From: sip1@ellis.uchicago.edu (Timothy F. Sipples)
Newsgroups: comp.os.os2.advocacy
Subject: Re: FCC will proclaim Microsoft is run by Communists! :)
Date: 2 Jan 93 00:59:48 GMT
Reply-To: sip1@midway.uchicago.edu
Organization: Dept. of Econ., Univ. of Chicago

In article <1992Dec29.205926.10277@microsoft.com> philipla@microsoft.com (Phil Lafornara) writes:
>>And who is to decide what "MOST PC buyers WANT?"  The Ziff-Davis crowd
>>who MSoft has put in their pocket through advertizing $$$???  No thanks.
>     No, it's the OEMs, who listen to the feedback from their customers.
>Right now, those customers overwhelmingly want DOS/Windows.  If
>that changes in the future, it may become economical for OEMs
>to offer other preinstalled OSes.  Right now it simply is not.
>>I think it should be up to the individual customer to CHOOSE what operating
>>system they want rather than deal with the heavyhanded and monopolistic
>>practices of Msoft.
>     The individual customer _does_ choose.  It isn't up to
>Microsoft, or OEMs for that matter, to offer you the system that you
>want at the _price_ that you want - if the world worked that way,
>I'd be driving a Ferrari and eating filet mignon for pennies a day.

The Microsoft pricing strategy for DOS is pretty clearly deemed
anticompetitive according to the case law, as far as I've been able to
determine.  We can debate the macroeconomic effects of any action
taken against Microsoft on this point until the cows come home, but
the FTC is likely going to object to the DOS pricing contracts.  This
is a pretty settled issue, actually.

It is not entirely clear that customers demand Microsoft DOS/Windows.
If Microsoft was so assured that customers would overwhelmingly select
Microsoft DOS and/or Windows, then why construct a DOS pricing
contract like the one they have?

To refresh everyone's memory, Microsoft offers two DOS pricing
contracts to computer vendors.  The vendor can purchase DOS at a
higher price and pay only for each copy of DOS software shipped.  Or
the vendor can opt for the second pricing scheme, where the vendor
pays a (lower) fee for each machine shipped, regardless of ultimate
use, and agrees to ship DOS with that machine regardless of the
customer's wishes.

Now, quite simply, if Microsoft DOS were such an easy sell, why even
offer the second pricing plan?  Put yet another way, the OEM contract
contains that requirement (that Microsoft DOS must ship with the
hardware no matter what) for a reason.  That requirement obviously
isn't something an OEM would do voluntarily, other things being equal.

By the way, if bundled sales of DOS/Windows with PCs is evidence that
customers overwhelming "want" Microsoft DOS and Microsoft Windows,
then I suppose it is equally plausible that IBM ValuePoints and PS/2s,
which are selling rather briskly bundled with OS/2 2.0, demonstrate
enormous customer demand for OS/2.

To carry that a bit farther, perhaps Olivetti PCs sold in Europe --
and bundled with OS/2 2.0 -- demonstrate customer demand for OS/2
there.  Ditto Compaq.

-- 
Timothy F. Sipples      | Read the OS/2 FAQ List 2.0h, available from
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