Even Microsoft customers are harmed by bundling

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

Joe,

Joe Moore wrote:
> 
> "Lewis A. Mettler" wrote:
> > 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.
> A reasonable assumption in some circumstances.
> 
> > Let's assume that a particular customer also wants an OS and a browser.
> Fine.
> 
> > Now.  Your argument is that since the bundle costs less than buying the
> > two products separately, that consumer is not harmed, right?
> No, my argument is that the bundle of the OS with a browser is not
> _unfair_ to that customer.

Most consumers do in fact consider it unfair if they can not avoid harm
to themselves.

> 
> > 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.
> So, by charging money for software, the industry is harming moneyless
> consumers?  Thank you RMS.

How much does the Office suite cost?

How much does Word cost?

What if you only have the money for one application but only the suite
is for sale?

Bingo.

Bundling always causes two affects:

1) price is increased or maintain high to cover the products
2) choice is reduced in the short and long run

The above illustration shows and proves that even if you want to only
buy Microsoft products AND you want their OS and browser, you can in
fact still be harmed by Microsoft bundling those products.

Is this ever the case?  For millions, the answer may be yes.

Why?  Because the entry level price is considerably higher than it would
be otherwise.  Just look at the low end of the market.  How many more
consumers could afford to buy a computer if $110 of software was removed
from the minimum price?  ($35 for IE, $75 for networking technology)  If
you assume that a low end PC sells for $400-500, that range becomes
$290-390.

Might some of those consumers buy a browser or networking next month or
next year?  Sure, they might.  But, for now why do you insist upon that
higher beginning price.

You clearly do not represent consumers.  You are only promoting the sale
of particular software but fail to disclose that.

> 
> > 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.
> Then Windows + IE is NOT the combination they want.  We have assumed
> that the customer wants an OS and a browser.  We have also assumed that
> they want to buy only Microsoft products.  The logical conclustion is
> that they want to buy a Microsoft Browser.  If the Microsoft browser is
> not what they wanted, they either need to complain to M$ for a bugfix or
> reevaluate their requirements.

Sorry.  But, bundling prevents any complaints.  They have to buy it.

Without the option your are forced to not only buy certain products but
you are also forced to buy them now.

> 
> > 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?
> If a consumer fits the assumptions above, they want to buy IE, which is
> Microsoft's only browser.

If they are blind or required to purchase IE, they usually just ignore
other products and do not even access their own needs.

I may want a BMW.  And, I may want a BMW CD-Player.  But, if I am forced
to buy them both or not buy a car at all, I am in fact harmed by that
packaging.

So.  Even if you assume a product and brand preference, you can be
harmed by that bundle.

Why do you insist upon refusing the consumer logical options?

Obviously, you are only promoting particular products.  You refuse to
give logical and common choices to all consumers.

> 
> > What if you already own a browser?  Are you still stupid enough to buy
> > the bundle?  Most consumers are not.
> No.  There should be a choice.  That wasn't the point.  The point (in
> case you've forgotten what you're talking about) is that bundling is NOT
> unfair to ALL consumers.

Incorrect.  I have just proven that bundling IE with the OS is unfair to
all hard nosed Microsoft shops if they already have licensed copies of
IE when they buy their system.

Do you really think it is fair to force consumers to re-purchase ALL OF
THEIR APPLICATIONS each time they upgrade their OS?

Even if they buy only Microsoft products and want only Microsoft
products and want IE, they are in fact harmed by being forced to buy yet
another license of IE.

Just what percent of all Windows 98 buyers already have browsers? 
50-80%  

If you represented the views of consumers (and you obviously do not) you
would suggest they get a $35 discount to leave IE at the store when they
already have a copy.

> 
> > 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?
> Yes, the "cost of the required minimal functionality" should not include
> the repurchase price of applications, if the license terms allow the
> migration of that application to the new system.  If the license does
> not allow moving the application, then you lose the rights to use the
> software when you upgrade, and so that cost should be counted (maybe
> twice, depending on how smart your accountant is)

Sounds like Microsoft is harming millions of consumers depending upon
the cost of IE in Windows 98.  

Hint: Microsoft Corporation itself claims 20% of the OS revenue is
attributed to unearned revenue which they say includes IE.

Simply put, the price should be reduced for the OS version without IE.

Otherwise, you are just screwing Microsoft customers. (i.e. customers
who already have IE)

The general rule has just extended itself into almost all current
Microsoft customers.

> 
> > Your "exception" above fails in most cases.
> Most?  I don't care if an exception fails in most cases.  Exceptions
> are, by definition, a relatively small number.  But they do disprove
> rules that refer to ALL consumers.

What percent of Windows 98 purchasers already have Word?

What percent of Windows 98 purchasers already have IE?

Do you think a single Microsoft customer would buy your argument if you
forced them to also buy a new copy of Word?

Again, it is obvious you are promoting a particular brand of product by
your argument and do not care if you harm consumers.  Obviously,
bundling IE also harms hard-nosed Microsoft customers.  About $35 a
piece cash money.

> 
> > 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?
> No, and No.  But the license for IE specifically ties it to a single OS
> installation.  Microsoft DOES require you to buy it yet again.  But
> that's another issue.

Do you really think the second time you rape your victim it is "okay"?

That general rule is applying pretty well to even the Microsoft
customers.

> 
> > Why do you think Microsoft distributes IE separately and independently
> > of any OS?
> I don't know, nor do I care.  Probably to gain revenue, to make the Nth
> quarter books look better.

Think a bit.  IE 5.5 Beta is just about out.  IE 5 was release just a
while ago.

Hint: Product cycles are different. Very different.

It is pure stupidity to combine any application with the OS for that
reason alone.

> 
> > Why do you think that you have to buy IE in order to get an
> > OS but not the other way around?
> Err.... IE5 will run on Windows 3.1?

Think.  You are not thinking.

You have to buy IE when you buy the OS because it forces the sale.

They do give it away as well.  But, only a fool thinks that makes the
one you buy "free".  It does not.  Even Microsoft says you pay money for
it.

If you buy a pack of gum for $.35, but then I give you a stick because
we are such good friends, does that mean the pack you just bought was
free?  The store will not think so. They will not refund your money.

They might think you are a fool.

> 
> > 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.
> Err... No, If a consumer needs a Microsoft browser and OS, then bundling
> the two together is NOT unfair to that consumer.

False.  Most already have that application.  Some have IE.  Some have
Navigator.

Both are directly and financially harmed at the time they buy that
bundled.  The only question is how much.

> 
> > 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.
> So?  This is not relevant to this argument.

Absolutely it is.  IE is the forced sale product.  IE is the product
being forced upon consumers regardless of their needs.

> 
> > And, as has been pointed out, if you already have a copy of IE, you are
> > a fool for buying it yet again.
> Except that if you install IE on the new computer, you are breaking the
> license agreement, and are subject to software piracy prosecution.

No.  Not necessarily.  You may have downloaded it, right?

If you want to argue that all Microsoft customers must always buy
upgraded applications each time they get a new OS, go ahead and make the
argument.

What is painfully obvious is that you care less about the rights of any
consumers.

You are even willing to financially harm Microsoft customers, just like
Microsoft.

> 
> > So, even in the above so called exception, consumers are in fact harmed.
> This conclusion is not justified.  You have given no evidence about the
> above exception.

Read above.

I have proven positively that a high percentage of all Windows 98
consumers that want only Microsoft products are in fact harmed
financially on the day they buy their system via bundling.

You have failed to identify any class of consumer that is not harmed
financially.

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