How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 483.03

+0.5%

Dec 5 3:59 PM EST

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To: stak who wrote (11874)	10/28/1998 11:34:00 PM
From: ed	Read Replies (1) of 74651

I think you still did not get my points. My point is MSFT did not give its IE free. As I said the major cost of software products is the R&D cost, once after the sale of the first one or two million copies which recover the cost of development, the additional copies sold will be pure profit. The cost of marketing and and support for MSFT's OS is very low, and the cost of manufacturing is even lower. MSFT can still make a fat profit on OS even if the price is dropped to $10 once the cost of development is recovered. With IE integrated , and the price of OS is still sold for somewhere around $50, who said Microsoft is giving the IE free ? The price of OS is very low comparing to what it is about 10 years ago relative to the average income of US families. As the price of hardware continues dropping, the percentage of OS expense is higher relative to the price of the whole PC system, but the law did not say that as the price of car is dropping, the price of gas has to drop accordingly, because the price structure is different between the two, which is translated to the fact that the law did not say the price of the OS has to drop together with the drop of hardware.

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