Microsoft makes 85% margin on Windows system 5

[thorntonb]

FRONT PAGE - COMPANIES & MARKETS: Microsoft makes 85% margin on Windows system

Can you believe this??

http://search.ft.com/search/article...ry=Microsoft&vsc_appId=totalSearch&state=Form

Where is IT Going In The Next 5 Years??? not sure but all the money is going into Microsoft's bank account

 

[schase]

wish it was a product of mine. "Damn the torpedoes, full speed ahead!"

-Adm. James Farragut

Stuart

 

[petermeachem]

Yes I can believe and no I'm not surprised and no it is not relevant to anything at all.
I'm afraid I will just have to admit to having sold items at enormous profit. But I don't make an enormous overall profit.
I'm surprised that the ft should print such a silly article, makes you wonder what they are up to.

I think it should be obligatory for everyone to run their own business for a year or so. Or at least get taught the relevant points at school. Then we wouldn't be subjected to this sort of thing.

I've just looked up Citrix financial results. I quote

"Electronic delivery of licenses this quarter amounted to 26% of product sales compared to 19% in the previous quarter."

That obviously doesn't actually cost them much, little more than electricity for the computer. What's the margin on that then? Shocking.

Peter Meachem
peter @ accuflight.com

 

[Craig0201]

Ummm, yes......easily.....

Just a question here but what is wrong with MS being successful???

Craig

 

[jad]

85% margin?

i wondered why my printing looked sh*te

 

[CajunCenturion]

I don't have any problem with a company making 85% profit on a good solid useful product.

I have a problem with a company making 85& profit on a product that crashes once a week, and thru monopolistic policies, does everything in its power to squash the competition and prevent users from having a choice. Good Luck
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As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[thorntonb]

I wish it was a product of mine too, I have no problems with Microsoft, only when their products don't do what I want them to ;-).

Brian

 

[Craig0201]

Name a company that wouldn't try to maximise profits by defending market position? If you don't you're a fool!!!

Craig

 

[Grenage]

Defence and defence in the form of an attack are completely different. Mind you this isn't the place there is a forum dedicated to worshipping and slagging off Bill Gates and MS.

 

[rycamor]

It depends what kind of a "problem" people have with this 85%. If it is just an opinion kind of thing, then have at it. I can easily understand an opinion that products such as Microsoft's don't deserve such a margin, if you take into account the quality of the software, bad implementation of protocols, etc... As always, my complaint with Microsoft is not about it being an evil beast, but simply the low quality of software that people have become conditioned to expect.

But if you mean is it wrong morally, then no: a company should be able to sell a product for whatever it decides. If people buy of their own free choice, then who is to blame? Don't give me the old tired argument that they have no choice. Alternatives have always been available. They just weren't as attractive to most purchasers, for whatever (uninformed) reason.

However, it does point out some very interesting things about Microsoft, and about the software industry in general. If I remember my basic economics right, the standard profit margin for large corporations is somewhere between 4% to 6%. This is for commodity goods, on a relatively open market, etc... Basically, if they fall below 4% for too long, they can't maintain the company, and if they go above 6%, another company undercuts the price, and forces them to lower their profit a little. Mind you, these are very generalized averages. Obviously these generalizations don't apply to startup companies and new technologies, because they might easily have many times this sort of profit margin for a short time, until the market reacts and competition steps in to stabilize things.

Now Microsoft may post an 85% margin on certain sections of the company, but what is more interesting is its total profit margin, which appears to be around 40%, if I correctly read the SEC filing at

http://www.sec.gov/Archives/edgar/data/789019/000103221002001614/d10q.htm#tx220_1

This is an incredible profit margin for a company of its size. But then again, we are talking about the software industry, where all the old metrics don't apply. Companies much smaller than Microsoft regularly produce better, more complex software. This is a world where well-designed operating systems can be developed by few people (BEOS), or even by one person (

http://www.atheos.cx)!!

So the quality of the software has almost nothing to do with the number of people you throw at it. In fact, in "The Mythical Man-month", the author argues that throwing more people at a software problem usually makes it worse. (Case in point, well... I'm not going to say.). Also, since the 'Net, the necessary cost of distributing software is almost nil in comparison to what it used to be. (it still costs something: the download itself burns up bandwidth). But Microsoft still makes its monely purely with prepackaged, physically shipped software.

