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The Microsoft Monopoly vs. Economies of Scale

Oct 06, 2009, 14:03 (3 Talkback[s])
(Other stories by TesserID)


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"The dilemma that Microsoft is now facing is a matter of basic economics. They want to sell more copies of their product, but they are unwilling to sell at a price that is appropriate to a mass-produced product. But then, this is the aspiration of all monopolies and monopoly wanna-bes--to have sufficient control to sell to everybody with an unreasonably huge profit margin. Unfortunately for Microsoft, absolute control of prices only comes with absolute control of the market, and Microsoft is only a minor monopoly. So, they have to settle for a market where mass sales occur only at relatively small profit margins.

"However, Microsoft's latest offerings have fairly stiff price tags--comparable to the price of an entire netbook. While the prices for bundling Windows with a computer are cheaper, they still represent a significant percentage of a netbook's price. And, those offerings are not targeted at the power users who might be willing to pay those prices. In fact, the few features that interest power users are only available in the highest priced Microsoft products. This is the sort of thing that makes the less expensive alternatives to Microsoft look so attractive to power users. So, while the power users may feel over taxed or left behind, Microsoft's products are targeted at the widest audience possible--the audience that is least interested in paying anything higher than commodity prices."

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