Date: Mon, 15 Nov 1999 23:07:37 -0800 From: Joseph Scott <joseph.scott@owp.csus.edu> To: David Schwartz <davids@webmaster.com> Cc: walton@nordicrecords.com, freebsd-chat@FreeBSD.ORG Subject: Re: Judge: "Gates Was Main Culprit" Message-ID: <383102B9.8CD2AE12@owp.csus.edu> References: <000001bf2fea$0d9207b0$021d85d1@youwant.to>
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I'm not really big on beating this into the ground, but I thought I might point out a few things here. David Schwartz wrote: > > Right, because if they don't maximize revenue, they won't be able to do the > research needed to keep Windows competitive. The software market is > sufficiently dynamic that Windows has to become almost an entirely new > product every two years to maintain its status as market leader. To put it simply, I don't agree that MS has made Windows an entirely new product every two years. From everything that I've gathered Win95->Win98 was mostly large number of patches+IE. So from 1995 to now ( 1999, almost 2000 ) MS has been able to maintain, at the very least, it's leadership with the same product ( with some patches ). The time span MS takes to introduce Windows as a new product would be something more on the order of 6.5 years, give or take. > Actually, they Microsoft's pricing is consistent with a firm that needs to > spend massive amounts on research and development to keep its products > competitive. Yes, they maximize revenue (as every firm does) primarily to > allow them to maintain Window's competitiveness. This is far different from > the type of price raising that is monopoly harm. > Would does this "could have charged" mean? They could have given it away > for free. > To take a page from my business management class, setting the price of the product has little and/or nothing to do with it's cost. I won't go into the details of how or why this is true, it took the instructor months to convince us :-) But in the end I believe this is true. This nice thing in a monopoly area, the best price is the most you can charge until the marginal return for increased price becomes useless. There are some pricing constraints, even for monopolies, but they are very different than "normal" competitive markets. > I'm not sure I believe that. Personally, I think Microsoft set the price > far above the revenue-maximizing price. Heck, the more people who use > Windows the more people they can sell Microsoft office too, right? I would tend to think that this statement supports my claim, in a monopoly area you set you price that will get the most people to buy it. More or less, it's never quite that easy. > Of course, every company sets its prices at the revenue-maximizing price. > If Microsoft didn't do that, their management should be fired. The biggest > balancing factor for Microsoft is that the more expensive Windows is, the > more incentive there is to market and develop alternatives to it. The difference is that in a monopoly what determines the revenue-maximizing price is different than in competitive markets. > To the extent that Windows is a monopoly, it is a temporary one. Much as > vinyl records were a monopoly for awhile, soon replaced by cassette tapes, > now replaced by CDs, and probably soon to be replaced by some other format. > Microsoft will do everything possible to maximize the amount of time its > operating systems matter, but ultimately, there will be nothing it can do -- > it will have to invent a new product or lose its market share. I think this is an apples vs. oranges argument. Both the software and music industries are very complex, and this makes it sound just a wee too simple. I'm not going to list problems with this argument because I think that they are fairly obvious. > This is not the type of monopoly that the anti-trust laws were meant to > prevent. They were supposed to stop a static monopoly, where a company can > charge whatever it wants and sell whatever it wants. Microsoft can't do > that. I don't think that history would support this statement. Joseph Scott joseph.scott@owp.csus.edu Water Programs - CSU Sacramento To Unsubscribe: send mail to majordomo@FreeBSD.org with "unsubscribe freebsd-chat" in the body of the message
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