ANALYSIS: How Much is Too Much?

[fulcizombie]

With the news that Linux is set to make an appearance on the ps3,i wouldn't expect MS to leave the console market anytime soon.In fact if the ps3(or ps40 goes down to the road of becoming a replacement for the pc in many things,i actually expect MS to become much more aggresive in the oming years and doing some crazy stuff(like buying some top videogames software companies).

I allready see MS pushing the xbox360/games for windows combo more aggresive than they have ever done in the past with things like Live anywhere and getting things like splinter cell exclusive.

Oh and it also helps that MS is turnng out huge profits each year in spite of the xbox's losses.

 

[Dave Baumann]

Microsoft OS’s are over priced.

For the level of coding, support and features/functionality provided with an OS such as XP I do find it astonishing that people claim its overpriced when its only 2x-3x the cost of a (Windows) game...

And applications like Office are sought after (and are worth the money) because they are actually incredibly functional and useful tools. Works or Star Office will provide more functionality than most home users actually need, but people want the best.

 

[-tkf-]

For the level of coding, support and features/functionality provided with an OS such as XP I do find it astonishing that people claim its overpriced when its only 2x-3x the cost of a (Windows) game...

And applications like Office are sought after (and are worth the money) because they are actually incredibly functional and useful tools. Works or Star Office will provide more functionality than most home users actually need, but people want the best.

The number of copies sold and the total lack of real support for the Windows OS makes it overpriced. You only have to look at the money Microsoft is making to see that it¨s overpriced.

If i buy a Game and can´t get it to work i got lots of places to go for support, if i have a problem with my Windows OS i do what?

 

[zed]

whens the next microsoft financial results due?
my expectation the gaming devision will show a huge loss (perhaps a record one)
the xb360 will never make a profit (true it might have profitable quarters but these wont be enuf to overset the losses incurred)
but as others have pointed out ms aint to concerned, they need a console to counter the ps3 home entertainment leverage system

 

[melfster]

whens the next microsoft financial results due?
my expectation the gaming devision will show a huge loss (perhaps a record one)
the xb360 will never make a profit (true it might have profitable quarters but these wont be enuf to overset the losses incurred)
but as others have pointed out ms aint to concerned, they need a console to counter the ps3 home entertainment leverage system

Yes you are right xbox360 is making a huge lost right now but I don't think the PS3 is going to be profitable for Sony any time soon. I think MS will become profitable on the 360 before sony becomes profitable on PS3.

 

[RobertR1]

As Dave stated, MS is a software company.

My belief is that they're now transitioning to a software+service company. "Live" is a great service and one that with recurring revenue which is key going forward. One time sales eventually saturate the market over time and you have to constantly reinvent yourself. With an ongoing service you can slowly add modules over time and the costs of r&d is easily offset by the recurring revenue.

Going forward, I expect many more services from MS that are recurring than say, new software....

 

[Serenity Painted Death]

They care if they make money on this yes, but I doubt they're really expecting it to happen.

I'm sure at some point the 360 will turn "profitable," but by then they'll already by a good 8 billion in the hole (360 is already "1.3 billion" and Xbox was 5... and this is with reporting that masks some of the loss with profits from other sectors of the company -- and they've awhile to go yet before they're actually making money). Just for reference, from 1998 until present, PS has generated about 5 billion in profit for Sony...

Given that MS employs a similar strategy as Sony (sell for massive losses early, etc) they'd need similar Sony-style domination to really get anywhere. Nintendo is somewhat behind Sony in profit during this same period, but their business model is much more adept.

So even with Sony-like dominance (which won't ever happen) they're still looking at 15 or more years until they've dug themselves out of the sea of red they've painted -- at least with the Xbox brand alone.

 

[Dave Baumann]

The number of copies sold and the total lack of real support for the Windows OS makes it overpriced. You only have to look at the money Microsoft is making to see that it¨s overpriced.

As a user of a peice of software I care about whether I'm getting value for money. I'm fine with paying $50 for a game that I may actually only play for a month; I'm also fine with paying 3x that for software that I'll use for 3, 4, 5 years, is bundled with many applications that I can or could use, and recieve both functionality / usability updates and critical support updates over the duration of that time.

Are you suggesting that games should come down in price based on how popular they are projected to be?

If i buy a Game and can´t get it to work i got lots of places to go for support, if i have a problem with my Windows OS i do what?

MS have support numbers, try giving them a call. Most people will contact their OEM first though.

 

[hey69]

the reason why most people just pirate OFFICE is just, they dont know any other WP.
like other people suggested, you can have free or very cheap alternatives . 90% of the people dont use it to the max anyway.

I have a license from work, we can freely install it over the internet from our work . but i didnt. i dont need it. if I want to type some txt. i use WORDPAD (does the trick)
if i want to view excel sheet, i just install excel viewer97 , idem powerpoint viewer etc.
Lots of people i know, just copy and isntall a whole office suit .

anyway, i hope MS will get a bigger marketshare with the xbox360 then last gen or they will loose lots of money on this xbox360 project. i hope they wont axe it very fast like the original xbox again after 3.5 years....

