From: rwh@moose.cccs.umn.edu (RICHARD HOFFBECK)
Subject: Re: FCC will proclaim Microsoft is run by Communists! : )
News-Software: VAX/VMS VNEWS 1.41    
Reply-To: rwh@moose.cccs.umn.edu
Organization: Colon Cancer Control Study, University of Minnesota, Minneapolis
Date: Mon, 28 Dec 1992 18:17:00 GMT

In article <Bzoz5n.HD0@csulb.edu>, sichermn@csulb.edu (Jeff Sicherman) writes:
> In article <1992Dec22.201103.28693@noose.ecn.purdue.edu> helz@ecn.purdue.edu (Randall A Helzerman) writes:
> >In article <1992Dec22.161425.0299694@locus.com>, lowell@locus.com (Lowell Morrison) writes:
> >|> In article <1992Dec22.040237.14440@tc.cornell.edu> bai@msiadmin.cit.cornell.edu (Dov Bai-MSI Visitor) writes:
> >|> >In article <Bzn0EI.D2w@csulb.edu> sichermn@csulb.edu (Jeff Sicherman) writes:
> >|> >
> >|> 
> >|> Lots on Standard Oil & Unfair Competition Deleted.
> >
> >|> MS has not kept the prices down, infact if you look at their $8 a unit
> >|> for bundled Windows for Workgroups vs the $100 per station that the
> >|> end user pays, you might suspect that MS is price gouging the end
> >|> user shamelessly.
> >
> >*sigh* is anybody forcing people to buy MS DOS at $100 a copy?  Any sales
> >which go on are completely voluntary between buyer and seller.  Obviously
> >both parties are happy about the price or it wouldn't get sold.  If
> >Microsoft and its customers are happy, why interfere with them?
> >
>  
>   Well, this can get pretty complicated with the nuances of anti-trust law
> but there are laws that prohibit manufacturers from discriminating against
> different sellers on *arbitrary* criteria (volume is a valid reason) but
> price fixing and unreasonably controlling the ability and price at which
> your resellers sell the product is generally a no-no. And punishing them
> for not following such anti-competitive practices is also illegal. 

Price maintenance agreements are usually used to keep prices high; whereas,
MS is being accused of keep them too low.

> Whether
> MS's bundling agreements fit these situations, I don't know, but such a
> wide gap in wholesale vs. retail prices (which don't manifest themselves
> in the market due to competition) suggest there is something other than
> good-old-American-captialistic-competition operating here.

Its called price discrimination and it is the basis for most real world
competition.  If you can find a fool to pay $495 for a spreadsheet, sell
it to him, then let the mail order places sell to those willing to pay
$295, bookstores sell to students who can only pay $95.  Same thing with
hardcover vs paperback, business coach vs supersaver, and so on.

Actually, I don't see that much difference between $10 a copy for OEMs and 
they pick up the cost of the manual vs $50 at Egghead with MS picking up the
cost of the manual, distribution costs and Egghead's cut.  The biggest cut
seems to be the near universal 30% to 35% discount from suggested retail to
mail order.

If MS required Gateway, Zeos, etc. to purchase a retail version of Windows,
or more exactly, refused to provide an OEM license and required that they
buy individual copies with MS manuals, we'd hear arguments on the other side.

--rick

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| Richard Hoffbeck               INTERNET: rwh@moose.cccs.umn.edu |
| Colon Cancer Control Study     ATT     : (612) 627-4151         |
| University of Minnesota        CIS     : 72406,521              |
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