Re: bundling (again)

["Lewis A. Mettler" <lmettler@lamlaw.com>]

Steve,

steve cohen wrote:
> 
> "Lewis A. Mettler" wrote:
> >
> > Joe,
> >
> > Let's assume even more facts that you have allowed in your suggestion
> > that some consumers are not harmed by bundling.
> >
> > Joe Moore wrote:
> > >
> > >
> > > 4) Those who choose to purchase the complete bundle because the amount
> > > paid for the bundle is lower than the cost of the required minimal
> > > functionality, if purchased separately.
> > >
> >
> > Let's assume that a particular customer wants to only purchase Microsoft
> > products.
> >
> > Let's assume that a particular customer also wants an OS and a browser.
> >
> > Now.  Your argument is that since the bundle costs less than buying the
> > two products separately, that consumer is not harmed, right?
> >
> > What if they only have enough money for one of them on the day they
> > purchase?  Have you not forced them to either borrow money or not buy at
> > all?  Yes, you have.  You caused harm.
> >
> > What if they want their browser to work best in conjunction with some
> > other package (a web server or some other application like a billing
> > package)?  Have you harmed them?  Yes, you have.
> >
> > What if the "required minimal functionality" does not come in any
> > bundle?  What if you need a browser but not IE?  What if you are not
> > sure what browser you will need (next week) and you want to wait until
> > you ascertain your browser requirements?  Are you harmed then?
> >
> > What if you already own a browser?  Are you still stupid enough to buy
> > the bundle?  Most consumers are not.
> >
> > Is there a difference to you in the "cost of the required minimal
> > functionality" if you already have some of those applications?  What
> > percent of new computer users already have a browser?  5%?  2%?  10%?
> > Or, do you suppose it is closer to 50-60% or more?  Why are they being
> > forced to buy the bundle?
> >
> > Your "exception" above fails in most cases.
> >
> > If you already have a copy of Word, should you be required to buy
> > another in order to get Excell?
> >
> > If you already have a copy of IE, should you be required to buy it yet
> > again in order to upgrade your OS?
> >
> > Why do you think Microsoft distributes IE separately and independently
> > of any OS?  Why do you think that you have to buy IE in order to get an
> > OS but not the other way around?  Your exception above fails to take
> > that into account.  If you need a browser and an OS, then you should
> > rightly be forced to buy both with you buy one of them, right?  That is
> > the bundling you are referring to.  But Microsoft does not do that.
> > They do not require that you always buy both at the same time at all.
> > They only require that you always buy IE.
> >
> > And, as has been pointed out, if you already have a copy of IE, you are
> > a fool for buying it yet again.
> >
> > So, even in the above so called exception, consumers are in fact harmed.
> >
> > All products must be sold separately (or at least that option made
> > available to the individual buyer) or they are harmed.
> >
> > --
> > Lewis A. Mettler, Esq.(Attorney and Software Developer)
> > lmettler@LAMLaw.com
> > http://www.lamlaw.com/ (detailed review of the Microsoft antitrust
> > trial)
> 
> The problem with THIS argument is you are taking a case that is most
> favorable to your position and asserting that it is in fact, the general
> case.

Absolutely not.  Any general statement MUST apply in the beginning to
ALL consumers.  My statement does in fact apply to all of them.  I
further break down that statement into 3 classes and explain for each
class how the statement still applies to that class.

> 
> A customer wants a browser and an OS.  

Some do. Millions do not.

> So what's the harm in bundling?

Read the fairness sentence.

> You then proceed to demolish this straw man (which of course, no one on
> this list was making),
> 
> But now let's cut to the chase, shall we?  Let's take an example that's a
> little less favorable to your point.  Let us take for example, a typical
> Linux distribution, and let us assume that the user is buying the CDROM
> version with hundreds of programs, applications, and utilities bundled with
> it.
> 
> Let us further assume that this distribution sells for $60.  For that $60
> the user receives a complete kernel customization facility, a c compiler
> and several other programming languages, one or more web browsers, one or
> more web servers, java,  a modem internet connection facility, several text
> editors, a choice of two different graphical user interface desktops,
> several flavors of networking, several unix command-line shells, system
> configuration utilities, a photo manipulation program, several email
> clients and servers, a sound player, a calendar/organizer program, faxmodem
> software, a bunch of games and a whole host of other programs.  Maybe even
> an office suite.
> 
> Beyond that, any or all of this software may be copied onto as many
> computers as the user wants to copy it onto.  The CD may be passed around a
> group of friends, all of whom may legally copy whatever they want from it
> onto their systems.
> 
> And now you want to say this is unfair, and that to become fair the seller
> of this package must package it up so that the user may buy the system with
> or without any or all of these optional packages.