Yet, even with all of the inefficiency these facts imply for Microsoft, they still manage to generate huge profits. This is because there is an absolute economy of scale on software. Write once, distribute many times. To me, it is actually amazing that Microsoft doesn't make more profit. Here's one way to look at the inefficiency of Microsoft: if Microsoft lost 50% of its customer base, it would be no longer making a profit. This is in spite of the huge economies of scale available in software, and in spite the fact that 50% of its customers would still number in the billions!!! That's kind of an amazing fact, really. And remember this: even if that population continues to be loyal Microsoft users, there is NO profit for Microsoft unless they buy the next, latest and greatest from Redmond. Microsoft has no use for loyal Windows 95 users.

So, this is why Microsoft jumps like a scared rabbit at any sign of real competition. The threats are still very real, in spite of their preeminant position. IMHO, this is because while making good business choices, they have made comparitively poor technological ones. They are constantly having to "rework" some piece of software to make it handle a new situation. (Winsock anyone?)

Let's just do a mind game here: what if Microsoft disappeared, and we just "dropped in" a group of people providing replacement software for all Microsoft Windows client and Office products. This could be any company that provides a nicely tweaked combination of Linux or FreeBSD, with KDE as the desktop, Koffice, or Star Office/Openoffice as the business software, etc... The software could be sold en masse for a fraction of Microsoft costs, and could feasibly do (one way or another) everything that Microsoft's software does now. (Yes, I know about the migration costs, but let's leave those for a minute) The world would be billions of dollars richer, both in software costs, and in much lessened security costs (antivirus software, trojan cleanup costs, etc...). This could well offset the migration costs, which I think wouldn't have to be as great as most people make them out to be. After all, most companies have their corporate information systems hosted on Unix servers, anyway. Actually, I think the real savings would be in the trillions, because once companies realized the administrative savings involved, they would be able to use their computer personnel for productive work, instead of the frantic running around that most have to do now.

Nah... I'm talking foolishness now. What major company would ever think this way? (The answer: Microsoft itself --

http://www.theregister.co.uk/content/4/28226.html

and

http://www.securityoffice.net/mssecrets/hotmail.html).

-------------------------------------------

Big Brother: "War is Peace" -- Big Business: "Suspicion is Trust"
(

http://www.cl.cam.ac.uk/~rja14/tcpa-faq.html)

 

[palbano]

>> on a product that crashes once a week

Oh great... here we go again.

Tell me where that guy is that's holding the shotgun to your head and forcing you to use it and I will find someone to come and take care of him for you so you can start using the Hamilton OS or whatever you want.

-pete

 

[jad]

some tools only exist for windows ... have you ever used a tool called 'TOAD' ? i'd love it for unix, it's the best database tool i've come across, but it's only windows based.

Oracle also has it's designer and developer tools only working on Windows, so if we want to use them, we have to use windows.

have you heard of a program called 'Solidworks' ... 3D CAD package, only works on Windows ... our CAD guys here love it to bits ... it is easy to use, well built, and the user support is second to no other CAD support ... they will talk to you for hours to solve your problem, will ring back, and if need be will come and see you to talk to you about it. they also implement things in their software that might only be asked for by 1 person ... we know of a guy who wanted to do 'plumbing' drawings in 3D and they coded a whole interface to deal with 'welding' joins and 'barreling' of surfaces ... yes they're useful for other people, but it started with 1 guy asking a question ...

I could name about 20 other examples if you want them ... most of the sh*te you get on windows can be done elsewhere, sometimes better ... but there are a few applications that just work on windows that you can't get elsewhere.

if i could get these people to code for Solaris, or Linux, or any other Unix type; i'd swap out my windows machine in next to no time ... but it's not going to happen any day soon.

 

[CajunCenturion]

>>Tell me where that guy is that's holding the shotgun to your head and forcing you to use it

The person is my employer who signs my paycheck. Good Luck
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As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[Craftor]

>>Tell me where that guy is that's holding the shotgun to your head and forcing you to use it

The person is my employer who signs my paycheck.

But what's stopping you from running something else at home? I work for a company that considers (and I'm not joking/exaggerating here) anything non-Microsoft "evil". (My boss's exact words to me). He refuses to use anything but MS products and languages - even when another solution is better/more readily available.

I run a dual boot Linux/Windows at home (and it would be totally Linux if only I could port my games easily!).

This is totally personal preference. I'm not fully comfortable with Linux (only having started learning it this year) and I think Windows is actually quite a nice, easy to use OS. I disapprove of their policies especially product activation (part of the reason for the swap) but if that was out the way (and Windows was that much more reliable!), I'd stay!

My Linux I got for +/- $10 at a Computer Faire and I'm trying to switch purely because I object to having to pay +/-$200 for XP. (not to mention less security & virus risks).

We may not have a choice in the workplace but we (theoretically) do at home.

This post isn't to knock anyone using Windows (or not using Linux for that matter) - just my 2c worth...

