boomberg bloopers

David Johnson david at
Sun Feb 18 00:24:42 UTC 2001

On Saturday 17 February 2001 03:20 pm, Frank LaMonica wrote:

> > The real problem with the MicroSoft model is that they artificially
> inflated the price of software to way beyond its true cost to develop.

All prices are artificially inflated since no prices are based upon the true 
cost to develop the product. The concept of a "fair" or "just" price died out 
in the middle ages.

The price of a product is determined by both the seller and the buyer. An 
economic transaction cannot occur unless both parties agree to the price. If 
one of the other party does not agree, and the transaction still occurs, a 
crime has been committed (as in the case of burglary, bait and switch, etc). 
Producers always want the price to be as high as possible while the consumers 
want it to be as low as possible. When the balance is made the price is set.

What the producer wants to sell for is as irrelevant as what the consumer 
wants to pay. Too high a price and no one buys it. Too low a price and no one 
produces it. (I'll come back to this)

In the case of Microsoft, they spent  a couple of decades selling their 
products at a price comparable to their competitors. Go pick up some old 
copies of Computer Shopper and compare the prices between Windows and OS/2, 
Novell DOS and MS DOS, Smartsuite versus MS Office, etc.

Now suddenly Microsoft has found out that a significant portion of their 
consumer base considers their prices too high. Their choices are narrowed 
down to a) reducing their prices, or b) convincing the consumer that their 
prices are fair. They're opting for (b), and one tactic is to persuade the 
consumer that Open Source is not worth its price. That they're doing (b) in a 
rather tacky manner is beside the point.

Okay, coming back to the statement that "too low a price and no one produces 
it". I still stand by this, despite the overwhelming evidence that indicates 
that some developers are giving away their products at zero cost. That's 
because the developers are getting paid in something other than money (cf 
Eric Raymond), or the distributors are selling something other than the 
software (cf Bob Young).

David Johnson

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