RE: boomberg bloopers
From: Chloe Hoffman [SMTP:[EMAIL PROTECTED]] Predatory pricing is the act of someone with market power selling something below the marginal cost thereof with the primary intent to drive out [DJW:] The marginal cost of software is very low, which is why this issue arises in the first place. If you are not allowed to include design costs, such a definition would not be much of a problem for "free" software. Incidentally, the subject of this thread is based on a false premise that you cannot charge for the supply of Open Source software. Actually, traditionally, Open Source software has been paid for with other Open Source software and with maintenance programming of the application, so, traditionally, the real costs has been higher than the acquisition cost. This is not true of many end users today. -- --- DISCLAIMER - Any views expressed in this message are those of the individual sender, except where the sender specifically states them to be the views of BTS.
Re: boomberg bloopers
Chloe Hoffman wrote: * As an aside predatory pricing was never raised in MS' antitrust troubles probably because of the bashing this theory has had in antitrust circles. Further, to make that charge stick is very difficult especially when the facts were not there - the competitor MS was allegedly trying to drive out with free Explorer was already (and continued thereafter) giving away Navigator for free. I don't disagree with the overall thrust of your comments, but I do want to correct a error of fact here: Netscape was _not_ "giving away Navigator for free" (at least not before January 1998 -- see below) although I concede it may have appeared that way to the "person on the street". The reality is somewhat more complicated and interesting, so I'll beg your pardon for a brief digression: For 1995 through 1997 Netscape Navigator and Communicator were made available under a proprietary license that allowed 90-day evaluation at no charge; after 90 days the license expired and the user no longer had a valid license unless they purchased the product. Many home users ignored this and continued to use the software without paying for it, and Netscape had an unofficial policy of looking the other way and not pursuing home users for "piracy". Other home users got Navigator or Communicator truly at no charge through their ISPs or PC vendors, who signed OEM contracts with Netscape allowing them to distribute Navigator/Communicator; the OEMs paid Netscape through a combination of per-copy fees and bounties resulting from Netscape users signing up for ISP services. For this latter group of home users Navigator/Communicator was "free" in the same sense that Windows is "free" when they buy a PC: it had been paid for by someone else. However there were no such "good deals" for corporate users of Navigator/Communicator, who paid relatively large license fees to Netscape directly or indirectly (i.e., through resellers); typical prices ranged from $30-40 per user down to a few dollars per user for large site licenses. We in Netscape government sales did a client/server site license with the US Department of Defense in September 1997, and Communicator accounted for several million dollars of the total deal price. Netscape Communicator and Navigator were not made truly gratis until January 1998, when Netscape reduced the price to zero in response to the pricing of IE and Outlook Express. Not so coincidentally, this is the same time that Netscape announced its intention to release Communicator source code; this had been proposed internally for quite a while, but was only implemented once Netscape gave up all hope of charging licensing fees on the binary version. So regardless of whether you consider this an instance of predatory pricing or not, the fact is that Netscape derived significant revenues from licensing of Navigator and Communicator from the beginning of 1995 through the end of 1997, and those revenues declined drastically over that period, first in relative terms and then in absolute terms. I just looked at a 10-K that has a breakdown of product revenues for 1995-1997; for those three years Netscape had $365M million dollars of revenue attributable to Navigator/Communicator, more than a third of total revenues over that period. Navigator/Communicator revenue accounted for over 90 per cent of Netscape's revenue for 1995, just over half in 1996, and less than 20 per cent in 1997. If Netscape had had the same relative amount of Navigator/Comunicator revenue in 1997 as it did in 1996, then its revenue would have been about $325M higher than the actual figure; as it was Netscape lost $115M in 1997. Frank -- Frank Heckerwork: http://www.collab.net/ [EMAIL PROTECTED]home: http://www.hecker.org/
Re: boomberg bloopers
On Saturday 17 February 2001 03:20 pm, Frank LaMonica wrote: The real problem with the MicroSoft model is that they artificially inflated the price of software to way beyond its true cost to develop. All prices are artificially inflated since no prices are based upon the true cost to develop the product. The concept of a "fair" or "just" price died out in the middle ages. The price of a product is determined by both the seller and the buyer. An economic transaction cannot occur unless both parties agree to the price. If one of the other party does not agree, and the transaction still occurs, a crime has been committed (as in the case of burglary, bait and switch, etc). Producers always want the price to be as high as possible while the consumers want it to be as low as possible. When the balance is made the price is set. What the producer wants to sell for is as irrelevant as what the consumer wants to pay. Too high a price and no one buys it. Too low a price and no one produces it. (I'll come back to this) In the case of Microsoft, they spent a couple of decades selling their products at a price comparable to their competitors. Go pick up some old copies of Computer Shopper and compare the prices between Windows and OS/2, Novell DOS and MS DOS, Smartsuite versus MS Office, etc. Now suddenly Microsoft has found out that a significant portion of their consumer base considers their prices too high. Their choices are narrowed down to a) reducing their prices, or b) convincing the consumer that their prices are fair. They're opting for (b), and one tactic is to persuade the consumer that Open Source is not worth its price. That they're doing (b) in a rather tacky manner is beside the point. Okay, coming back to the statement that "too low a price and no one produces it". I still stand by this, despite the overwhelming evidence that indicates that some developers are giving away their products at zero cost. That's because the developers are getting paid in something other than money (cf Eric Raymond), or the distributors are selling something other than the software (cf Bob Young). -- David Johnson ___ http://www.usermode.org
