Dan - I don't see how you got that out of my post - I said that the OS price is not much of a factor in OEM pricing.
It is not the price that affects the OEMs - or MSFT's viability in the OS space per se. It is MSFT's ability to create and maintain common hook points at a couple of points in the architecture in partnership with the OEMS that has allowed thousands of independent hardware vendors (IHVs) and software producers to develop components for the WinTel platform, independent of the decisions of the big boys.
Any OEM who maintains their own stack - and that includes SUNW, IBM, CPQ in the Tandem and Alpha lines, HP in PA RISC, must do the whole job - the stack, backward compatibility, enticing IHVs to develop for the platform. Aside from the direct cost of doing that work, which is substantial, IHVs simply do not develop much stuff for those platforms. As a result, the cost to develop a full featured platform is a lot higher, and the functionality is a lot less.
The advantage of "owning it all" is that the platform can be more controlled, and therefore more reliable - as Cheryl is fond of reminding us. And that is a benefit for those who need that capability and are willing to pay for it. MSFT and the WinTel OEMs have yet to solve the problem of controlling the platform tightly enough to give that level of reliability while still enabling the thousands of volume players to stay in the game. Win2K is a step in the right direction, but many third party developers have yet to jump over the bar.
So my contention is that SUNW has a good model which works in its space - the space of customers who need a more consistent and reliable platform, and are willing to give up features and functionality for that consistency. IBM and HP have managed to maintain decent revenues on the same basis. But all of those players see increasing pressure from the WinTel vendors - not yet enough to cut into SUNW's growth, but enough to be a threat. Reducing or eliminating the market mechanisms that have driven the volume segment reduces the price performance advantage of the WinTel players, and forces them to assume (and include in their costs) many of the same expenses that the proprietary players must support. This reduces the tendency for customers to accept the WinTel proposition since their price benefit is reduced, and also slows the need for additional development, incentives for IHVs and ISVs, and other ongoing expenses.
There is no question that this is good for the proprietary vendors, and if I were in their shoes I would do everything in my power to make that happen, as they have done. But it is bad news for the industry in general and for customers.
If my majority holdings were SUNW, IBM and HWP, I might well be on the other side of this issue - I do tend to think with my wallet. I understand and appreciate the positions taken by people more partisan to the SUNW cause than I am. But on a pure "right and wrong" scale, allowing those vendors to use the DOJ action against MSFT to hurt the WinTel OEMs seems like dirty pool. |
