Feeds

MS pushes prices down, not up, claims study

CFA study which claimed Microsoft owed customers $10 billion was deeply flawed, new book alleges

  • alert
  • submit to reddit

High performance access to file storage

A report published last year by the Consumer Federation of America (CFA) which said Microsoft's domination of the applications market had pushed software prices up got it completely wrong, the authors of a second study have claimed. Economists Stephen Margolis and Stan Liebowitz from North Carolina State University and the University of Texas, respectively, charted Microsoft pricing policy for their forthcoming book Winners, Losers and Microsoft: How Technology Markets Choose Products. The result: "Unbiased and careful studies discover that Microsoft lowers prices even when it achieves very large market shares, quite the opposite of the nonsense now being promulgated by the CFA and the Department of Justice," according to Liebowitz. As evidence, the authors cite the battle between Microsoft Word and WordPerfect. Between 1986 and 1992, US prices fell from $168 to $130. At that point WordPerfect's market share collapsed and it ceased to be a major competitor, prices subsequently fell even further, reaching just $46 by 1997. Margolis and Liebowitz claim that in ten software categories in which Microsoft competes, prices fell on average 65 per cent between 1988 and 1995. In five categories that Microsoft doesn't offer software, prices fell just 15 per cent. That may be true, but it has to be remembered that the fall in prices has come more by bundling applications together than because the prices of individual packages have been cut. Word may have effectively costed $46 in 1997, but you'd have had a job buying it as a standalone package at that price. The authors also point out that OS prices have fallen, with a DOS/Windows combo falling from $205 to $163 between April and December 1990. Last April, Windows 95 cost $185 and $98 for an upgrade pack; by the end of the year, Windows 98 was $169 and the upgrade $85. Still, the authors are keen not to be seen judging price cuts like these as a positive move on Microsoft's part -- they're simply saying that prices have come down, and it's wrong to claim otherwise, as the "poorly researched" CFA study claimed to show. Said Liebowitz: "[CFA researchers] base their conclusions on four referenced studies, one of which is a single paragraph in Business Week that discusses a study of industry-wide prices over a two-year period, surely too short a time span to draw any conclusions." ® Complete Register trial coverage

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.