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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: dreydoc who wrote (5048)	2/21/1998 8:20:00 PM
From: NicholasC	Read Replies (1) \| Respond to of 9068

I guess that article just confirms that underlying Microsoft business model. Their business model is interesting: - It is unlikely that Microsoft make any money off Win95 and NT. The costs of developing, marketing and supporting them is way out of wack compared to other areas. Think about it - Win95 goes for about $65 to Microsoft. Subtract packaging and distribution costs and the probably take $50 up front. On the other side take the costs of supporting it. OS programmers are heavy duty. They have to support a myriad of hardware for compatibility - CDROMs, Modems, Computers, Monitors, Drive controllers, Sound cards, ... the list goes on. Then they need to support a ton of software compatibility issues. Then legacy hardware and software compatibility standards. Then de facto standards (e.g. TCPIP, IPX/SPX, DCOM, FTP, HTTP, etc. All for $50? Now compare this to Office 97. While I'm sure that there are compatibility and support issues here, the number of issues is dramatically less than the aforementioned OS. And for ~$500. Botton line Office 97 sells for a lot more and has a fraction of the support and development costs. It is extremely profitable. For confirmation, look at Microsoft's last earnings release. Where do you think Microsoft makes the most money(when comparing costs)? Don't you think that their financial people have this all figured out? In other words, Win95, NT, DOS, etc. have always been loss-leaders. Doesn't Office 97 integrate and work better with Win95 and NT than other packages? No mistake or coincidence. Win95, NT and Hydra are simply strategy pieces for Microsoft and I'm sure that they are glad to see Citrix enhance them, make them better, at Citrix's cost and a final cost to customer. That simple. - N