MS pricing for Win95: Compaq $25, IBM $46

Our friend from IBM reveals some interesting numbers

MS on Trial Microsoft tried to claim during the cross-examination of Garry Norris that IBM was "not one of the top-tier revenue producers for Microsoft", which stretched the definition of "top". Perhaps Microsoft meant that IBM paid Microsoft more than any other OEM, in view of what Microsoft was charging IBM for Windows. The first antitrust case against Microsoft did achieve an end to the old practice of Microsoft charging for an operating system with 'per processor' licences, even if the system did not have a Microsoft OS installed. IBM seems to have found itself trapped by an equally iniquitous problem, but found itself unable to do anything about it. IBM decided it would like to offer its customers choice of Windows 3.11 or Windows 95 at the time when there was considerable resistance about moving to Windows 95. In an unexpected answer to a question, and one that Pepperman did not want, Norris said: "And for about a six-month period of time, Microsoft made us pay both royalties, Windows 3.11 and the royalty for Windows 95." But this payment of double royalties was not the only iniquity: "We also paid Microsoft royalties on what they called designated systems, whether we shipped a licence with that system or not. We also paid you royalties on OS/2 as well." Some interesting information about OEM prices for Windows came to light. The per copy price for NT 3.51 to IBM was $195. With a volume commitment, IBM's price went down to $147.75. NT 4.0 to IBM was $127 with the so-called Windows Family Agreement, but IBM was very unhappy with this price since it believed from consultancy studies and intelligence that Compaq, DEC and HP were paying around $80. IBM was paying Microsoft $46.60 for Windows 95 in August 1996, which Pepperman suggested was what other comparable OEMs were paying, with the exception of Compaq. Microsoft told IBM it could have the same price as Compaq (believed to be no more than $25) if IBM stopped competing - a dangerous thing to say in view of the antitrust implications. ® Complete Register trial coverage

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