Feeds

MS breakup could cost world $310bn – crazed new study

Windows to cost more than petrol, wolves howl on Highway 101..

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

The estimated cost of breaking up Microsoft has reached a new high - consumer worldwide could wind up paying anything up to $310 billion more, according to a new study produced by Professor Stan Liebowitz under the banner of pro-Microsoft and Microsoft-backed lobby group the Association for Competitive Technology.

Liebowitz already has a track record of predicting doom for the US economy if Microsoft takes the fall, but the latest (thanks to Kevin Reichard of Linux Today for drawing out attention to it) is more impressive than ever. He estimates that over a three year period price rises in Microsoft software caused by a breakup could cost US consumer $50-125 billion, the higher figure being achieved "if the two new companies completely turn their back on the prior pricing strategy of Microsoft," while the worldwide figure will be at least $125 billion, but up to a maximum of $310 billion.

The good prof's reasoning appears to be based on a quantity of high-altitude thinking that was produced during the trial. For Microsoft, Richard Schmalensee you'll recall came up with a "profit-maximising" price for Windows of $900-$2000. Liebowitz doesn't altogether back Schmalensee here, rather hurtfully commenting that "economists less friendly to Microsoft" have come up with the profit-maximising number of $813. This is based on the price of a PC being $1000, while Schmalensee went for $2000.

Liebowitz spoils it by plumping for $1700 as the worldwide price. But enough of this guff. The profit-maximising reasoning basically boils down to this: if Microsoft puts up the price of Windows, then clearly the total cost of a PC will go up to reflect this, and therefore PC sales will fall. Depending on how much extra profit Microsoft makes because it puts the price up, this isn't necessarily bad news for the company, because less sales can still equal more money.

So Liebowitz reasons that Microsoft's profit would carry on going up until the price increased something like sixfold. Frankly, it's angels and pinheads stuff that only relates to the real world in the most tenuous of fashions. What would you do if Windows cost $300? What, more importantly, would Dell do? To what extent would the cost of Linux figure in this? And do we seriously believe that Microsoft charges OEMs something in the vicinity of $50 for Windows because it's a nice company?

Linux Today, as you might expect, doesn't think much of the study either, and you can read about that here. If you'd like a look at the whole of Liebowitz's heroic effort, you can get that here. ®

Related Stories

Enemies of MS in plot to burgle supporters. Not
Spying on MS - yes, it's the Man from Oracle

Providing a secure and efficient Helpdesk

More from The Register

next story
Microsoft on the Threshold of a new name for Windows next week
Rebranded OS reportedly set to be flung open by Redmond
Business is back, baby! Hasta la VISTA, Win 8... Oh, yeah, Windows 9
Forget touchscreen millennials, Microsoft goes for mouse crowd
SMASH the Bash bug! Apple and Red Hat scramble for patch batches
'Applying multiple security updates is extremely difficult'
Apple: SO sorry for the iOS 8.0.1 UPDATE BUNGLE HORROR
Apple kills 'upgrade'. Hey, Microsoft. You sure you want to be like these guys?
ARM gives Internet of Things a piece of its mind – the Cortex-M7
32-bit core packs some DSP for VIP IoT CPU LOL
Lotus Notes inventor Ozzie invents app to talk to people on your phone
Imagine that. Startup floats with voice collab app for Win iPhone
'Google is NOT the gatekeeper to the web, as some claim'
Plus: 'Pretty sure iOS 8.0.2 will just turn the iPhone into a fax machine'
prev story

Whitepapers

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.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
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?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.