Wellll. First i must admit that I'm hard put to keep track of my pocket change but if on average the software R&D budget is about $4 bn (its less then 6 thats I'm sure ) and almost all branches of MS are losing money except the software department and their gross revenue was $61bn last year http://finance.yahoo.com/q/ks?s=msft you do the math......
Last edited by petrossa; 14 Jul 2009 at 11:14. Reason: typo
However, a big portion of that profit is NOT made on the sale of the client software, but on the support deals they make. Those support deals are part of the OS and Server business lines and their income is recorded in those business lines. Unfortunately, I don't have a more defined breakdown, but I do know, approximately, what we as a business pay for a Client OS/Office seat and it is around $55/seat. We then pay about a $10/seat/yr. for support and to maintain the license. Again, not "completely over the top".
Plus, MS does have to continue to pay the unfair EU Commission fines. That, of course, will always come at the expense of the consumer.
PhreePhly
Ah Phree a beautiful example of cognitive dissonance there. The reason you pay $55 per seat is because you have the whole shebang MS has to offer that goes with it.However, a big portion of that profit is NOT made on the sale of the client software, but on the support deals they make. Those support deals are part of the OS and Server business lines and their income is recorded in those business lines. Unfortunately, I don't have a more defined breakdown, but I do know, approximately, what we as a business pay for a Client OS/Office seat and it is around $55/seat. We then pay about a $10/seat/yr. for support and to maintain the license. Again, not "completely over the top".
Plus, MS does have to continue to pay the unfair EU Commission fines. That, of course, will always come at the expense of the consumer.
PhreePhly
Compare it to cell phones (in Europe):
You can only get prescriptions based on so called Forfait. Assume you take 20 bucks. This means you take a contract where you are obligated to use the 20 each month if not they are forfeited. In this Forfait you pay a certain cost per unit of time. After you have used your Forfait the unit cost doubles.
So either you pay for nothing if you don't phone, or you use exactly your Forfait, or you pay through the nose.
So this is what i call a abuse of market position. All cell providers have the same system, just a different mix of forfait and unitcosts which evades formally a cartel arrangement.
So, in MS case. If i, Joe Shmuck, buy 1 license i pay 3000% profit margin.
If you buy 100 licences you pay 2000% but if you take the all in, rings and bells special 'support' package; you pay only a 1000% margin but get stuffed on the 'support' which should be included in the license.
If you buy a product you can expect it to behave as sold, you shouldn't need to be shoehorned in a extra 'guarantee' like TV salesmen try to do.
In your cellphone example, I don't see the abuse. Don't like the system, use buy as you go or pre-paid. You may pay a higher unit cost, but you don't worry about going over and getting raped. If you don't have another option, you might hope that the EU Commission steps in and fixes things. I'm sure it will get the pricing lowered.I also don't get your problem with software making a killing on sales. It's not just MS, but pretty much every software seller out there.
Do you really think some of the CAD/CAM software packages are really worth $20,000? Is Photoshop worth $1000? This is the world of software. You have support issues, updates, piracy, etc. to deal with and so you front-load the price. You ran a software business, you know better. Talk about cognitive dissonance. You show it yourself.
I know exactly why my company pays $55/seat for its OS/Productivity software. I also know why Dell is probably only paying something like $40 for an OEM version of Home Premium.
Again, thinking that MS is going to lower their price, when they know that in the EU, there is a chance that they may be paying upwards of 10% of their profits to abusive rulings, is somewhat wishful. It's also a bit hypocritical to then turn around and talk about their abuses (MS)
PhreePhly
Don't get angry at me, it's just talk.
The reason i have all this time on my hands to pull your chain is because i sold my very profitable software company 14 years ago which permitted me to retire to the south of france at age 40.
Sure one preloads, but in MS case it's all out of proportion. Their own tax declaration shows it. 400 euro for a retail version to power a computer that costs less is in my mind extortionate.
Sorry, the ills of written not spoken words, I'm not angry, just forgot the emoticon. The point is, you don't need the 400 euro version to power your computer. If you want Ultimate, you pay for it, but it is not required. Heck, you don't need the Professional version, Home Premium is fine for the vast majority and that is not 400 euros.