Do you have philosophical problem with offering a consumer a $40 price
for the software they think they need?  Or, do you always insist upon
consumers buying what you are selling?

> 
> And you further stipulate that the price for which they must sell this
> modified package will be reduced not by whatever percentage of the whole
> the undesired elements might be somehow calculated to represent, but by the
> street price of a competitive product, even if that price is greater than
> the total price of the Linux distribution.  (I don't think you've backed
> off from that point, at any rate).

Apparently you have absolutely no idea how competitive packaging and
pricing works in a fair and open marketplace.

You do not have to decide pricing.  It is determined by the market.

> 
> The point is simple and it's one you refuse to acknowledge.  The greater
> the number of options, the more complicated must be the system that keeps
> track of selling all the configurations possible.

Your argument might apply to the manufacture of hard goods.  But, the
auto industry proves that you are incorrect even there.  The many
options available on computer hardware also prove your point wrong.

Computer software is about the easiest product to configure alternative
packaging.  It is also about the least expensive.

> 
> Let us assume for the sake of argument that the cost of producing and
> administering this system adds $30 to the purchase price of each unit sold.
> You'll probably say that's excessive but I don't think so.  There is the
> cost of writing the user-interface to allow the picking and choosing, the
> calculation of the price, more complex accounting required, the increased
> cost of technical support as the tech support representative no longer has
> the luxury of knowing what is enabled on the CDROM any given user has; not
> to mention the increase of knowledge required on the part of these support
> personnel which should translate into higher costs.

Your point is disproven by the separate availability of almost all
products available in suites.

> 
> If you still think this price increase excessive, then consider that in
> order to refund not just the percentage of the whole represented by each
> unwanted component, the seller must raise prices to cover the cost of
> refunding based on the market value of competitive products (every customer
> who doesn't want networking is going to need a $75 refund based on the
> street price of Lantastic that you are taking as a measure.)  Really, the
> price of such a setup might be closer to $6000 than to $60.

Your point is disproven by the separate availability of almost all
products available in suites.

> 
> Perhaps the user may be able to do away with enough unneeded functions to
> make this deal worthwhile to him.  But I guarantee that there is another
> user who would rather avoid the hassle, buy a CD that has functions he
> might need someday if not now, etc.

Your point is disproven by the separate availability of almost all
products available in suites.

> 
> If this deal is so great, why wouldn't it be offered now by one of the
> competing Linux distributions?  Why wouldn't Debian or SuSE, for example,
> offer a CD this way, in order to lure masses of customers away from RedHat,
> trapped as they are by RedHat's "nefarious bundling practices?"
> 
> The reason, Lewis, why in this very competitive marketplace such a deal is
> not offered is because it is not good business.  There isn't a significant
> market for it.  They know that the masses of customers will move away from
> them, not toward them, if they were crazy enough to adopt your model.

Your point is disproven by the separate availability of almost all
products available in suites.

> 
> It is not offered because most current users of these products think the
> bundling is both fair and a good deal.  If one of the distributions were to
> go to this method (with raised costs for the full bundle) it would lose
> business to the others.

Your point is disproven by the separate availability of almost all
products available in suites.

> 
> In other words, it is in THIS case, in the case of a Linux distribution,
> that YOU must prove bundling is unfair if you are going to make the claim
> that ALL bundling is unfair.  This is the worst case scenario for your
> argument.  If you can't prove it, then you must admit that SOME bundling is
> not unfair.

Your point is disproven by the separate availability of almost all
products available in suites.

Bundling is in fact inherently unfair to consumers.

This point is proven by the separate availability of almost all products
available in suites.

Anyone who supports bundling is only forcing the sale of products upon
consumers.  That is obvious.

Anyone who is a consumer (or views this issue from the consumer
perspective) could care less what options are available to others.  But,
for some reason, those who want to force the sale of certain software
try very hard to prevent consumers from having the choices they may
want.

-- 
Lewis A. Mettler, Esq.(Attorney and Software Developer)
lmettler@LAMLaw.com
http://www.lamlaw.com/ (detailed review of the Microsoft antitrust
trial)