DFS wrote:
> Rex Ballard wrote:
>
> > At one time, the OEM believed that "Without Microsoft (OS du jur), all
> > you have is a box with blinking lights". Today, OEMs know that Linux
> > will work perfectly well, but they also know that most customers still
> > want to run Windows in some form. Microsoft's pricing model is pretty
> > simple. By what you need (say 80%) at 10% discount, or by way more
> > than you need at a 40% discount. Let's say that the OEM price is $100
> > for 100 copies or less. Let's say that the OEM can sell 10 million
> > machines, both the OEM and Micrososft know this, based on previous
> > year sales, license registrations, and the XP "phone home" update
> > service. The OEM can buy 8 million licenses for $90 per copy, for a
> > total of $720 million. Or the OEM can buy 12 million copies at $60
> > per copy, which also happens to be $720 million.
> >
> > There is a catch. The OEM must purchase all of those copies within
> > the year. They can only install them on their own machines (can't
> > sell them to other OEMs or VARs), they can't use them the following
> > year. On the other hand, if they order the entire amount, Microsoft
> > will finance the purchase interest free, and give them 12 months to
> > pay. If the user violates the OEM license agreement, they still have
> > to pay off the loan, even though the licenses purchased would be
> > revoked. If the licenses are revoked, Microsoft can negotiate a
> > "repurchase", and might even offer them for as little as $10 copy,
> > but only if the OEM accepts even more draconian terms.
>
> Here you go again, laying out very specific numbers when the truth is you
> have no idea about any OEM contracts with Microsoft. Is this what a
> "visionary" does?
>
I was kinda hopin you'd ask that.
Back when I was working at Prudential, in about 1997, I had a nice
little cube, right next to the Microsoft rep. She was a nice lady, I
think her last name was Lawless (like Lucy), but I couldn't be sure
about that. I would quietly work at my desk, doing my job as
technology evangelist for new architectures, and listen as she made her
pitch to customer after customer. I really couldn't help but listen,
she wasn't exactly the "quiet type". And she would be very
enthusiastic on the phone as she pitched company after company for NT
4.0 and Microsoft office.
She had a quota to meet for each company, at it was quite clear that
she had been doing this for a few years. Her approach was as sweet and
friendly as possible, as she pretty much laid out the choices. After
listening to this "cliff tiered" approach a few times, I did the math.
It turned out that, just as she said, it would cost almost exactly the
same price to purchase far more than you needed at a deeper discount,
than it would to buy the bare minumum you needed at the standard
discount. Of course, there were those terms, and the generous
financing offer, and the penalties for not meeting your minimum
commitment rates.
One day, I "accidentally" left a copy of Red Hat Linux on her desk.
After that, she talked more quietly.
One day my supervisor called me into his office, and gave me a document
to copy, and asked me to return it. When I got to the copier, someone,
appearantly high in the corporate IT division, had left a copy of the
Microsoft corporate license agreement for Prudential on the copier. I
made the copy and noticed that some of the pages were out of order. As
I sorted the document back into order, I got a really interesting
glimpse of Microsoft's contracting practices, and how really nasty
Microsoft could get.
Later that year, Microsoft wanted to sell Office 97 to Prudential. We
were quite content with Office 95 and I suggested that unless there
were some compelling reason to purchase this version, it might make
sense to wait for the next version (which would have been Office 2000).
It was going to save the company about $25 million in licenses on
100,000 workstations, and 250 million in total costs, since there would
be no requirement for additional labor. In addition, the license
agreements for Office 97 had more restrictions and would have required
that Prudential purchase copies for any employees who had Windows PCs
at home (even if their PCs were sold to them with Office 95 or Office
97 preinstalled).
Ms Lawless (or whatever her name was), left shortly after that. And
within a month, Microsoft was demanding a "license audit". They were
finding client access licenses we had never heard before. Before long,
they handed us a bill for -- yep. $25 million dollars.
It ultimately boiled down to the fact that Microsoft's revenue plan
called for $250 per employee, and they were going to get $250 per
employees even if they had to pull a rabbit out of the hat to do it.
Ironically, immediately after this little maneuver, I was asked to
provide some demonstrations of Linux server and desktop. I was given 5
days to simulate a project that had been 6 months in development on
Windows. Furthermore, I would not be present when the equipment was
being demonstrated.
