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To: XiaoYao who wrote (21371)	11/11/1998 3:47:00 PM
From: Daniel Schuh	Respond to of 24154

OK, variable cost of production, i.e. marginal costs per unit produced. Sheesh. Back to your original post You can't compare hardware with software. Hardware production cost goes much cheaper once manufacture reached a certain point of mass production. But software cost would only go higher since you need to hire more software engineers to write more advanced software. It's true you can't compare hardware to software. Once the development work is done for software, it's essentially free. Microsoft can get CDs stamped out at pennies a copy. To sell more software, they don't have to make it more advanced, or put more engineering into it. Whether they sell a million or 100 million, the development costs are the same, and that's the only significant cost they have (well, besides marketing and PR. Hardware guys have development and engineering costs too. These are fixed costs. They also have production costs, to actually fabricate the materials. They have some economies of scale there too, but they also have big capital expenses for manufacturing facilities. A state of the art semiconductor production line was $2billion last I heard. Microsoft's R&D budget looks pretty puny compared to that. Yet somehow, hardware prices keep coming down, even in absolute terms, not considering that the hardware is much faster and more capacious than it used to be. Windows9x, however, isn't particularly better, and isn't particularly more functional than when it launched, except for "free forever" integrated IE. Which in pure engineering terms, may well have been a bad idea on the "sucks less" front. But, it cost the same as ever, maybe more at the OEM level, it's hard to tell. And the "upgrade" from Win95 to Win98 is much less of an upgrade than from Win3x to Win95, but that still costs the same, too. Nice business and everything, I just wish some of the massive returns would go to making it suck less. Cheers, Dan.