Re: CFA: Microsoft overcharges consumers $10 billion in 3 years

["Eric M. Bennett" <ericb@pobox.com>]

Simon Cooke wrote:

>You might also want to compare the prices of other OSs on the market too.

That's been done here before.  We don't like what we see.

Windows 98 retail price : $180
MacOS retail price      : $100
RedHat retail price     : $ 50
BeOS retail price       : $ 70

But the real problem is not so much Microsoft's retail prices.  As
Microsoft has observed, those prices haven't changed a whole lot (although
they may change quite a bit when Windows NT 5 becomes "the" single version
of Windows).  The real problem is the prices Microsoft has charged computer
makers... Microsoft *admits* (see my signature for example) that it has
been raising prices for computer makers, despite the following two
undeniable facts:
(1) Microsoft's unit volumes have been increasing; this lowers the amount
MS much charge per unit to recoup its development costs
(2) As a whole, software prices have been *de*creasing during the time
Microsoft has been *in*creasing prices.

Microsoft can get away with this because consumers don't see these price
increases.  They're masked by falling hardware prices.  If the price of a
hard drive drops $50 and the price of Windows goes up $10, the only thing
most consumers see is that a computer maker has dropped its prices by $40.
When Microsoft talks about how inexpensive computing is today relative to
several years ago, consumers can nod in agreement, because it's the truth.
The *full* truth is that computing gets cheaper in spite of Redmond, not
because of it.


Microsoft claims that consumers are still getting a great value because
Windows now has many more features.  This argument is a red herring.  *All*
software has become increasingly powerful with time.  It has also gotten
cheaper--except for Windows.



--
Eric Bennett ( http://www.pobox.com/~ericb/ )
Cornell University, Field of Biochemistry, 377 Olin Chemistry Lab

We have increased our prices over the last 10 years [while]
other component prices have come down and continue to come down.
-Joachim Kempin, Senior Vice President, Microsoft Corp.