Software Costs - Why is the focus on MS

[ikonia]

This possibly should be in general discussion but due to the discussions on vista of late I thought it maybe appropriate in here.

There have been a lot of threads stating displeasure at MS's pricing model, authentication techniques and licensing.

With this in mind I can't see or understand why the focus is on Vista.

Windows XP - everyone complained about the cost of XP, so MS released a home and professional version, the only real difference in home and pro was the ability to be part of an AD domain in a business environment, yet I'd put money on the ammount of people buying it because it said "pro" and didn't want to be classed as a home user. Yet the price difference between home and pro was reasonable. MS this time took this futher by releasing multiple versions at different price models and its still getting moaned about. I'm going to use Amazon as a bench mark randomly for this thread.

Windows Vista Ultimate Edition - Retail (ultimate expense)
£313
Annoying activation online and phone
has a transferable license - 1 PC at once

Adobe Photoshop CS2
£497
Online Activation or phone
transferable license 1 PC at once

Dreamweaver 8
£328
Online activation
Transferable license 1 PC at once


Quark Xpress
£886
Online Activation
Transferable License 1 PC at once

Autocad 2006
£1090
Online Activation
Transferable License 1 PC at once

now some of these are extreme examples and specialist business use only, but I'm including them to show the reality of anything from home use to small or big business

Windows Home Vista Premium eddition
£187
online / phone activation
Transferable license 1 PC at once

you'll bulk it up with software that you consider needed for you use like PS CS2 or Dream Wever that costs double that and have similar activation methods - albeit less often.

You'll pay for the hardware required to run this without a batting an eye lid, you'll pay for software and games on top of it

Doom 3
£35

Command & Conquer 3
£29

ten games over the course of the year and you could have bought Vista Reatail

I understand frustration at the terms of the license (although don't agree) and I understand frustration at the price of vista (although don't agree - you have a massive choice of cost and license) Why is there complaints that you need to pay this much to then pay more for the software and games you love so much

(all prices are amazon.co.uk and current of today to try to show a reasonable representation)

[Dreaming]

Unless it comes with the computer I don't know many students who go out and buy photoshop or dreamweaver, it's prohibitively expensive.

[ikonia]

I didn't include OEM/Student/Upgrade style products in the example as the prices vary, I could do the same examples with studen/oem/educational editions, but for the purpose of this discussion I selected full retail editions.

[TheAnimus]

Originally Posted by Dreaming

Unless it comes with the computer I don't know many students who go out and buy photoshop or dreamweaver, it's prohibitively expensive.

but how many use it!

[excalibur2]

Originally Posted by Dreaming

Unless it comes with the computer I don't know many students who go out and buy photoshop or dreamweaver, it's prohibitively expensive.

But I bet quite a few leftie students object to Bill Gates being the richest man on earth, also capitalists charging big bucks for software, and pirate software.

[directhex]

Originally Posted by excalibur2

But I bet quite a few leftie students object to Bill Gates being the richest man on earth, also capitalists charging big bucks for software, and pirate software.

if you object to "capitalist software" then switch to open source

[dangel]

Nice examples - but flawed. The one thing you didn't talk about is volume - how many people buy photoshop compared to Windows? Larger volume should equal a smaller price should it not? Unless of course you a market monopoly, and therefore you have no reason to lower pricing. In fact, you might even charge a far higher price in the UK than another market.. Of course there's open source.. but then that's far too frightening a prospect for joe bloggs - he wants windows cos he uses it at work and had the last version.

How many copies of Windows will MS sell this year? During nine months XP did "35.5 million copies of the fully functional version of Windows XP were sold in Europe during the same nine-month period" (http://www.microsoft.com/presspass/l...pnsalesfs.mspx)
We have to remember that this is a guaranteed cash cow for MS - what they see through OEM's and retail adds up to one heck of a pile of DVDs per annum. Do any of the other examples get anywhere near this volume? I wonder.

Right i'm off for tequila - have a good weekend

[chuckskull]

I completely agree. Vista Home premuim(which is plenty for 99% of people, even most professionals) can be had for just over £150, even less with a new PC, or even just a stick of RAM if you wanna bend the rules a little. For a piece of software that will last a very long time and has 10+years of free support and updates that's pretty good IMO.

There are free alternatives, but in my opinion for mom and pop beige box, and even for most high end users it's just not as good as Windows for desktop use. It's a great OS don't get me wrong, especially in the server space, but for a desktop it just cant compare to Windows.

And please don't go bashing Vista without even using it. Which apart from some very minor teething problems is very good.

[bluesatin]

Originally Posted by dangel

Larger volume should equal a smaller price should it not? Unless of course you a market monopoly, and therefore you have no reason to lower pricing. In fact, you might even charge a far higher price in the UK than another market.. Of course there's open source.. but then that's far too frightening a prospect for joe bloggs - he wants windows cos he uses it at work and had the last version.

According to what I've been taught in AS business studies..

If your product isn't very popular the higher prices you can put up
If your product is really popular you can put the prices up

But of course the other factor is that Microsoft have a monopoly on the OS scene, so they can charge whatever they want really, within the law

And of course the other programs are in a similair situation for high end use, monopoly (25% of the market is a legal monopoly I think (In England), illegal if it's over 25% I guess?)

[mike_w]

Originally Posted by bluesatin

If your product isn't very popular the higher prices you can put up
If your product is really popular you can put the prices up

If you want to be really technical, the effect on demand of changing price depends on price elasticity of demand. If demand is price inelastic i.e. consumers are insensitive to price changes, and you raise prices, then the proportion of customers lost is less than the proportional price increase (and total revenue rises, other things being equal). If demand is price elastic i.e. consumers are sensitive to price changes, and you raise prices, then the proportion of customers lost is greater than the proportional price increase (and total revenue falls, other things being equal).

Elasticity is determined by a number of factors, but one of the major factors is the availability of substitutes. There are no substitutes for Windows in the eyes of most people - most are unaware of or unwilling to use alternatives OSs for whatever reason. And, of course, you need an operating system to use a computer properly, so there's no substitute in that respect. Therefore, demand for Windows is reasonably inelastic, and so it makes sense for Microsoft to raise prices to increase revenue*.

* Of course, this neatly ignores any issues of the black market i.e. piracy.

And of course the other programs are in a similair situation for high end use, monopoly (25% of the market is a legal monopoly I think (In England), illegal if it's over 25% I guess?)

If you have 25% or greater market shares its legally a monopoly so far as I know, although many such monopolies are probably more accurately described as oligopolies.