Archive of UserLand's first discussion group, started October 5, 1998.
Marginal OS Profit??
Author: Sam Yates Posted: 9/24/1999; 12:49:49 PM Topic: Windows apps on Linux: the real reason Msg #: 11447 (In response to 11429) Prev/Next: 11446 / 11448
"Consider that the OS is for them already a marginal profit source or even a loss leader, and the real money comes from selling Office and sundry "asteroid" applications revolving around that"Huh?
Check out some of the financial info at: http://www.microsoft.com/msft/ar98/mdna.htm
Here is a small excerpt: "Platform product revenue was $4.11 billion, $5.97 billion, and $7.64 billion in 1996, 1997, and 1998. Platform revenue is primarily licenses of PC operating systems; business systems with client/server, Internet, and intranet architectures; and software development tools."
Do you think they spent >7.64 billion developing their platform in 1998? As I understand it, that's what they'd have to do in order to call the OS a "loss leader".
For comparison sake, application revenue in 1998 was 6.84 billion, which, while hardly chump change, isn't even as much as they make form the OS. I can hardly see why they would want to give up this revenue by making applications run on any old platform.
Besides, the application revenue would be much harder to sustain if the platform didn't matter.
I see the "Web services" play as just a hedge (with some nice sounding press releases), at least for the time being. Maybe when everyone has super fat, cheap pipes to their home and business that will change, but that time will not be here for a while.
Everything MSFT does seems to be centered around preserving their platform advantage, and for most intents and purposes, platform=Windows.
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