From: mhuth@byron.u.washington.edu (Mark Huth)
Newsgroups: comp.os.os2.advocacy
Subject: Re: Bundling Networks, OS/2 v. NT
Date: 15 Oct 92 02:38:40 GMT
Article-I.D.: u.1992Oct15.023840.4347
Organization: University of Washington, Seattle

>Stacy (or John, whichever you prefer to be called), I think you are
>letting your dislike and distrust of Microsoft cloud your judgement
>on this point.  You're digging yourself deeper and deeper into a
>totally untenable position.  What Pete says, whether you like it or
>not and whether you like the messenger (and the messenger's source)
>or not, is quite correct.
>
>Question:  Just what percentage of the total cost of a typical software
>package would you estimate is earmarked for amortizing the development
>costs?  The general tone of your articles seems to imply that you think
>that this percentage is fairly high -- maybe 50% or more.  I'll give
>you a clue:  for off-the-shelf (non-custom) software, the _highest_
>likely value is probably around 20%, and that would be in special cases
>where the development costs were unusually high compared to what the
>market would bear for the product.  Most of the costs go into production,
>marketing, distribution, and support;  development costs are usually no
>more than 10% and likely in single digits.  Obviously different products
>have different numbers, but I think the general picture is very different
>from the one you appear to have.
>
>> When I buy a product, I am buying a certain set
>> features which I deem cost effective for what they provide.  The company I buy
>> it from has a responsibility to price this at a price that is equiable to both
>> parties involved.  If the price is not set to a point where I can pay for it
>> because it includes features which I deem unnecissary to me, then that product
>> will not get purchased.  The networking development involved a certain cost.
>> Take the networking out of a certain version, and I am no longer purchasing
>> that networking software, nor will I be any further burden on that company for
>> that particular feature set.  Therefore the price of the development costs
>> should not enter into the equation for that product and thus it should cost
>> less.  MS would be selling the networking to those who need it and want it.
>
>You seem to be convinced that the networking support is a high-cost
>development item relative to other things in the basic system.  It
>isn't.  It has often been sold separately in the past with other OS's
>because enough people have wanted it do enable the vendor to set up
>separate product lines for it (it should be noted that it _does_ cost
>the vendor something to split up a product, it's not all gravy);  it's
>also not uncommon for the network support to be bundled in:  it's more
>of a marketing decision than anything else.  Sometimes you can make
>more money by just selling more units (because of the increased feature
>set) rather than reducing the costs of each unit, even at the same price.
>
>The kind of `a la carte' pricing that you seem to be so fond of would
>result in very expensive software because you are having to duplicate
>many of the costs over and over again for all of the components:  Why
>stop at networks?  Why not unbundle everything, since the same argument
>applies a fortiori to other common components, e.g., the GUI?  (I
>should note that not all of these costs are going to the software
>publisher -- MS or IBM in this case -- a lot of them would be going
>to distributors and retailers for handling all the extra packages).
>The idea (not a new one) is to bundle a lot of features together and
>maybe a lot of people will see subsets that they like and discard the
>rest;  and since the entire package only has to be manufactured and
>distributed once, the total cost (and price) can be kept down.
>
>Your idea has a sort of `ivory tower' idealism, but I don't think it
>can work in the real world -- for MS _OR_ IBM ... or anyone else for
>that matter.
>
>Bruce C. Wright
Sigh, Bruce.  There you go confusing all those nasty arguments with logic
and a clear, lucid, cohesive discussion.  Stacy (or John) won't like it
and we'll have to ban you from this group! (grin). 


-- 
Mark Huth                         * Is it too wild to want to get into 
Mhuth@u.washington.edu            * Space someday?
Compuserve 70346,563              *