Re: Some interesting economic facts

["Matt Deatrick" <mattd@shocking.com>]

My take is that M$ is scared of the changes that are going to inevitably
occur in the software market. My job, as a good citizen, is to make sure
that they can't get in the way of that happening. I don't want to wait
another twenty years for the next best thing in operating systems because
of a monopoly. 
	Yes, the OEM's are in a bad position. And when M$ offers them IE free, it
gives them the chance to make a margin up somehwere. They will take any
advantage they can, unfotunately they all have the same advantage system
from M$ to work with. It is odd to me that OEM's scrape out a 10% profit
margin whilst M$ gets 20-30% margins. I mean lets be honest for one second,
this is a symbiotic relationship, isn't it? How did we get here? M$ got us
here, and now we have to do something about it.
	Matt

----------
> From: Mitch Stone <mstone@vc.net>
> To: Multiple recipients of list AM-INFO <am-info@essential.org>
> Subject: Re: Some interesting economic facts
> Date: Wednesday, April 22, 1998 8:40 PM
> 
> In reply to Matt Deatrick's message sent 4/22/98 5:11 PM:
> 
> >	Yes, and for most software the prices are declining. My main point
> >was that in economics Prices should equal marginal costs(the cost to 
> >produce one more unit). I am not in the mood to go through the whole
thing
> >again, but suffice it to say that prices are above marginal costs in
most
> >cases, even where they have fallen. Even though marginal costs in the
> >software industry are so near to zero as to be inconsiquential
> >theoretically. The argument, then, is that the reason M$ has had 20%
plus
> >profit margins, ie the reason Gates is so grossly wealthy, is because he
is
> >abusing our perceptions of quality by tricking the market. If it isn't
> >expensive it doesn't work? Not in M$'s case.
> 
> This is more or less what I am saying. Microsoft can only keep its 
> margins up by creating false economies, and it needs the OS monopoly to 
> do that effectively. They must realize that the public will eventually 
> catch on to the fact that a new version of Office doesn't really amount 
> to a $400 gain in productivity, and begin to refuse to fork over. Even a 
> software monopoly can't force customers to buy essentially the same 
> product over and over again.
> 
> But, if the software monopoly can continually churn the market by 
> snapping the OS rug (excuse the mixed metaphor), and/or by hiding the 
> costs of their products in OEM packages, then the consumer really has no 
> choice in the matter, or finds himself buying the veritable pig in a
poke.
> 
> Or so I suppose.
> 
>    Mitch Stone
>    Editor, Boycott Microsoft
>    http://www.vcnet.com/bms 
>  +---
>    We're very confident that once Judge Bork understands the facts 
>    of these issues that he'll agree our business practices are 
>    completely legal. --- Mark Murray, Microsoft spokesman   
> 
>    If you don't see it Microsoft's way, then you just don't 
>    have enough information. --- Silicon Valley Saying
>