For those of you who have forgotten, the marginal cost of producing another copy of Windows, Office, Linux, or any other software product is zero other than insignificant media and distribution costs. Microsoft's "cost" for this donation is essentially zero. So, forget about taxes, etc.
What Microsoft is doing here is called "price discrimination" in Economics. They charge full price to those with deep pockets and less to others, like students, with more limited resources. Since there is a benefit to Microsoft when its market share increases, "selling" another unit at zero price makes sense. Selling at zero price only makes sense if the marginal cost of production is zero (or near zero) and there is some benefit to increasing the number of units sold.
Price discrimination is not just a tool for monopolists. Movie theatres, for example, employ the technique when they charge seniors and children less than the rest of us.
Although Microsoft's behavior is completely rational, it is clear that those who pay a zero price are being subsidized by those who pay a low price (e.g., students) and those who pay a high price (the rest of us).
I just bought my wife of 30 years (in a few weeks) an "upgrade" of the engagement ring that I bought for her in 1972. I spent approximately two months take-home salary on the upgrade. Did I spend this money to get laid? Hardly not. Is it some of the best money I have ever spent? Absolutely.
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For those of you who have forgotten, the marginal cost of producing another copy of Windows, Office, Linux, or any other software product is zero other than insignificant media and distribution costs. Microsoft's "cost" for this donation is essentially zero. So, forget about taxes, etc. What Microsoft is doing here is called "price discrimination" in Economics. They charge full price to those with deep pockets and less to others, like students, with more limited resources. Since there is a benefit to Microsoft when its market share increases, "selling" another unit at zero price makes sense. Selling at zero price only makes sense if the marginal cost of production is zero (or near zero) and there is some benefit to increasing the number of units sold. Price discrimination is not just a tool for monopolists. Movie theatres, for example, employ the technique when they charge seniors and children less than the rest of us. Although Microsoft's behavior is completely rational, it is clear that those who pay a zero price are being subsidized by those who pay a low price (e.g., students) and those who pay a high price (the rest of us).
I just bought my wife of 30 years (in a few weeks) an "upgrade" of the engagement ring that I bought for her in 1972. I spent approximately two months take-home salary on the upgrade. Did I spend this money to get laid? Hardly not. Is it some of the best money I have ever spent? Absolutely.