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Technology Stocks : Wind River going up, up, up!

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To: Richard Karpel who wrote (840)4/16/1997 1:22:00 PM
From: David R. Lehenky   of 10309
 
Richard, I think you missed my point. The "cost" is not just in
royalty fees, its in the system resources required to support the
functionality of the GUI. A GUI is not just software; there is a
significant hardware subsystem as well. As I pointed out in my post,
the GUI will need video or LCD interface chips and display hardware,
as well as a keyboard or keypad and/or pointing device with
appropriate interface circuitry. These things are not free,
regardless of what MSFT charges for WinCE. They can easily exceed
the electronics required by the balance of the system being built.
If you have priced a PC video card lately you will see that it costs
as much or more than a modem of equal quality. The circuitry on the
video card is just part of what's needed to implement a GUI.

In terms of software, a line of program code costs something to
develop and maintain. A piece of software that has twice as many
lines of program code as another (e.g. WinCE vs VxWorks) costs
twice as much - period. MSFT may choose to sell WinCE, with twice
the number of lines of code, for the same price or less than VxWorks,
but the fact is they will be losing money, relative to WIND. MSFT
may do this to gain market share, and this tactic is not unknown in
the business world, but you can be sure they will get it back, in
spades, somewhere down the road. I don't think most companies are
naive enough about MSFT business practices to put their corporate
jewels in that vice. If MSFT prices WinCE based on their costs, they
CANNOT sell it as cheaply as WIND can sell (license) VxWorks.

-Dave Lehenky
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