MSFT Internet Explorer vs. NSCP Navigator Message Board

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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator

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To: Reginald Middleton who wrote (3237)	11/20/1996 4:32:00 PM
From: Mark Finger	of 24154

I see that the OEM price is about $55 to major computer companies that bundle Win95. Assume 50M machines per year this means that $2.5B is Win95 on new machines. If Gateway is offering NT Workstation as a $99 upgrade, I cannot believe the 4x price (I suspect that the added cost is about $70 or so. I expect the transition to NT to take 3-5 years unless Microsoft does what they did with Win 3.1 and drop the product entirely. Yes there will be growth here but the numbers do not quite develop like you would say. Also remember that very few machines over 2 years old will be upgraded to Win 95 because of the cost of hardware and the relative price of new machines (probably less than 10% of the installed base will be upgraded, and the bulk will be done by site license). Yes, NT Server is much more costly but I wonder about how many will really use it. I suspect that the real boost was the compession of the normal upgrade cycle in applications and the boost in prices for 32 bit versions. Under normal circumstances, only about 25% of people upgrade their applications for any specific version. Some of those skip versions (go from version 1 to version 3, for example). The situation following Win 95 made it somewhat more likely that people would buy the upgrade, because there would be more perceived value in that upgrade than the normal one. Increasing the upgrade rate to 35% would produce a very nice sales boost. If you look at Microsoft's quarterly sales numbers, there was a sudden increase in the September 95 quarter (the quarter Win 95 was released). The increase was very pronounced. Since then, Microsoft has gone back to about 3-6% sequential quarter increases over the next 4 quarters. Right now Microsoft sells about $100 per Intel based machine sold. They would have to increase this number by $15-25 just to grow by Oracle rates for FY 97. They did not do that during FY 96, even with Win95; and I can see no event that can do something like that in the next couple years (NT simply cannot do that).

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