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To: Saturn V who wrote (259606)4/8/2009 12:36:40 AM
From: rudedogRead Replies (1) | Respond to of 275872
 
Most of the arguments centered around tying, but in the course of discovery, it turned out that some vendors (Compaq in most cases) got very different pricing for desktop OS because of their volume of Server OS or other MS products. That started as a tying argument also, but then a number of situations surfaced where MS gave favorable discounts to some firms bidding on government contracts, usually those who proposed only a Microsoft solution. In the penalty phase, those situations were addressed by applying GSA pricing to any vendor bidding on a broad range of GSA contracts, effectively leveling the playing field when it came to licenses. For the OEMs, the structure forces identical pricing for given tiers, and the difference top to bottom is not large. In addition, many classes of marketing offsets were eliminated, primarily those that were simple unit based rebates. MDF is now linked mostly to market making and lead generation rather than sales activity.

Some companies who had invested in complete MS solutions, for example Unisys, were penalized more than companies which already used GSA or LAR pricing, since markup on that software pretty much disappeared. GSA hastened the process by consolidating agreements across different agencies.

As far as the OEMs were concerned, they got hurt more than MS - since the effect of the constraints was to eliminate discounts for the bigger players. Many folks familiar with the situation believe MS improved margins very significantly, since some of their biggest customers had to pay as much as 100% over their previous contracts.

I think you have it exactly right - the government 'punished' MS by giving them a mandated price hike. The real punishment was to others in the MS ecosystem who had their business models disrupted through no fault of their own.