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Technology Stocks : How high will Microsoft fly?
MSFT 510.28+1.4%3:59 PM EST
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To: Dwight E. Karlsen who wrote (40538)4/3/2000 4:48:00 AM
From: William C. Spaulding  Read Replies (2) of 74651
 
The ridiculous conclusion you talk about was reached because I and others had Office listed as zero cost on their invoices. I put up a copy of mine in the article. While IBM did give Lotus away, it did so without any chance of being able to recoup its costs through high prices, because Office was still widely distributed, and therefore effective competition.

You don't seem to understand what predatory pricing is. Predatory pricing is pricing below costs until rivals are minimized, freeing the monopolist to raise prices for maximum profits. I only did the graph because many people have the erroneous idea that monopolies charge the highest price the market will bear, which isn't true. Remember my discussion of price elasticity in my article?

I never implied that high market share=monopoly, because it isn't true. Ditto, for good gross profit margin. The question is, why does the company have a high gross margin? If it's because it has patents, as in Qualcomm's case, or efficiency, or superiority of product, then there's nothing wrong with that. But Microsoft didn't achieve its market share by any of the above. It achieved it by having the computer manufacturers distribute its software to every computer buyer--predatory pricing.
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