From: palmer@pcatsc.UUCP (Doug Palmer)
Newsgroups: comp.os.ms-windows.advocacy
Subject: Re: FCC will proclaim Microsoft is run by Communists! : )
Summary: Microsoft's predatory practices.
Date: 29 Dec 92 18:53:56 GMT
Distribution: na
Organization: United States Courts (pcatsc)

In article <1hn6pkINNg5u@transfer.stratus.com> jmann@vineland.pubs.stratus.com writes:
>In article <1992Dec24.175117.12752@pcatsc.UUCP> palmer@pcatsc.UUCP  
>(Doug Palmer) writes:
>> You are *completely* missing the point. It's not the hardware vendors
>> who are adversely affected by MicroSoft's predatory practices, but the
>> competitor OS vendors. In effect, when MicroSoft enters into an agreement
>> to tie royalty payments to units sold, they are forcing the hardware
>> vendor to add the price of DOS/Windows to any other bundled operating
>> system. This is an "unfair" practice in re the OS vendor, not the
>> hardware vendor. They have effectively increased the cost of all other
>> operating systems. That's illegal.
>
>The various parts of this paragraph don't hold together. First
>off, many companies, not just Microsoft, provide volume discounts,
>which is what I assume you mean by "tie royalty payments to
>units sold."  (Or are you somehow saying that Microsoft should
>NOT charge for every unit sold?) 

I can see where you might be confused. Apparently you are not aware of
the nature of these contracts which Microsoft has formed with hardware
vendors. It's not a matter of the vendors paying for the copies of
DOS and/or Windows bundled with each system sold -- but a matter of 
aggreements forcing the vendor to bundle DOS and/or Windows with each 
system sold. Even if a customer refuses to accept DOS/Windows, the
vendor *must* pay royalties to MicroSoft reguardless of what is actually
delivered.

> I'm sure Goodyear gives
>Ford a discount for buying millions of tires, and that Ford
>can pay less for tires by putting Goodyear's on all their cars
>rather than Goodyear's on some, Michelen's on others, and Dunlop's
>on yet others, since Goodyear will give a far bigger discount if
>Ford buys all (rather than 25%) of their tires from Goodyear.  
>(Warning to the literal minded: this is a hypothetical example.
>I don't know if Ford actually uses Goodyear.)

Some major differences here. First, and most obvious, the tire delivered
by the car manufacturer will actually be made by the tire-maker (take a 
good look at Gateway's DOS and Windows diskettes). Also, if the customer
custom-orders special tires -- the car maker will not have to pay the
standard tire maker a cent (This I've been through personally). As a 
matter of fact, when I special-ordered Dunlop GT Qualifiers for my
new car, the dealer subtracted the price of the Eagle GTs and added 
back in the price of the Dunlops. This sort of ethical trade practice is
precluded by some of Microsoft's agreement structures. They will get
their money whether or not the customer gets/wants/or needs DOS and/or
Windows.

>Second, you keep using the word "forces."  Microsoft is not
>"forcing" anyone to bundle DOS/Windows. They are just giving them
>bigger discounts if they do.  And, in a market where almost
>everyone is asking for Windows and DOS, it is probably cheaper
>for a hardware company to put DOS/Windows on every machine
>(and load every machine from the same tape) than to customize
>every machine someone orders.

If the vendor wants pricing that will allow him to be competitive
in a highly competitive, highly elastic market -- then he has to agree
to the most restrictive of covenants. I find it hard to believe that
*anyone* finds "force" too strong a word for enforcing contractual 
obligations.
-- 

United States Courts                                         Doug Palmer
Automated Training & Support Center
7550 IH10 West, Suite 1100                     spatsc!palmer@spao.ao.gov