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Two approaches to Microsoft's (over)pricing
If you're a Microsoft reseller, you've heard the same age complaints for decades: Microsoft is evil and its products are too expensive and lack security.
The Microsoft Certified Professional Magazine aims to help worker bees who are confronted with those complaints in an story about "Dealing with Microsoft haters".
Let's skip the 'evil' and 'security' arguments for now and focus on the cost. The story quotes Microsoft partner David Wertz with PC Worlks Plus who claims that: "We do software and application development ourselves, so I know the cost of that. I haven't the foggiest clue what the costs are in developing [Microsoft] operating systems, but it must be incredible." Windows, he concludes, is "not just more money in Bill Gates' pocket."
Wertz clearly has never looked at Microsoft's financial statement. The profit margin for the Microsoft business group representing Windows is about 71 per cent: $8bn profit on revenues of $11.2bn.
In a well functioning, competitive market, Microsoft would have been forced to lower the price of the software – given that the code is about five years old by now and is unable to stay up with advances in hardware development.
If the computer market would look anything like the game console space, Windows's market share by now would have plummeted to a sub zero level. But unfortunately there is no Sony or Nintendo in the computer market to keep Microsoft on its toes.
The $8bn in profit also fails to explain how Linux available free of charge while showing performance and security levels that are similar to those displayed by Microsoft.
July 3, 2006 at 06:43 PM | Permalink
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» Dos aproximaciones al (sobre)precio de Microsoft from Silicon Valley Sleuth ES
Si eres un distribuidor de Microsoft, habrás escuchado las mismas quejas durante décadas: Microsoft es mala y sus productos, además de ser demasiado caros, tienen problemas de seguridad. El Microsoft Certified Professional Magazine intenta ayudar a las... [Read More]
Tracked on 4 Jul 2006 09:32:37
Comments
Without competition and free-trade then the capitalist system only works to centralize wealth and hinder innovation.
For instance, why would a company (whose sole purpose is a private interest to maximise profits) at all care about innovating and being efficient if it has no competition.
Microsoft has been shown to use a number of illegal tactics and a larger number of dubiously immoral business techniques to crush competition and to hinder new competition and innovation.
They are then using their excess profits from the uncompetitive (monopolistic) market to enter new markets and ultimately hurt and hinder innovation and efficiency there. All the time centralising wealth into their pockets, instead, where in a competitive free-market economy, the wealth would be distributed between companies trying to compete and to innovate.
Its a pity the US system which once thrived on liberal competitive free-market capitalist economy has become this way.
Posted-by: Billy Bono | 12 Jul 2006 10:04:02
Spanish
