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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."
Wow, what a news flash, the cost of developing software is covered by the consumers. I never would have guessed.
"I use a Mac because I'm just better than you are."
1. How much of the $21.50 goes to the companies and/or individuals who hold the patents?
2. How many innovators (engineers, etc.) are employed as a result of the $21.50?
3. How much of the $21.50 is eaten up with legal fees?
I've got no problem paying a license fee as long as I am getting a significant amount of innovation for my money.
Toronto-area transit rider? Rate your ride.
These billions of dollars in legal fees seems to me all the more reason for Microsoft to release a commercial Linux distro.
*ducks and runs full speed from the pitchforks and torches*
Read my Very Short "Stories"
I'll admit, I only skimmed the article, but if M$ spent that much money, total, on patent legal fees, that money needs to be divided evenly against the revenue of all offered products.
Microsoft's pricing isn't driven by their costs, it's driven by revenue maximization. A change in their cost structure has no effect on the prices they charge; raising prices would reduce their gross revenues, which would be quite counterproductive.
Lacking <sarcasm> tags,
It's a good thing Microsoft doesn't sell any products other than Windows XP. And it's also a good thing none of this technology that was patented will go into any future products. The real price when distributed over the myriad of products Microsoft sells drastically reduces this figure. If you include just Office this figure will drop in half. Now you have to wonder how many of these patents apply or are financed by much higher end products, ie. Windows Server. Basically, $21.50 is the MOST a customer could be paying for patents on Windows XP. The real thing to consider, is whether the average customer will derive more than $21.50 in value from those features. I think they will.
Well, I guess its a good thing that I've never paid for a MS OS, or for an MS Office product.
This post written on a PC running Windows and Office XP. How did those get there? Hold on while I go look for my, erm, install disks... and just ignore that folder named "ISO-WAREZ". *flees*
There is no mod option "-1: Disagree" for a reason. "Overrated" is not an acceptable substitute. Post something instead.
...and years i kept asking for a stupidity-tax.
:)
now...there it obviously is!
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.
Or is this like if we considered Windows XP was the only revenue source of Microsoft during those years? And there I thought Microsoft had quite a few products (even if you don't count the "at a loss" ones).
Which ranges from $200-$400 for a real, new license of Windows! That's between 10% and 5% depending on the version of Windows.
So in a very real sense no cost is passed on to consumers; the market decides the optimal price for the product
This is true of many purchases for which a simple supply and demand model is adequate. This isn't true of many markets however. In markets for essential goods where there are few alternatives these models collape. The obvious example is the energy market. Rising prices should reduce demand, which should cause prices to fall again, until an equilimbrium is reached. This isn't the case however, costs are passed directly to consumers, demand never wanes and prices keep rising. This is a pretty simple example, of course, but not every market, and certainly not the software market, is a textbook example of supply and demand.
If privacy had a tombstone it would read "We did it for your own good" . -- John Twelve Hawks
That you're paying a "patent tax" is nothing new. You're paying a "tax" on everything. If you've ever bought a pack of smokes you're paying into their legal fees, for instance. It's really just a cost of doing business not related to development nor profits.
.GIF files. Windows comes with a media player that can play .MP3 files. Windows natively supports TrueType fonts. How much per copy is going to make sure they're on the up-and-up with those IPs?
What I'd find more interesting is how much of the cost of Windows goes into licensning patented software. MSPAINT can read and write
More Twoson than Cupertino
I couldn't believe this, there really is (well, was) a window tax. According to http://www.neatorama.com/2007/04/19/what-wont-they -tax/ ... Now, can we get some boards on the monitor please?
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WINDOW TAX
Pitt the Younger also tried a chimney tax, but found that windows were easier to count. People paid the tax based on the number of windows in their home. Result: a lot of boarded-up windows.
Support NYCountryLawyer RIAA vs People
Anyone find it ironic that Microsoft's legal costs have reached the size of a long int?
Does "an eternal stain on their souls" count as tax?
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What you're neglecting to consider is the cost of patent licensing upon the market in question. For example, if it costs MS $20 to license the patents they use, what does it cost Apple to license some of those same patents? What does it cost Sun and Redhat? What does it cost to, alternatively, work around those patents? Once you've determined the above, what the does the cost of patents to the market, in general, do to the price of software and the perceived relative value?
For example, suppose I'm in a more classic market, like televisions. Now suppose I have a patent on the best/cheapest technology needed to lower power requirements to comply with new FCC rules. Everyone licenses this from me for their TV sets. Does that cost get passed on to the consumer? To some degree, yes because all the TV makers are competing partly on price and since the relative prices did not change, it is unlikely that public perception of value will not keep up with current prices.
Now that applies to some degree to the OS market, but exactly how much is hard to determine. I suspect, the OS market being monopolized and thus largely non-competative means it applies a negligible amount compared to the prices MS charges but I'm not privy to their margins/costs.
We call that a 'inelastic' demand. Note that it will react to price increases, but it takes huge increses to compensate a small supply difference.
On the case of energy, if it is expensive enough people will freeze, but won't be able to buy it. That's sad, but the model works. The point is not to tell nice things, but to be able to predict what will happen.
Rethinking email
It says right here http://slashdot.org/article.pl?sid=07/04/19/155321 9 if Windows cost any more Microsoft would be engaged in dumping and abuse of monopoly power!!
Ever meet a Microsoft employee? Most of them are really quite nice
Let me be the devil's advocate by saying you aren't paying 21.50 in patents fees. Actually, Microsoft is losing 21.50$ on each licenses it sells. See, the price of XP has been going down over the years, not up. So the consumer is paying less and less for XP, while Microsoft is paying more and more legal fees.
To me your bolstering the AC's point, not diminishing it. There is no excuse for knowingly empowering evil with your efforts and talents, just because you want the money. But I'll be sure to forgive any hitman who kills my family. After all, they gotta make a living, right? Why, I'll bet the hitman didn't even get to choose who to kill, so it's not their fault.
The real hole in the AC's argument is that not everyone agrees that Microsoft is "evil". Calling someone criminal scum for working for a company that you aren't fond of is a little bit stubborn.
"When the atomic bomb goes off there's devastation...but when the atomic bong goes off there's celebraaaaation!"
They have worse than hitmen: they have lawyers.
The worst a hitman can do is kill you, but a lawyer can make death look like the better option.
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