Re: Some interesting economic facts

[Mitch Stone <mstone@vc.net>]

In reply to Katharine M.J. Osborne's message sent 4/22/98 10:54 AM:

>Yes, MS could be selling their products for a song, but
>consumers have a certain perception of what software
>should be valued at. What is a certain product worth to
>them? What does the consumer think it should be worth?
>That percieved value is shaped a lot by marketing, as well
>as the standard prices set for each individual product
>category. We are afterall the people willing to by
>T-shirts for $20 that cost pennies to make.

I apologize in advance if I've missed this in the earlier posts in the 
thread, but what about the notion of "value added?" A lawyer may be able 
to easily charge you $200 an hour if he can keep you out of jail, even 
though his training and experience may be no greater than, say, a 
librarian. This is, I'm led to understand, one reason why legal fees 
remain high in the face of a glut of lawyers. (If geese form a gaggle, do 
lawyers form a glut? Probably.)

Likewise, how much is it "worth" to replace a typewriter with a good word 
processing application (which leaves out MS Word, but never mind)? The 
"value added," and thus the price, is unrelated to the cost of 
production, and probably ought to be relatively high.

So my question is this: trading a typewriter for a word processing 
application would expect to carry a large value added. But shouldn't it 
be larger than trading one word processing application for another, which 
is mainly what we're doing today? In other words, shouldn't the cost of 
word processing applications be declining?

   Mitch Stone
   Editor, Boycott Microsoft
   http://www.vcnet.com/bms 
 +---
   While we're all very dependent on technology, 
   it doesn't always work --- Bill Gates