From: tomh@wes.on.ca (Tom Haapanen)
Subject: MS-DOS bundling (was: FCC will proclaim ...)
Organization: Waterloo Engineering Software
Date: Tue, 29 Dec 1992 21:34:38 GMT

> philco@microsoft.com (Phillip Cooper) writes:
>> All right, this mis-information being spread is getting a little out of
>> hand.  It is true that *one* type of licensing contract offered to system
>> vendors charges royalties per computer.  It is also true that another
>> type of licensing contract charges royalties per copy of OS sold.

jmaynard@oac.hsc.uth.tmc.edu (Jay Maynard) writes:
> Not necessarily. For example, say that MS charges $8 per machine for the
> every-machine-gets-one contract, and $20 per license for the completely
> unbundled version.

Wait, Jay -- suppose IBM says "buy *all* your computer equipment from us,
and we'll give you 40% off list.  If you just buy that AS/400 that you
need, we can only give you 25% off the list prices."  Ooh, they're holding 
an economic gun to our heads!  :)

Of course none of us know whether the real numbers are anything like $8,
$20, 40% or 25%.

> This would be a prime case of MS forcing vendors to sell DOS and Windows
> with each machine, whether or not the customer wants or needs it. (I can
> hear the cries now: "But they're not holding a gun to their head!"...to
> which I answer that force can be economic as well as physical.)

No, they're not forcing anything.  All it means is that the vendor pays
Microsoft a royalty of $X per machine shipped for the RIGHT TO INSTALL
MS-DOS on all the machines.  They can choose to install or not to install,
it's just that the money they pay Microsoft doesn't depend on the actual
number of MS-DOS systems shipped, but on the total number of units.

If we use your hypothetical $8 figure, that means that the vendor has to
add $8 to the cost of every system sold, saving him a hypothetical $12
for each one of the MS-DOS systems making up 90% of his sales.  Sure, there
is that extra hypothetical $8 for that last 10% of non-MS-DOS systems, but
that's all that's there.

So, no, the vendor isn't forced to ship MS-DOS.  Yes, you will pay for the
license, but you can't choose everything on your machine, can you?  Can
you delete that silly game port, or drop that never-used "Turbo" button,
decline the Weitek socket you will never use, or buy your ATI Ultra without
that "mouse" they include?  No, of course not.  But that won't stop you
from buying that particular machine if THE TOTAL PACKAGE is a good deal.
Why should that hypothetical $8 for MS-DOS be any different?

> (Fortunately, though
> , this may be changing; at least Dell is standing up to MS' pressure,
> and I can always go get a PS/Valuepoint...)

How do you *KNOW* that Dell isn't still paying the per-unit royalty, and
just absorbing that hypothetical $8 if you specify a different operating
system?

Oh, and why is bundling OS/2 all right on PS/Valuepoints, but including
MS-DOS and Windows is evil?  Shouldn't IBM give us a choice, too, using
the same criterial you apply to others?

(Now, the machines *I* buy are very unbundled: I'll spec the motherboard,
disk drive, video card, display -- and I'll add my choice of OS to it.
But I certainly won't cry about a bundled MS-DOS that happens to come with
a Unix system, or the useless mouse I get with ATI's accelerator cards.
I just ignore those "features" when evaluating the products' value...)

[ \tom haapanen    "i don't even know what street canada is on" -- al capone ]
[ tomh@wes.on.ca                   "trust the programmer" -- ansi c standard ]
[ waterloo engineering software      "to thine own self be true" -- polonius ]
Newsgroups: comp.os.os2.advocacy