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Technology Stocks : How high will Microsoft fly?
MSFT 477.66+0.8%3:56 PM EST
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To: ToySoldier who wrote (11652)10/22/1998 2:44:00 PM
From: rudedog  Read Replies (1) of 74651
 
Toy -
You forgot the smaller or upstart PC OEMs that will not get these same deals with MSFT

Actually MSFT has made it possible for even very small OEMs to offer competitive prices, without much commitment. There is a program called DSP which gives significant discounts with a quantity commitment as low as 3 units. There are other programs (such as the MOLP program) which allow small companies to get an increasing discount level as they sell more, especially if the sales are to a single company (say a small reseller who does most of his work with a big local company). For OEMs who want to sell directly to large companies, there is another option - the large companies can do a 'select' agreement directly with MSFT or with an intermediary, and the OEM then supplies everything but the actual SW licenses. This may lose them a few $ profit on a Win98 license, but the MSFT field is incented to work with vendors who do 'select' so the small player gets MSFT field help that some large vendors don't get.

You forgot the consumers that will realize inceased prices in the end
In real terms this has not been happening, in fact I think that pressure will actually drive prices down over the next few years. The problem with SW is that there is a natural floor - even if MSFT got 100% of the desktop business, if they started to raise prices even a little, someone else would come in and undercut them (can you say Linux) and they would have to drop back to maintain market share.
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