't like when other companies step on thier turf.
#hostfile 0.0.0.0 primidi.com 0.0.0.0 www.primidi.com 0.0.0.0 radio.weblogs.com
MS can also make items standard part of the OS - with programs not as good, but maybe enough for some people to not go out hunting for other items. Over the years networking that didn't need novell, Internet Explorer and more recently firewall, zip file browsing, GoBack (System restore in XP) and CD burning. Never great but maybe enough for someone to think (or in many consumer cases, without realising there is something better there) that they don't need anything else.
So an innovative third party can enjoy a few years of having something that poeple want to buy, but as soon as MS come up with their version of it (or maybe buy it out) that company is screwed.
Professor Karmadillo Songs of Science
Just look at the Steve Ballmer video http://slashdot.org/article.pl?sid=05/01/24/015721 8&tid=133&tid=109. In the video Windows 1.0 is selling for $99.00 retail, now Windows XP Home sells for $184.99 retail.
Only if your time is worthless. Bugs, missing features, no (or very little) standards, IP bound formats, no security...
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.
Isn't Microsoft doing what society tells them? i.e. try to be the richest person around. Isn't that the message of society today? Microsoft was clever (and lucky) to take advantage of all the circumstances and become the king of software at specific fields. That's something that we all like to do, but now it is increasingly more difficult. So we shouldn't blame Microsoft for being greedy, they are just a reflection of our society.
There is a highly correlated inverse relationship with software prices and the rate of piracy.
Ergo - piracy actually keeps prices down.
Of course Software companies would have you believe the opposite: "We need to keep this price so high to combat piracy". But the software companies know damn well what is the most optimal price for their marginal returns to be optimized.
It's not sufficient to say "Y happened after X, therefor X caused Y". This is so old a logical error that it has a latin name (:-))
To prove X causes Y, you really have to show there is a causal realtionship, not just propinquity.
--dave
davecb@spamcop.net
Microsoft DOES copy other companies GUIs. The Mac's GUI, in fact. The last time MS tried to innovate, they gave us BoB!
Slow down, cowboy! It has been 4 hours since you last posted. You must wait another few hours.
Microsoft prices are just enough to kill the competition and have very little to do with economics. Lets take a look at C compilers..
Once there was Borland, Symantec and Microsoft. You could generally get these compilers for $300 or less. Symantec had a real good one too! Symantec got out leaving Borland and Microsoft. Microsoft continually put APIs in theirs that Borland could not obtain stable versions for. Now that Microsoft owns this space as a monopoly the same compiler is about $1000 or more.
Linux does far more as in the orient and Europe where adoption of open source is more pervasive so Microsoft lowers the price of their OS to $30 and less. And they also often include office at a ridiculasly low price when compared to North America.
I believe I paid $75 in 1995 for Windows 95. A current retail version of XP is much more than this today.
No industry I know of gas the profit margins of Microsoft. While this is good for investors it is not very competative. Microsoft will file useless patents and tie up anyone in court that they deem a threat to their pricing model. This being their current strategy.
While it is legal for "Microsoft Only" contracts with Dell and HP there will be very little competition. But this does leave room for someone to come right up the middle and be the next Lell Computer company. (L-inux).
I spent Sunday on two different service calls. One to a private residence. One to a dentist office. Each one had a new Windows PC with no application software. (Linux was a no-go for each customer.)
Software I installed and/or updated included:
AVG Anti-Virus by Grisoft Home PC: free Office PC (pro version): $33.30
Open Office (incl. Spreadsheet and Word Processing) Home & Office: free
Zone Alarm: Home PC: free Office licenses including download: $32.00
Spybot Search & Destroy: Home & Office: free
______________
Total software cost: Home: free Office: $65.30
According to compusa.com, the current price for Microsoft Office standard edition is $399.99 AFTER you mail in for a $50.00 rebate.
SOooo......
Based on the article, Microsoft's products feel 12%, while the competing products in the consumer home environment fell by 100% (to free). If you want to give Microsoft "credit" for "motivating" people and companies to create free software, that is fine by me. But Microsoft is only a recent entrant to the firewall market, they are only preparing to enter the anti-virus market, and deficiencies in their products are what has enabled the entire anti-spyware market that they don't currently participate in at all.
Live Long and Prosper - Thanks Leonard. You are missed.
I would say that it's right on the money! Where MS decides to compete (i.e. there is money involved), the Open source movement follows to compete. That saves money all around!
Sure. Let's give kudos to the Nazis, too, because if it weren't for their evil, none of those interned in concentration camps could have demonstrated such amazing spirit.
WTF?
Sometimes I have to say to hell with it and just eat my jellybeans.
Wow!!
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I'm sorry I misread you; I just couldn't believe anyone would claim that!!
I used both at the time -- and IE didn't have enough advantage to win by itself without the bundling.
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I think this is a typical case of mistaking correlation for cause and effect. Just because one can find a correlation between software markets, that Microsoft has entered and falling prices, it does by no constitute proof that Microsoft's entry is responsible for the drop in price. Assume that markets with large audiences, tend to scale well and therefor the economies of scale allow to bring down prices (in combination with competition that is attracted to the huge market). Now think that Microsoft only enters markets where they believe (or see evidence) that the market is really big (in combination with price undercutting tactics [think IE for free?] if they see a thread to their market dominant products). Voila! You have a correlation between markets that Microsoft entered and falling prices. That does not exclude, that the prices would have fallen anyhow. Just my five cents K
Busy helping non technical users of OpenOffice.org - http://plan-b-for-openoffice.org/
Thus, any company trying to compete with the monopoly would have to lower its own prices, reducing its profits,
Two interesting symptoms have developed in the case of Microsoft in the way of differential pricing depending on the buyer's ability to pay. If the market makes it possible to do differential pricing, then it is more profitable for a company to do it. It is possible for Microsoft to use differential pricing and it is doing so.