Re: boomberg bloopers
On Thu, 15 Feb 2001, Ralf Schwoebel wrote: We still wait for comments from the board on our license, but meanwhile please comment on that: http://news.cnet.com/news/0-1003-200-4833927.html?tag=mn_hd Heh, I wish they had included the part where I said if MS really said that Open Source was a threat to "innovation" and inellectual property, then MS doesn't understand copyright laws OR open source. I'm glad the opposing viewpoint made it in there, it was actually an IDC analyst I talked with. My comment about "fascist" was in the context of explaining that most companies who are involved in open source development do so because it can enhance their revenues elsewhere - in hardware, services, or even other proprietary software. I gave the example of Linus and Transmeta as one where there is a mixed model of closed and open. Note of course, Ralf, that Linus has a very clear notion about what is Open Source, and what is not, and don't try to claim otherwise. This is the start of a concerted effort by MS to attack Linux on non-technical fronts. I can see them aiming to compare the effect of Open Source on the software industry to be equivalent to the effect of Napster on the music industry. Bullocks - you may agree or disagree with the contention that swapping someone else's IP against their will is theft, but you can't claim that someone who writes software and *intentionally* gives it away for free is a threat to anyone. This is a pile of manure so silly that even the press won't buy it. Next they'll attack it on patent, trademark, and labor law bases. I think, "FREE does not mean GRATIS" is totally stated wrong and some native speakers should write to Bloomberg to get their head into the right place, and I guess they left half of the statement of Brian out. I do not have the perception of Collab.net to put that incomplete... Does Microsoft own Bloomberg? Or do they invite journalists to cruiseship trips to the carribean sea? Uh, Bloomburg isn't giving an editorial in this article, they're reporting what people said. Brian
Re: boomberg bloopers
Brian Behlendorf writes: Bullocks - you may agree or disagree with the contention that swapping someone else's IP against their will is theft, but you can't claim that someone who writes software and *intentionally* gives it away for free is a threat to anyone. That person is a threat to the revenues of the people selling comparable software. That threat is real, even though it arises from totally legitimate activities (from the point of view of many different political philosophies and legal regimes). If there were a big market for some kind of labor and a lot of people began to do that same labor as volunteers, or as a hobby, the people who did it for a living would see their livelihood threatened, even though the activities of the volunteers or hobbyists are totally legitimate. Imagine for example that on a certain street there are two Internet cafes, run by starving entrepreneurs who think an Internet cafe is an honest business with some growth potential. Now along comes a retired hacker who made three million dollars from the exuberance of investors (I won't say whether it was rational or irrational) about a project to which he made major technical contributions. This retired hacker has _always_ wanted to have his very own Internet cafe, so he buys a warehouse, renovates it (sparing no expense), and opens it up. Possibly he doesn't have a huge amount of business sense, so his Internet cafe is not very profitable. In fact, maybe it loses money. But the retired hacker doesn't care -- he's got his own Internet cafe! And he doesn't feel a need to charge high prices, or to pay low wages; he's happy to offer reasonable prices to his customers, and reasonable wages and benefits to his employees. The customers are happy; they keep coming back. The employees are happy; they don't leave. Everybody enjoys the Internet cafe. Except the proprietors of the _other_ Internet cafes, which are rapidly losing business. Those Internet cafes are being run for profit; their owners need to make money! If they don't, they're going to go out of business, and lose their own investments of time and money. They can't afford to be unprofitable for more than a month or two; they wouldn't be able to pay their Internet service bills or order food and dozens of kinds of exotic coffee. But since customers are flocking to the retired hacker's Internet cafe, the for-profit cafe owners are starting to feel the pinch. They feel threatened because they realize that the retired hacker is free from the vagaries of market forces and competition; he's mostly doing it (as the autobiography of a certain famous non-retired hacker once suggested) "just for fun". And in the process, he's likely to bankrupt the cafe owners with traditional business models. If you look at bottom lines instead of ethical or legal principles, _any_ competition -- especially competition from competitors who experience fewer costs -- is undesirable and harmful. It doesn't matter to the bottom line whether the competitors are thieves, "dumpers", ideologues, hobbyists, or corporations. From a certain