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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Dwight E. Karlsen who wrote (41345)	4/6/2000 3:10:00 AM
From: The Duke of URL©	Read Replies (2) \| Respond to of 74651

<"ostensible" is right. I can hardly believe that it was any cheaper at all to report "total sales" vs. "total units of software shipped". Even the entry level garden variety software like QuickBooks will give you exact figures of how many units and sales dollars of each component sold, for any time-frame you choose. The real goal as you said, was exclusion> Dwight: It is not a question of cheaper. Since the software can be easily duplicated by the vendor (and in fact MSFT assists the vendor in being able to duplicate) the problem is one of MSFT getting paid. If the vendor has to pay for only each machine that is loaded with the MSFT operating system you can see the problems. The vendor, who is running at 4% profit margin has a tremendous temptation and opportunity to simply forget about a "couple" of dupes. But if MSFT says to the vender, "heh, you do what you want, but we want to be paid on the basis of "X" percent of your units shipped", then MSFT doesn't get stiffed. The vendor has to report the units shipped in a variety of ways and it is very easy for MSFT to audit its own receivables profit. For instance, the vendor has a mobo supplier which keeps records, a power supply supplier who keeps records,...well you get the drift. Certainly duplication protection has been tried, but mostly unsuccessfully. With some major vendors, the way I think it worked is that they had their own code on its copy of the program, so that when the customer called in to register, when help was needed, MSFT could cross check the license number. The problem with this technique, is that you are now spending $23 dollars keeping track of a $59 dollar sale; not to mention that by the time you compiled the data you have shipped the vendor 8-10 months of product on maybe 150 slow pay. Not a good time to get into a disagreement with the vendor. Now with the internet, MSFT has plans to code through using the net. However, public opinion against this was vehement when it was leaked, and of course there is that small thing about right of privacy. Now would not be a good time, either. Because of the cost and problems in other methods, its just easier to charge based on gross sales. Its harder than you might imagine running a trillion dollar company. Duke