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Windows Buyers Pay Patent Tax of $21.50 ?
An anonymous reader writes "Ars Technica has a story up about an estimate done by the Software Freedom Law Center of how much purchasers of Microsoft Windows are paying in 'patent taxes'. 'SFLA took the total of $4.3 billion dollars in legal costs for Microsoft from 2001 to 2004 and divided it by estimated sales of Windows XP over the same period — approximately 200 million copies — to come up with the $21.50 estimate. The organization added that North American and European customers, who pay more for Windows licenses than customers in other parts of the world, actually ended up paying more of this patent tax, and that people who pirate Windows pass their share of the tax on to paying customers.' The article goes on to point out several flaws in the study's logic. For example, the actual cost of a Windows OEM hasn't increased in the last few years; Microsoft isn't passing this cost directly on to the consumer."
One counterpart to this kind of study is this argument: If you think $21.50 is a lot, just imagine how much it would cost each individual customer to negotiate and license all of the patents in question? By centralizing the negotiation and licensing, Microsoft greatly reduces the total transaction costs.
That said, I'm sure a lot of these patents are absurd software patents that Microsoft decided it was cheaper or easier to license than defeat in court.
3. How much of the $21.50 is eaten up with legal fees?
Well, considering the basis for the $21.50 number starts by taking the legal fee and dividing it by the number of copies sold, the answer is simply ALL OF IT.
We call that a 'inelastic' demand. Note that it will react to price increases, but it takes huge increses to compensate a small supply difference.
On the case of energy, if it is expensive enough people will freeze, but won't be able to buy it. That's sad, but the model works. The point is not to tell nice things, but to be able to predict what will happen.
Rethinking email
It says right here http://slashdot.org/article.pl?sid=07/04/19/155321 9 if Windows cost any more Microsoft would be engaged in dumping and abuse of monopoly power!!
What about the people who work for Microsoft. What kind of patent tax do they pay? :-)
They don't have to pay a patent tax. However, they have to work with the TCO. Their maintenance costs are huge; and they have to support it. I wouldn't want to be in their shoes.