 

[SPM]

I don't think losing money is an issue for Microsoft. The only two divisions of Microsoft that make a profit are the monopoly divisions - the OS and Office divisions. Every other division makes a big fat perpetual loss. Microsoft can afford to use the Microsoft monopoly tax to pay for losses in other divisions.

Sony doesn't have a monopoly in any field, and so it has to stay competitive in every field and can't leverage any other area in the same way or they will lose out in that area.

The danger of course is that if Microsoft suceeded in buying a monopoly in gaming by using subsidies to force competitors out of the business (like they did with Netscape), the monopoly tax would appear in gaming, and the quality of games would drop as a result of not having competition.

 

[cthellis42]

I'd say about 95% of the people I know have at least one legit copy of Office at their home.

It might not be Office XP, it might be 2000 or whatever former iteration of the product, but at some point they went out and spent the cash and got a copy.

In fact, I think the idea that you used the phrase 'genuine legal copy', demonstrates you believe your very small niche of pirates and thieves is somehow representative of the majority of the population.

It's not.

It is.

When you work in a computer service store, freelance, and do tons of small business onsite work, you get a pretty good look at the "outside of corporate" world.

For every "majority of the population" you see purchasing copies (and that I see, which as I said is more than in times past), I'll match it to at least 5 who do not and 20+ computer business who have two legit copies if they're feeling nice.

The Windows OS is priced fine (especially since everyone and their mother can just get an Upgrade copy), and Word is only $50 if you know to get the Works Suite (which few realize, getting the cheaper "Works #" version instead), but anything branded "Office" is horribly overpriced for the home user. (Also discounting the previously-mentioned S&T edition, of course.) The Small Business Edition is not QUITE as reaming, as you get Publisher (which many home users care about) and there are few other competent desktop publishers with any visibility that aren't themselves rediculously expensive, but at $450 retail, that's still pretty effing steep. That makes Publisher only $50 more than the "Basic" edition without, but do they sell it for that by itself? Certainly not! It's more expensive than Windows! (That's where they sucker-punch parents at least. While the S&T edition is a damn bargain, I can't TELL you how many parents WANT and NEED Publisher help out with the extra-cirricular stuff for their kids.)

So don't be surprised when they "borrow" friends' disks, etc. There's a reason we're OpenOffice pushers.

 

[fearsomepirate]

I don't think losing money is an issue for Microsoft. The only two divisions of Microsoft that make a profit are the monopoly divisions - the OS and Office divisions.

The problem is that the monopoly might not last forever. They have to convince people to buy the new product, which I suppose they can by no longer making the old product (which they do), but how many people truly need a new PC? If the market gets saturated with functional PCs, then sales could sharply fall off, and then dropping billions on a game console could actually hurt them.

If they're so worried about piracy, they might try doing something other than tighter DRM and raising the price. Being against piracy doens't stop it from happening, and widescale piracy like this has got to be driven by economic and market factors instead of just plain lack of ethics. I think it has something to do with selling a product that people need, but don't think is very valuable (like bread), at a price that they think is ridiculously high. Especially when they've been getting Office for "free" when they buy PCs.

Besides, they're hugely profitable.

 

[inefficient]

I think the only reason MS has not been charged for anti-trust practices yet is because they are still not yet #1.

But given their pension for spending dollars from their OS/Office coffers to improve their position, if they do manage to buy their way into becoming the #1 platform for games, it's going to become even more difficult for other companies to compete against them.

"If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life"

 

[RobertR1]

Every company wants to monopolize it's respective market. Get that in your head and you'll understand capitalism a bit better. However, you don't just wake up and have a monopoly in your pocket. Often it's attributed to major stumbles from your direct competitior, gaining an advantage and then making the compeition bleed until it bows out or has it's market share reduced to an insignificant number.

Ofcourse, once you are at that level, it's much easier to crush most competition that starts up but there will always be a "minority voice." It's the fear of this minority voice gaining groud due to your own stumbles (similar to how you got in the dominant position) that forces the dominant company to stay proactive and inventive.

I would be worried however if this "minority voice" was completely silenced. Otherwise, having a dominant company setting the trend and streamlining the market direction isn't a bad thing.

Example: look at networking from the mid 90's to today. Novell NDS/IBM 0S2/NT4.0, lots of protocols, cross platform nightmare and tons of compatiablity issues. Now you have AD and other MS products for majority of your LAN functions. Everything simply works together, easier to manage and much more streamlined. Yet still, Linux acts as the "minority voice" in this case and it does a great job at it. If MS stumbles heavily Linux will be there to pick up the pieces and I'm quite alright with that scenario also.

 

[London Geezer]

Every company wants to monopolize it's respective market.

