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To: Gerald R. Lampton who wrote (21874)	12/2/1998 10:20:00 AM
From: rudedog	Read Replies (1) \| Respond to of 24154

Boulton seems to be comparing 1990 DOS pricing with 1996 Win95 pricing. A better measure would be some kind of average usage of the OS and shell in 1990, and even that would probably not really capture the product concepts correctly. OEMs can still buy DOS - some do so because they make dedicated systems which use it - and the price is currently very low, under $1 even in small quantities. The big OEMS get Win98 pricing somewhere in the $40s, which is in dollar terms about what the combination of DOS and Windows cost them in the early '90s (One big OEM paid $3 for DOS and $38 for Windows 3.1 in 1993, another paid $3.50 for DOS and $41 for Windows 3.1). As a percentage of the average cost, things have risen somewhat, since hardware costs have dropped a lot. But the overall desktop ASP has not dropped as much as Boulton's discussion would suggest - Dell's ASP is still over $2400 and although they do not break out desktops specifically, most analysts think their desktop ASP is well over $2200. In 1993 it was about $2700. So on that basis, the combination of DOS and Windows represented about 1.8% of a new PC in 1993, today it is about 2%. That does not seem like monopoly gouging to me. Furthermore, a number of OEM vendors have put MSFT on notice that they will use a 'windows compatible' non-MSFT OS for their low end products if MSFT does not come down in price - Sony is already doing this. Clearly, a $400 PC with a $40 OS is a non-starter, when alternatives like Be and Linux can be made to do the job with a modest technology investment. MSFT will probably respond with packaging of CE in that space at prices approaching $10. I think that Boulton is way off base with his pricing analysis - it depends on a very narrow definition of the desktop OS and ignores the realities of the current marketplace.