From: xtifr@netcom.com (Chris Waters)
Subject: Re: Bundling and the price of NT
Organization: Netcom - Online Communication Services  (408 241-9760 guest) 
Date: Fri, 16 Oct 1992 12:21:19 GMT

In <15OCT92.09363743.0185@UNBVM1.CSD.UNB.CA> Hugh Whalen <HWHA@UNB.CA> writes:

>In article <1992Oct15.050157.29160@netcom.com> xtifr@netcom.com (Chris Waters) writes:

>>probably because they feel that they can charge a slightly higher price,
>>while still selling a lot of copies.  And, chances are good that the are

>Not necessarily. This is where the arguement fails. They may think
>that bundling will let them sell *more copies at the same price*.
>This will also increase their profit.

Ok.  I tend to doubt this in this particular instance, but I'll accept
it as a possible.

>This is one possible way of reasoning. Yours is another (legitimate)
>way that they could look at this. I do not know the way they think.
>You do not know the way they think. Bundling may or may not increase
>the price. The point is that it may or may not increase the price.
>We do not know. For you to say that it *will* is as baseless as it
>would be for me to say it *will not*.

And I didn't say "will", I said "probably".  All I have to go by is the
fact that MS has announced "under $500", which to me suggests that the
price will probably be somewhere between $350 and $500.  Furthermore,
they're planning to offer systems like Win4Workgroups.  If NT is priced
too low, it will cut into the sales of W4WG.  Since W4WG has lower
ongoing cost WRT maintenace, it is to MS's advantage to sell more of the
W4WG and less NT.  (Less NT only if that increases W4WG sales, OC.)

Now, the server market *is* huge, and MS can expect to sell a *lot* of
copies of NT into that market.  Whatever the reason, I think that MS
thinks that they can maximize their profits from NT by selling it at a
price which is *very* competitive with other networking systems.  I see
NT as a network fileserver, not a standalone OS, and I really think that
this is what MS intends.

>>right.  And the fact that this leaves a gap in the market, which is
>>currently being filled by OS/2, is gravy to the OS/2 users.  :-)
>>--
>>.
>If Microsoft prices the thing incorrectly, you may very well be right.

Actually, I think that the ball is in IBM's court on this one.  If NT is
priced to be competitive with OS/2, IBM has the option of repricing OS/2
to keep their edge.  OS/2 has less bundled features, so the bottom line
(ongoing costs) is lower.  So, IBM *can* stay competitive (at least with
NT--W4WG is another question).  Furthermore, IBM is a *huge* company,
many times the size of MS.  They're in a much better position to offer
OS/2 as a loss-leader than MS is to offer NT as a loss-leader.  Just a
thought.

Gee, OS/2 at Egghead for $9.95 per box!  (Well, I can dream, can't I?) :-)

Anyway, I don't think that MS would be "pricing NT incorrectly" if they
priced it in such a way that OS/2 was still competitive.  After all,
OS/2 and NT seem to be aimed at different market segments.  It's more a
matter of "if MS prices NT for the network fileserver market".  And I
think that they have the potential to steal the filesever market, even
if they charge $499.99!  For a standalone OS, that's kinda high, but for
a network OS, that's a *great* deal!
-- 
Chris Waters    | the insane don't | NOBODY for President!
xtifr@netcom.COM| need disclaimers | Because Nobody's perfect!!
Newsgroups: comp.os.os2.advocacy