From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: Rude behavior on this group.
Organization: Texas Instruments Inc
Date: Tue, 15 Dec 1992 18:43:29 GMT

In <1992Dec15.153215.7166@jupiter.sun.csd.unb.ca> hwhalen@jupiter.sun.csd.unb.ca (Hugh Whalen) writes:

>In article <1992Dec14.213730.28787@mksol.dseg.ti.com> mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>>In <1992Dec13.200650.7979@microsoft.com> richs@microsoft.com (Rick Schaut) writes:
>>
> 
>[lots of stuff deleted]
>>
>>>Just to head off the next argument that's headed my way, I want to point
>>>out that a correlation between system price and the price the vendor pays
>>>for bundled software doesn't prove that the vendor is passing the costs on.
>>>That's because the causal link cannot be established.  The higher price
>>>that the vendor is able to charge for the system with the bundled software
>>>is more likely to be due to consumer demand (a computer which includes
>>>system software is more desireable than a chunk of hardware on which one
>>>must bootstrap system software) than it is due to a vendor trying to cover
>>>costs.
>>
>>
>>>I would suggest that a good number of the readers of these newsgroups
>>>enroll in a few Economics courses before trying to argue about the effects
>>>of licensing agreements on computer prices.
>>
>>Some of us have.  In fact, some of us have taken more than a few
>>Economics courses.  The reasoning about how getting DOS and Windows
>>even when you don't want it is 'free' is, in my opinion, bogus.  I may
>>only be paying a few dollars for it (given rumours about some of the
>>sweetheart deals that MS cuts with vendors who force it to be sold
>>with the machine), but I'm still paying for it.  Anyone who believes
>>otherwise should probably get outdoors with a bucket, lest it start
>>raining soup and they miss it.
>>
>>

>*WARNING Speculation and stuff from memory follows:
>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

>Microsoft Word for Windows contains a grammar checker. If you notice 
>the copyright notice on the log on screen it appears that someone 
>other than Microsoft wrote it. I would assume then that Microsoft pays 
>a royalty for each copy shipped. I believe the next version of 
>WordPerfect will also include a licensed grammar checker *without* an 
>increase in price. If this is true then we have an example of a cost 
>to the producer which is not passed on to the consumer because of the 
>effects of competition. I also believe that the list price for the two 
>products is the same. 

So it comes out of the profit margin, instead.  But in a highly
competetive situation, there is no profit margin for it to come out
of.  So either the costs for the other bits have to come down or the
vendor starts losing money on the deal.

No doubt they can make up that small loss on each sale by volume? 

You can't 'prove' things like this by analogy, because all situations
are different.  For example, there is somewhat more competition in the
PC clone business tahn in the word processor for DOS business.  Profit
margins are much slimmer.  When profit margins are slimmed down by
competition, you will pay for add-ins.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
------------------------------------------------------------------------------
Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.