Craftor

 

[Grenage]

Well MS products aren't really that bad. Windows 2000/XP are pretty good as far as stability goes, most crashes/issues are 3rd party programs. Don't get me wrong I use a Linux/xp machine at home but the real reason for me doing so is principle rather than windows is pants and unreliable.

 

[CajunCenturion]

Craftor As you said - We may not have a choice in the workplace but we (theoretically) do at home. ... I work for a company that considers ... anything non-Microsoft "evil".

That's my point. What we have at home doesn't put food on the table or pay the bills. Most of us don't have the luxury (and neither do you I see) of dictating what we use at work. If the machine crashes once a week at work, is it any less frustrating? To know that the majority stockholders of Microsoft have gotten rich on such sub-standard product because they are marketing geniuses does not relieve the angst of the person in the trenches whose productivity is reduced because of the sub-standard tools.

By the way, when are you going to get that someone to come take care of your boss - you know, the one with a shotgun that signs your paycheck that believes that anything non-MS is "evil"? Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[Craftor]

LOL CC - as you say - we do it cos we have to. At least I get free lunch here and have the liberty of looking at my penguins when I get home!

But as Grengage says - Windows is getting slowly better. Maybe *dream* there will come a day when Windows, too, can run for a week without strange things happening when I try to compile...

The problem is (and unfortunately there's not too much we can do about it in a work situation) that MS has the majority of the market share atm. They don't care that I want my DirectX games to run on Linux - and it's not in their own best interest. Linux, in fact, has been identified as MS's no. 1 competitor.

I don't know what the home market is like overseas but, unfortunately, even if everyone here stopped using MS as a 'home' OS, it wouldn't really make a difference as there are huge corporations that have thousands of users using MS.

IF (unlike me ) you are in the kind of company that is not totally pro MS, maybe you could suggest using Linux more - especially since Linux is not as hardware intensive as Windows - I hear (possibly a rumor) that SuSE can run on a 486 still???? Try WinXP on that!

We all are unfortunately hit by MS's lovely pricing margin. Possibly one of the best things to do is to use their 'fear' of other OSs against them by promoting them in the workplace .. if your boss is looking to do web hosting - suggest a Linux servser as opposed to Windows (and cite that lovely IIS bug that cropped up a few years ago).

If the majority started looking towards another OS (anyone want to take bets), MS would have to rethink some fundamentals of their business practices and, as always in such things, the customer stands to WIN WIN WIN

PROTEST FOR LINUX AT WORK *runs around in a penguin suit* <sigh>

I's been said before - a 900 pound gorilla doesn't worry where he sleeps (or who he sits on) and MS is unfortunately that gorilla ...

And yes it seems to have gone up from my 2c to my $10 dollars :-D ... i do go on ...

 

[CajunCenturion]

I completely agree. MS is that gorilla, and is just now beginning to care. LINUX is making inroads, and its market share is growing and that, IMHO, is why MS products are at least beginning to get better.

The race is on. LINUX is growing, and Microsoft is improving quality.

I certainly prefer LINUX, but at the present time, and dependant on MS products, such as they are, to fulfill my family obligations. Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[Grenage]

While it's true that if everyone at home ran an alternative OS - MS would still be dominant in the Worksplace, people would at least be more familiar and comfortable with them. One reason many employers don't incorporate Linux on the desktop is because of the retraining required (although this isnt always applicable). Support is always an issue aswell and there aren't enough IT staff keyed up on any operating system other than Windows (speaking from the UK), when your company hits a snag on system deployment you will need people who know what they are doing within the company. Linux/other OS's will make their presence felt more in the work place eventually but only once the people using or maintaining it have sufficient knowledge and experience.

It's all too easy to go Miscrosoft at the moment.

 

[jad]

we have a strange one here (i'm UK based btw) ...

we hire people with little computing experience (they cost less i guess) and train them up. we're not MS junkies, and so with each new person we try and push a little bit more over to Solaris.

we've found there is no 're-training' problem because these guys have never been trained

i've written a system that works via a web browser ... the users also access mail ... in one instance where i swapped out a windows machine and placed in a Solaris machine i said to the guy running that specific department (Guy A) to tell the guy who now had to cope with solaris (Guy B) what the differences were.

ME: I'm sure <Guy A> will be able to tell you the differences between the platforms
Guy A to Guy B: There aren't any.

ME: yes there are, they're totally different.
Guy A: I haven't noticed ...

as far as they're concerned, they log in at the login screen, open up netscape from the 'netscape icon' which although a different icon is about 5 seconds worth of training, open mail from the icon that looks like an envelope ... and thats it. there is no retraining issue because the rest is the same.

Hmm ... if i keep wafling like this you'll all get bored, so i'd best stop.