Mmm well that's not 100% correct. I would say most companies want to have the biggest share of the market. I don't think any company except very few have in their agenda "Become a Monopoly" simply because it's an objective that's unattainable by law, and objectives always have to be attainable (u know, the whole "objective need to be SMART" philosophy, where A is for Attainable). And even without laws, these days there is always some sort of competition and as long as it's there, you can't call the market in question a monopoly, as small as the competition is.

Every company out there is very happy with having the biggest share of the market, the bigger the better. But being a monopoly is useless as a dream because these days there are laws to avoid that from happening.

 

[-tkf-]

As a user of a peice of software I care about whether I'm getting value for money.

Windows XP is alot of value for money if you put it the way you do, but it´s still to expensive and the price is only that high because Microsoft has 97% of the market.

 

[fulcizombie]

They care if they make money on this yes, but I doubt they're really expecting it to happen.

I'm sure at some point the 360 will turn "profitable," but by then they'll already by a good 8 billion in the hole (360 is already "1.3 billion" and Xbox was 5... and this is with reporting that masks some of the loss with profits from other sectors of the company -- and they've awhile to go yet before they're actually making money). Just for reference, from 1998 until present, PS has generated about 5 billion in profit for Sony...

Given that MS employs a similar strategy as Sony (sell for massive losses early, etc) they'd need similar Sony-style domination to really get anywhere. Nintendo is somewhat behind Sony in profit during this same period, but their business model is much more adept.

So even with Sony-like dominance (which won't ever happen) they're still looking at 15 or more years until they've dug themselves out of the sea of red they've painted -- at least with the Xbox brand alone.

It's good then that this "sea of red" doesn't harm them in the slightest,while sony is up for some very hard times until ps3 turns a profit and with psp flopping.

 

[Rangers]

"The same people who pirate office will actually go out and buy a new copy of windows. "

That's because believe it or not, it's getting harder and harder to pirate Windows. The hackers love to claim they crack WGA in days, but guess what? Two weeks later MS comes out with a new one, then you have to wait around for a new hack, however long that takes, which will also only be temporary again.

Microsoft has actually got us by the balls now because now, you more or less must recurringly connect to them for software and patches on the net forever now. I think the pirates best days against MS are clearly behind them. Sure the hardcore will always be able to do it, but it's getting more and more difficult for the average user. It used to be you pirated XP and bam, you were done forever. No longer.

I dont really mind all this. A oem professional copy of Xp and I presume Vista costs what, $130? It's not an extreme expense. What bugs me is now supposedly Vista will only let you switch motherboards once. As a guy who rebuilds his computer twenty times in a five year period, that's just not going to work for me.

I think, google spreadsheets and whatnot are overrated, I was in on the beta, I toyed with it, just the other day I said screw it. I'm not sold on the concept at all, that online for such services will really work as compared to offline. It just doesn't feel stable.

I do find it amusing though, that free open office cannot gain a foothold despite being free. I think it sort of shoots a lot of arguments about the qaulity of certain software in the foot. Personally, I'm not a big fan of open source software, even Firefox, though I use it, has a ton of problems. Open Source always feels second rate or beta to me..

As far as the original topic, the main thing that costs ms is hardware, obviously. Supposedly that is changed with this business model, of them owning the IP. Now theoretically they are just losing the "ordinary" amount for new hardware (much as Sony will lose a lot with the PS3). Of course we cant tell for sure until a couple years, how well it worked. The Xbox1 was really a extraordinary case though, in theory.

The fact ms has not price dropped yet, tells me profit is a big part of their plans. They are very concerned with profit this time around, sometimes even overly so, I think. It is meantioned in the Xbox 360 book, that ms has 1,200 people working as first party developers, while Sony has 2,000. ms has fewer because they feel like they cannot afford more, weird as it sounds. But one thing that means, is right now we're not seeing as many first party games out of ms as one might expect, which could be hurting them. Much has been made about only Gears and Viva coming for 360 for several months now first party.

Also, Zune tells me ms feels they have more of a future in hardware, not less. Zune is really, a big thing, on par with the Xbox project to the outside world, and I think Xbox emboldened them to do Zune.
________
IOLITE MANUAL

 

[Shifty Geezer]

I dont really mind all this. A oem professional copy of Xp and I presume Vista costs what, $130? It's not an extreme expense. What bugs me is now supposedly Vista will only let you switch motherboards once. As a guy who rebuilds his computer twenty times in a five year period, that's just not going to work for me.

That's something I heard aerlier from a friend, but yesterday evening he was saying that it may be a mix up, and you can reinstall the software on a machine however many times you want, but can only have one machine with the software. ie. People who buy a copy of XP and put it on 3 computers in their house will instead have to buy a 3 computer license. Given MS wants everyone to have a computer and an MPC, that'd be pretty danged expensive! And Vista still doesn't really do anything much new - it's not like XP has terrible issues with useability that leaves everyone desperate for a replacement. Apart from hard-core gamers, I do wonder who's going to upgrade.

 

[one]

Wrote about it 2 years ago!
http://www.beyond3d.com/forum/showpost.php?p=363487&postcount=65