Re: [ox-en] esr on software costs
- From: "I. Claude Harper" <tekell swbell.net>
- Date: Thu, 07 Mar 2002 08:07:59 -0600
I don't think this particular argument depends on free competition; as I
understood it, what he's saying is that if the cost of software to OEMs is
fixed (at a level which lets Microsoft survive), but the cost of hardware
is falling (driven by Moore's law), then the total cost per PC falls. This
leaves OEMs with a smaller margin per PC, and the only route for them to
increase this margin will be to use free (in cost terms) software where
they can. Doing that depends on consumer acceptance of non-Microsoft OSs,
not on copyright law or the presence of a free market (apart from the
assumption that the PC market is free enough that if the cost to OEMs
falls, the cost to the consumer will fall too).
ESR IS WRONG.
Or at least I can say this, there is no sign that the ESR argument is
correct at all. There is no talk at OEMs (yes I work at one of the biggest)
about the possible increase in profits by switching away from Microsoft
software. OEMs don't want consumer prices to drop and often they are even
more concerned with total revenue more than profits anyway. What they are
trying to do is sell more and more stuff with the computer, not less. What
analysts, etc are concerned with is ASP (average selling price) and their
concerns/statements have the effect of vendors trying to keep ASP as high as
possible by selling more stuff. Furthermore, it might could be argued that
selling OSS is actually more costly to the seller than selling Microsoft.
Not too mention whatever monopolistic licensing practices MS is using to
trap vendors in.
The only thing negative I ever hear about Microsoft software isn't the OS's
cost to the PC, it's the rest of their software not being very profitable.
MS has even recently changed the way they manage enterprise licensing in
favor of themselves over the reseller. Still you can't increase in revenue
by not selling something or by replacing it with something that is free (and
this "free" item may actually cost you more). And Microsoft is in control
much of their negatives. That is, when MS costs too much that some OEM want
to switch to some OSS OS, they can just drop that costs to whatever they
need in order to maintain a monopoly. Don't think OEMs are paying MS
anything near retail. MS can afford to pretty much give away their OS to
OEMs, then make it up in ugrades and other software.
I could go on and on, if you are not convinced yet.
If Linux "wins" against Microsoft in the marketplace, then it will be
because of consumer demand, not because the economics for the OEM.