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Re: [Fsfe-uk] Mac OS X refund

From: Ian Lynch
Subject: Re: [Fsfe-uk] Mac OS X refund
Date: Sat, 02 Feb 2008 20:33:30 +0000

On Sat, 2008-02-02 at 15:34 +0000, Jon Grant wrote:
> Hi Ian,
> [...]
> > prices are unsustainable) and as more things move to be web based it's
> > less inconvenient to change from a Windows desktop. This has already
> > forced MS to reduce the price of OEM Windows for these devices. Reducing
> > the price will delay change but it won't in the end stop it as
> I think one risk is that MS drops their price to something small like
> £3 (OEM's only pay around £15 for XP I heard)

No. unless its some deal like Dell on a huge scale who I believe get
discounts effectively from commissions on sales. or perhaps on laptops.
We are an OEM supplier of Windows computers and we pay around £70 like
all other small systems builders although they have given a special
price for the EEEPC of about half that. This is significant. AFAIK it's
the first time any discounts have been given for OEM Windows - education
discounts are all for upgrades not OEM. A good guide is look at the
lowest cost laptops and then the price of a EEEPC. The difference is
software cost and a hard drive which is about £20. 

Selective discounts can only ever be an interim step because a supplier
that sells both EEEPC and Windows machines could buy at a discount for
the Linux machines and then put the software on the others to gain
competitive advantage or indeed sell on to other OEMs undercutting M$. 

Since around 30-40% of M$'s profitability is selling Windows, if the
price falls from £70 an OEM to £3 its going to have a very significant
effect. Initially, paradoxically more people might actually get legal so
difficult to be sure what the effect would be overall. Also EEEPC is
only the first. We will be selling the ink-media Ubuntu based machine
that is the same price but with a bigger 10" screen. Once there is an
obvious market, watch Dell, Lenovo and everyone dive in. All these will
also come with OpenOffice.org so that is another 40% of M$'s
profitability under threat especially if their OOXML ISO bid fails. 

>  charge, MS still make
> enough profit to do their business, and people stick with it as
> practically it does work well for many people and at that price point
> its easy for the price difference to not be a consideration.

The thing is that MS shareholders expect increasing profits and growth -
that is what share prices are dependent on. So while the company has too
much cash to go bust, a significant drop in revenue and/or market share
from Windows and/or Office will have a noticeable impact even if only
because shareholders will switch their money. Watch out for profit
warnings in the next two or three years :-)

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