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On Mon, 10 Apr 1995, Robert D. Seidman wrote:

> Please forgive the last "blank" message!  It was no way a subtle commentary
> on what I thought of Rex's remarks! 
> 
> On Mon, 10 Apr 1995, R Ballard wrote:
> 
> 
> > The question is, how many people are willing to shell out an extra 
> > $400/year (the first million get it for $50, the second million for $100, 
> > the rest pay $300-$400/copy) for client software.
> 
> Huh?  If you were talking about NT, I would agree with you, but since we're
> talking about Windows '95 -- MS's replacement for the Win 3.1 and 
> 3.11(Workgroups) operating systems, I don't think you'll ever see it in the
> $300-$400 range.  
Actually, I was referring to a marketing practice used by Microsoft since 
1982 on almost every new product it has produced.  If they want to 
release a new product, they first price it at near cost, around $40-50 in 
a package like "Quick C" or "Microsoft Word 1.0" or "Excel 1.0".  It is a 
competitive product with things like Borland, WordStar, or Lotus, and the 
price is so good that the adventurous take a risk.  In six months, an 
"improved" version comes out for $100-150, but only if you already own 
one of the "High priced packages".  Then, when the market has reached a 
certain "critical mass" they switch to the "perceived value pricing" with 
the "Professional Edition".  Within a year, the base editions are gone.  
Of course, so is the competition.  Microsoft took out Borland, Lotus, 
WordStar and WordPerfect, and Novell with these tactics.  Then the user 
can purchase "Upgrades" for $100-$200/year.

This is known as "Perceived Value Pricing", a term coined by Lotus and 
Microsoft back in 1982 when customers realized that they were paying 4-6 
times what they had paid for the CP/M equivalents.  Many had switched 
from CP/M and S-100 machines on the promise of economical software that 
was easy to use.  Much of the cost was that Microsoft was collecting 
royalties on the Run-Time Basic package that gave programmers access to 
graphics and other PC features.

If Microsoft gets over 2 million subscribers to MSN, the price will jump 
to about $400/year.  More importantly, they can track piracy through 
"snitch clients" built into Microsoft applications.  The SPA collected an 
extra 14 million from about 5000 corporations (no I'm not sure of these 
numbers, it's in a PR NewsWire article).  With "SnitchWare" Microsoft can 
sue everybody.

> > How many vendors/servers are willing to shell out royalties to Microsoft 
> > for content, $2000+ for NT Server and NT Exchange?  Remember, this is 
> > just the software.  Many are balking at the $25,000 for an unlimited user 
> > licence for Netscape server.

> My understanding is that Content Providers who wish to house their content
> on MSN will not be forced to set-up or maintain their own servers.  Though
> I can think of a scenario or two where that might be beneficial.  For now,
The point is that MSN is structured exclusively around Microsoft 
Exchange.  I can get a Dial-Up to an NT Server running Exchange, or I can 
get NT/Exchange on a local/corporate server.

The internet is structured around Unix and VMS servers.  Largely because 
Windows was so poor at Telecommunications, Multitasking, MultiUser 
support, and scheduling.  Windows-NT solves *some* of those problems, but 
not ALL.  We can be gunea pigs on 4 million lines of "Beta Code" or run 
Unix/Linux with 25 years of support by 1 million BSEE and BSCS professionals.
Which would you rather have running the computer system that feeds your 
business, the CNE/CME or the BSEE/BSCS?  The CNE studies for 6 weeks, the 
BSEE studies for 5 years.

> I think the content providers house their stuff on MSN's servers and get
> tools to manipulate their data.  I did read though where companies who 
> wish to use MSN as their e-mail gateway could set up a local server connected
> to MSN that would handle all the mail for employees.  This isn't 
> required, as everyone could just use MSN via dialup (and eventually TCP/IP),
I'm sure that Microsoft would be happy to offer dial-up for $30/month 
(multiply by twelve and look at the number in the first paragraph).

> but their actually might be some cost advantages to going the server route
> vs. using MSN.  Then again, there are probably cheaper methods to handle
> internal e-mail and Internet gateways. :-)
Yes, you can fake out the server into giving you multiuser mode for more 
users than you really have.  If you get caught, the legal fees will put 
you out of business.  The criminal penalties will make your life quite 
unpleasant.  Remember, the "SnitchWare" is built-in.

> Robert

	Rex


From rballard@cnj.digex.net Mon Apr 10 22:12:42 1995
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