I installed the systems, and had everything working perfectly, but at
some point, a "little gremlin" decided to plug my ethernet cables into
a different router, breaking the connectivity which had been
established by the server. Someone at the show gave me a call, I got
the DHCP address, switched the routings on the machines via remote
access, and had everything working again within 15 minutes.
It turned out that Prudential actually had 5 Linux servers in the
computer room, hiding in the back. One was being used as an
administrative system. Another was being used for training. A third
was used as a test system, and a forth was being used for some other
support utilities. One of the machines had been running for over a
year without a reboot.
> > Keep in mind that the terms are also pretty simple. Microsoft will
> > provide the "core" configuration. Any change to that configuration
> > (such as addition of drivers for hardware) must be approved by
> > Microsoft prior to shipment. This means that ANY change to the
> > configuration, such as the addition of boot managers, change in drive
> > partitioning, additional applications, and so on, must be approved, by
> > Microsoft, in writing prior to shipment.
>
> How do you know? You don't. So why do you blab this stuff?
>
That information was made public in transcripts of the contempt of
court case in 1997/8, and the Antitrust preliminaries in 1998. Again,
I've seen some contracts that the public doesn't get to see, and I've
read the transcripts and documents that most people, especially the
reporters, tended to ignore. Much of this information was available as
part of the depositions and briefs filed shortly after Judge Jackson
ruled that Microsoft's contract requirement that Microsoft lawyers be
present, when DOJ investigators were interrogating witnesses and taking
depositions, was obstruction of justice.
Almost immediately, a number of filings and briefs were filed. It
painted a much bigger story, and if the DOJ had been able to expand the
scope of their case, they might have done so. Instead, Judge Jackson
had limited the scope of the case, and the number of witnesses allowed
to testify directly. Jackson's strategy was to allow the DOJ to
establish a pattern of abuse that warrented a structural remedy. The
additional briefs and supporting documents were admitted into the
record, probably because Jackson didn't want the Appellate court to
allow Microsoft to submit their own version of the facts and claim that
the facts in the case were innacurate. This is how they won their
contempt of court appeal.
I don't think the records in this case were ever sealed. There is a
web site and it only costs about 2 cents/page to download. I think I
spent about $20 at the site.
It's amazing how much information the news media doesn't include in
their reporting.
Why is that anyway?
> > They are not willing to
> > continue to have Microsoft "tell them what they are going to eat".
> > With OpenOffice, FireFox, and numerous critical applications now
> > available on both Windows and Linux, and Linux now offering equal or
> > better applications at a fraction of the cost,
>
> Which apps?
>
Rational studio, Lotus Workplace, Eclipse, PeopleSoft, SAP, Oracle, SGI
rendering solutions, StarUML, Umbrello, project management software, CA
software, Borland Kylix...
More and more apps are being written in truly portable Java, and can
easily be run on both Windows and Linux. A number of applications such
as VMware, VNC, and Fsecure are available in both Linux and Windows.
Some, like Fsecure, are written to a cygwin library for Windows and run
directly on Linux.
>
> > The end-user gets misdirected to MSN and ends up
> > getting billed $20/month.
>
> Liar.
>
>
> > Microsoft can easily make as much as $2,000 per machine
> > in revenues AFTER the Windows.
>
> ROFL! From who?
>From you.
Buy a house, Microsoft gets part of the realtor's commision. Buy a
car, Microsoft gets a piece of the car dealer's profit. Get a job
through Monster, Microsoft gets a piece of the head-hunter's
commission.
If you think about it. It's actually a much better business model than
focusing only on the Operating system and some applications that let
you print pretty documents on a laser printer or put cute "slides" on a
projector.
Microsoft really understands the value of information. This is why
they so jealously guard the OEM channel. This gives them access to far
more information than they could possibly get if they only sold retail
versions that had to be installed by the customer.
> > This is one of the reasons
> > that they are willing to offer OEM prices that are 75% off MSRP, then
> > reduce them another 40% for market "saturation". Microsoft will sell
> > a $400 product (MSRP) for $20 per copy because they can get $4,000
> > over the next 5 years from the customer if they do so.
>
> You're nuts. Slinging crap numbers pulled out of thin air - with no
> relation to reality - which the cola cabal is all too willing to let slide.
The lowest discounted price for OEMs is about $20 per copy for the high
volume buyers who get "kickbacks" for "intellectual capital", using
Linux hostile hardware, and granting other terms favorable to
Microsoft. I think the lowest price on the public schedule is about
$35, which is about 10% of the "discounted" price of Windows XP Pro at
CompUSA in USA.
|
|
