NetNews Usenet Archive 1992 #31/NN_1992_31.iso/spool/comp/os/os2/advocacy/11320

Internet Message Format | 1992-12-31 | 5.2 KB

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Path: sparky!uunet!zaphod.mps.ohio-state.edu!cs.utexas.edu!tamsun.tamu.edu!bdubbs
From: [e-mail] (Bruce Dubbs)
Newsgroups: comp.os.os2.advocacy,comp.os.ms-windows.advocacy
Subject: Re: Is Microsoft the next Standard Oil?
Date: 31 Dec 1992 22:42:47 GMT
Organization: Computer Science Department, Texas A&M University
Lines: 95
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NNTP-Posting-Host: solar.tamu.edu

In article <[e-mail]> [e-mail] (Jack Choquette) writes:
|In article <[e-mail]>, [e-mail] (Bruce Dubbs) writes:
||> In article <[e-mail]> [e-mail] (Phil Lafornara) writes:
||> |In article <[e-mail]> [e-mail] (Bruce Dubbs) writes:
||> |>
||> |>Actually, I wasn't talking about Standard Oil, I was talking about MS.
||> |>The cost of duplicating software is negligible.  The cost of
||> |>developing is high.  If one company has deep pockets and no controls,
||> |>the potential exists for that company to dump the product (software) for a
||> |>period of time until the competitor goes out of business and then
||> |>raise the prices again.
||> |>
||> |>Has MS done this?  You bet.  How much was OS/2 1.0?  Answer: $325.
||> |>Why so much?  No competition.  How much was the original OS/2 PDK?
||> |>Answer: $2600.  Same reason.  Did IBM go along? Yup. They were
||> |>partners, not competitors then.
||> |
||> |    OK, I give up.  Which of the examples above is an example
||> |of the underpricing you describe in your first paragraph?
||> |
||>
||> Come on Phil.  You know better than that.  Are you saying that if
||> OS/2, NextStep, etc goes away through superior marketing (or other
||> tactics) that MS will not raise the prices?
||>
||> I was describing what DID happen without effective competition.  And
||> what I feel will happen again without ongoing competition.

|I have to point something out here.  Twice someone has asked how the OS/2
|example is an example of underpricing.  Both times you answered that they
|did not understand what you said and attacted them for being so blind to
|obvious validity of your viewpoints.
|
|I don't think you understand what you've written.  In the first paragraph
|you describe how business undercuts a compeditor and then raises prices.
|You then go on to say that the high price for OS/2 is an example of MS
|doing it (underpricing and then raising prices).

I suppose I did not write clearly.  Sorry.
In the first paragraph I point out that MS has the *potential* to gain
a monopoly position through dumping.  Once in a monopoly position the
prices are high.

In the second paragraph, I point out that when in an effective
monopoly situation, MS has charged high (some would say very high)
prices.

I did not mean to imply that MS has previously obtained a monopoly
position via dumping.  I believe their prior dominant position was not
obtained through unethical of illegal means.  I do believe they are
trying to re-establish their overwhelming position by all means,
including marketing, low pricing, etc.  Is everying they are doing now
legal? I can't say for sure.  Its OK for MS to push the limits, but
they shouldn't be suprised if the referee (the FTC) says "OK, you've
gone to far, time to pull back a little."

|OS/2 may be an example of overpricing, I am not questioning that.  But it
|is NOT an example of underpricing to eliminate competitors and then raising
|prices.
|
|I must also point out that I'm not attacking (or supporting) your viewpoints.
|I'm just pointing out that this one point appears to be incorrect or unclear
|and maybe you should clarify it.  Phil did this, in a tongue and cheek sort
|of way, and you attacted him.  Please don't attact me, just clarify your
|point or admit what you said is incorrect or stated incorrectly.

Did I really attack Phil?  I didn't mean to.  I didn't use any
adjectives implying lack of social graces, etc.

|Also, please don't say this is a minor point.  Overpricing a new product
|is much different then underpricing and then raising prices.  Overpricing
|a NEW product (and an example of it) does not support your position, at
|least in the way you've explained your position.  Overpricing a NEW product is
|the fastest way to kill the product and is not a very good business practice.
|
|I may be wrong about overpricing a NEW product being bad for the company doing
|the overpricing.  If I am, please explain how.  Otherwise please use another
|example.  Maybe you can use the example of companies in Japan dumping
|memory chips.

Hmmm.  I agree that overpricing a new product will kill it (as it
essentially did to OS/2 in the late 80's), but I also feel that MS's
prior behavior in a controlling position is indicatative of what they
would do (or any company would do) if the present competition was
rendered ineffective.
   -- Bruce





--
Bruce Dubbs                   |  Oxymorons of note:
[e-mail]        |  Honest Politician, Political Science,
                              |  Scrupulous Lawyer