The reason i have all this time on my hands to pull your chain is because i sold my very profitable software company 14 years ago which permitted me to retire to the south of france at age 40.
Sure one preloads, but in MS case it's all out of proportion. Their own tax declaration shows it. 400 euro for a retail version to power a computer that costs less is in my mind extortionate.
Ironically, because we are on an enterprise plan at work, we will be getting the Enterprise version (same as Ultimate) with our $55/seat license we paid 2 years ago. (well we are entitled to it, my idiot IT group wants to stick with XP).
PhreePhly
Glad. I think our difference in viewpoint is that you look at the issue in relative way, as in relative to other pricings.
I look at in a absolute way. I look at their earnings, i look at the effort they make those earnings and to my mind there's very little effort for large gains.
To my mind that constitutes usury. Especially because these gains have gotten by years of dominant market share abuse.
IBM is no better, but they don't make an OS that's a virtual monopoly.
And whichever version you take of Win 7 it's seriously overpriced for a, lets admit, mediocre product. Actually it's been overpriced since version 3.1.
On topic:
Microsoft faces more EU anti-trust probes - V3.co.uk - formerly vnunet.com
As far as prices go, I absolutely disagree about Windows being overpriced. I think that you are simplifying the effort that MS makes, and how the earnings are split amongst the various divisions of MS.
I also disagree that Windows is a mediocre product, especially the NT family. The question that I have is "Is MS a monopoly because of their dominance and abuse, or are they a monopoly because they had the best product and the best price at the time?" I, of course, believe the latter. Windows was the best product at the time for the price point. Because of that MS became a monopoly. While they should be held in check, they got there by understanding the business better than anyone else.
I also think it very unfair to judge MS differently than other software manufacturers. Yes, I know they are a monopoly, but they are pricing no different than the competition, which is good. MS could drop the price to almost free, and the EU would hit them for dumping. You seem to want to have both ways, hit for being too expensive, and then turn around and defend the EU for their stupid rulings.
All of the points you are making about price markups are the same for every manufacturer out there.
PhreePhly
One detail you tend to overlook in the story is the acknowledged fact that Windows didn't get to be a widely used OS by it's merits but for the most part by MS's criminal business practices. (they've been convicted several times, a white collar crime is still a crime)
The DrDos, OS/2 saga, Netscape are some of the most obvious ones, the MS OEM tax a somewhat hidden one, and going by that it's hard to assume they were normal competitors at any level.
For me that makes them akin to a criminal organisation.
But i appreciate your opinion, we'll agree to disagree.
But there is a detail your overlooking. Of course it was a widely used OS first, otherwise it couldn't be a monopoly. If it weren't a monopoly, all of the "criminal" issues wouldn't exist.One detail you tend to overlook in the story is the acknowledged fact that Windows didn't get to be a widely used OS by it's merits but for the most part by MS's criminal business practices. (they've been convicted several times, a white collar crime is still a crime)
The DrDos, OS/2 saga, Netscape are some of the most obvious ones, the MS OEM tax a somewhat hidden one, and going by that it's hard to assume they were normal competitors at any level.
For me that makes them akin to a criminal organisation.
But i appreciate your opinion, we'll agree to disagree.
The DR DOS was not criminal, and they weren't convicted of anything. OS/2 wasn't good enough and IBM can't market fire to eskimos, nothing criminal. Netscape blew itself up. IE 3 and especially IE 4 were soooooo much better than NetScape's offerings, that they imploded on their own. In fact, MS basically pulled a Netscape with IE 5 and 6. MS figured they had the browser market and let their browser stagnate. FF came in and beat them at their own game. The only thing that saved MS is that they were able to fix the browser in time.
MS was convicted for its handling of OEMs. And rightfully so. I contend that they never needed the heavy handed tactics, but Gates is a paranoid individual, and recognized how quickly things change in the tech world. He tried to hedge his bets by strong-arming OEMs and almost lost his empire as a result. Had it not been for the Bush Administration coming in, I think the Clinton DOJ would have split MS into separate entities.
PhreePhly
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