Paul, Doesn't Intel get pissed with Microsoft getting a bigger and bigger piece of the PC pie? 10%! Microsoft used to be lucky to get 3-4% a couple years ago.
>>Kempin's memo projected that if the trend toward cheaper computers continued toward the $500 level for Christmas 1998 -- and this month some complete systems are selling for less than $600 -- ''our
royalties... could be as high as 10 percent of total system price.''
Kempin said that Microsoft must ''resist... royalty price decreases firmly'' for the low-priced machines.
He said the company's goal was to get the ''highest amount of dollars'' possible from computer makers for loading Windows on their machines.
But the memo also expressed fear that Microsoft's high prices might incite action by the nation's biggest personal computer maker to create a competing operating system.
''Our high prices could get a single OEM (Compaq might pay us $750 million next year) or a coalition to fund a competing effort(say in India),'' he wrote, referring to personal computer makers as original equipment manufacturers or OEMs.
One place that Kempin looked for a new flow of cash was personal computer owners.
Kempin devoted the last page of his single-spaced memo to concerns about who might be able to derail Microsoft's plan.
Kempin, after considering the threat posed by a coalition of PC makers led by Compaq Computer Corp.
(NYSE:CPQ - news), dismissed it by saying he doubted they could market the product successfully.
Kempin also doubted that computer makers would be willing to sell machines without Windows or another operating system. ''Who would want to start with this and lose business?'' he asked.
Kempin also expressed concern that Sun Microsystems and Netscape might team up, but said that the ''compatibility barrier'' stood in the way.
Warren-Boulton testified Thursday that incompatibility with other systems had prevented competition.
Microsoft's lawyer, Michael Lacovera, suggested that the Linux operating system provided competition.
Linux is a variant on the UNIX operating system and is used mostly by computer servers. But Warren-Boulton dismissed it, saying Linux had not constrained Microsoft's prices.
Kempin also raised concerns that Intel, which makes the chips that run most Microsoft Windows operating systems, could emerge as a competitor.
He predicted that if Intel decided to go down that road, ''it will get ugly.''
Warren-Boulton agreed on the witness stand that Intel would be a special case.
''Intel could enter the operating system market and if the price of operating systems dropped, it could raise the price of the chips,'' said Warren-Boulton. ''It is a potentially dangerous entrant.'' <<
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The last part sounds like the best freakin idea in a long time...
When is Intel going to go "hardcore" on it???
What's a billion $$$ anyways to Intel? |
