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

Internet Security Threat Report 2014

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

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.