To a small extent Microsoft does this in the domestic U.S. educational market (where the "get them accustomed to product X now so they'll buy it later" is an added long-term advantage) but moreso overseas where
- Implicit tolerance of piracy accomplishes the same goals as educational discounts in the industrialized world by allowing people to become attached to their products before they are willing to pay the going price.
- Explicit creation of things like Windows XP Lite for Thailand which are not substantially different than the product sold in the industrialized world, but has some deliberate crippling mechanisms added to turn off full functionality that would cost them less to leave in.
They've had to move towards explicit differential pricing because their usual business model is dependent upon consumers respecting their claims of intellectual property. If potential customers get too accustomted to piracy, they'll balk when the sheriff demands they cough up US$300.The "one market price for a product" model has been practically exhausted by a company that owns over 90% of the desktop OS market and office productivity suite market, so new ways of increasing sales by extending into new markets, pushing customers into more frequent upgrades or a subscription service model (all 3 much discussed here) and using novel techniques like differential pricing are ways for Microsoft to grow.
And, yes, DRM (TCPA) will give them more fine-grain control over differntial pricing techniques than they have now. Expect the existing unfixed rampant computer security problems to be used to sell DRM to customers.
"Provided by the management for your protection."
Especially true '97 when people mostly had slow modems to fetch large programs.
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Hi:
Buying anything at WalMart yields goods with a lifespan measured in days, or , in the case of clothes, washings. Clothing bought at Walmart only lasts a 5 or 10 washings, then it comes apart.
But American clothing manufacturers have been put out of business by the predatory purchasing practises of WalMart. Now it's really hard to get a tee shirt that will last for years. Same for Levi's jeans.
Tools from Walmart are good for (maybe) one liteweight repair job. Some of them, you need to buy 2 or 3 for the single job. And if they break while you're pushing hard on them, you can get hurt.
But Craftsman tools from Sears are guaranteed forever! If you find a broken Craftsman wrench in the roadside ditch, you can take it to Sears for a brand new one, no questions asked. Clothes from LL Bean last forever, and if they don't Bean's will replace or repair them, free.
But Sears is losing money...go figure!
too lazy to login.
Indeed. Lower prices are more attractive in some ways, but are they better? Just ask some of the companies that have done business with WalMart, or even better the competition.
I'd imagine it is similar with MS, they can absorb costs that others (paid products) cannot. Suck down the extra $25/copy of a compatible product, and in the end you're still making money because the product only works on your $150+ Operating System.
Whenever I think of WalMart I think of this:
The heating was dead in my apartment complex in the midst of some colder-than-usual winter weather. Even with blankets and an AMD CPU on my computer I couldn't keep warm.
I took a trip down to the local small hardware store, but unfortunately it was 4:25 and they'd closed at 4:00. I was just about to leave when somebody came to the door, asked what I needed, and let me in. I managed to get my heater and my toes survived the heater outage.
The heater was on sale too, so it really didn't cost much more than it might have at WalMart. Getting customer service when I needed it at almost a half-hour past closing, however, was something I would never expect from a place like WalMart (or any such larger corp).
Think along the same lines as MS. Yes, you can call and sit on hold with their customer-service department, hoping to get some service. You can email and get a canned answer. But some of the real love I've found came from smaller software companies with real people on the ends of a phone or email message... no canned answers and real solutions.
I wonder whether the perceived value of Microsoft as a overall "lowerer" of prices isn't a trick played using the time scale. I mean 1988 to 1995?
1995 was when Microsoft started raising the price on Windows.
Any study of Microsoft and software prices that ignores the last decade is going to be flawed.
Fanatically anti-fanatical
I was there -- I saw IE go from nothing to own the market in a short time without any large benefits compared to Netscape. If the bundling wasn't the major part, what was? You make claims so give supporting references (not from Microsoft paid research, plz).
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If only that were true ...
IE is so in need of fixing and has been for years. Sure they've dabbled with it but couldn't they put a team on it for a couple of months to fix the css bugs??
Couldn't we ransom them with a ddos attack to fix IE? We all agree to make 50 hits to a page on CSS compliance on the MSDN site at say 1500 hours EST every Tuesday
Any takers ...
...and the people who choose to look at the company's products and policies as if it does are fated to never understand the nature and role of M$.
M$ is merely a cog in the wheel of the much larger international industry known as "x86." It's a synergy of hardware and software companies, such as Intel, AMD, ATi, nVidia, Maxtor, Dell, Samsung, Electronic Arts, Adobe and Microsoft (just to provide singular examples from each category of company involved internationally in x86), and it has been the efforts over the last 15 years of these companies (and the hundreds more who also serve the x86 markets) that have created the *economies of scale* that have produced the much lower software *and* hardware prices that we enjoy today, not to mention the vastly increased quality and capability of general x86 software and hardware that we enjoy today as well.
Simply put, to analyze M$ independently of the whole of the x86 industry is to join the blind leading the blind and all such conclusions will take a person straight into the ditch...;)
Initially I didn't find Gimp to be very intuitive but I gave it a try. Now I find Photoshop to be non-intuitive and Gimp to be quite easy.
Either Gimp leapfrogged Photoshop or my intuitions are now aligned with the Gimp way of thinking.
Coding Blog
I really have too little time now and got too many answers that I felt I should discuss. Otherwise, I would have answered outrageous claims by asking for references -- and ignored it if none were forthcoming.
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