point of view, further, certain participants in a given market are likely to appear "subsidized" (they have a whole _category_ or a whole _level_ of resources completely unavailable to other participants), and so it will be hard for other participants to conceive of any kind of meaningful and "fair" competition. (The sense in which they say that the other participants' "subsidies" are "unfair" will depend on a lot of factors. You can see a few different examples reflecting very different perspectives. And consider how different firms would react to the idea "You must fundamentally and dramatically change your business practices or business model by in order to compete with ", depending on the nature of the change and of the competitor.) To be somewhat concrete, even if every single Linux company went out of business and you and I both lost our jobs, Microsoft would _still_ not "win"; they would still face very substantial competition from Linux and free software which would still undermine their revenues (relative to their early and mid-1990s market share). One reason for this is that the free software thus produced (as Martin Pool pointed out) will _still be available_ and _still be useful_ even if the companies which sponsored its development go out of business. This is almost always not true for proprietary software companies: if Corel goes broke, Microsoft has simply lost a competitor in the market for office suites. But if Sun drops out of that business, OpenOffice is still going to be around, still going to be just as available as before, and probably still as actively maintained. That gets into the second reason: many of us would keep producing free software or contributing to the maintenance of free software even if we were never paid to do it. So free software development can continue apace (for some values of "apace")
Re: boomberg bloopers
Seth David Schoen wrote: Going out of business is a real, time-honored, traditional market response to changing conditions. Some people (Schumpeter?) have written entire books on how it's supposed to be a really good thing that firms can go out of business. But surely those firms would have to see that (by whatever means it might happen) as "a threat", surely they would have to feel threatened by that. I personally don't object to Microsoft publicly saying that open source threatens their business and is a threat to Microsoft itself. But recall the actual Allchin quote: "I worry if the government encourages open source, and I don't think we've done enough education of policymakers to understand the threat." What Allchin is in effect claiming is that open source is a "threat" to the public at large, and one serious enough to warrant government intervention to counter it. Not only is this a dubious proposition (at the very least), it is also IMO a grossly hypocritical statement, given the positions Microsoft has taken relative to the DOJ antitrust case and Microsoft's claimed freedom to conduct its business as it wishes, regardless of the effect on Microsoft's competitors. Frank -- Frank Heckerwork: http://www.collab.net/ [EMAIL PROTECTED]home: http://www.hecker.org/
Re: boomberg bloopers
On Friday 16 February 2001 02:20 am, Seth David Schoen wrote: If there were a big market for some kind of labor and a lot of people began to do that same labor as volunteers, or as a hobby, the people who did it for a living would see their livelihood threatened, even though the activities of the volunteers or hobbyists are totally legitimate. Bullocks! If I donate my time to a soup kitchen I am not threatening the sandwich shop. And my letters to the editors do not threaten the daily columnists. If you look at bottom lines instead of ethical or legal principles, _any_ competition -- especially competition from competitors who experience fewer costs -- is undesirable and harmful. Bullocks again! Competition is an aid to an industry. A monopolist, regardless of your moral position on the topic, is prone to poor quality and high prices, while even two competitors in an industry will at least "raise the bar". Given that the competition is voluntary, and not an artificial product of a court ruling, it can only be a benefit. Of course, most, if not all, Open Source is "free beer" and not sold as a product (although the shrink wrap, service or support is). It is not in competition with closed source software anymore. That Open Source has become a significant enough factor to make Jim Allchin sweat is an indicator that least certain sectors of the closed source market are obsolete. The profession of scribe used to be a lucrative trade. But the invention of the printing press vastly lowered the producing copies of books. The profession of scribe didn't go away, it just had to find new market niches. I'm sure the Jim Allchins of those times accused Gutenburg of Uneuropean activities. In the same way, digital meda and networks have vastly lowered the cost of producing copies of software. And the public is starting to find this out. It won't take the closed source industry out of business. But closed source will have to find new market niches besides the "one size fits all" niche they've been in. -- David Johnson ___ http://www.usermode.org
RE: boomberg bloopers
From a public-policy perspective, the object should be that the public is well-served. In this sense, the criterion for judging the "threat" of free software is whether an economy that includes free software provides a public benefit equal to or better than an economy that doesn't include free software. If we were to assume that Allchin's worst fears come true and that all proprietary software is displaced by free software, the only public policy impact would be if this environment were to create a world that was worse-off. The fact that the domestic software industry would have to radically change is of secondary concern (albeit not inconsequential). So, would a world powered by Linux be worse-off than a world powered by Windows? J -Original Message- From: Seth David Schoen [mailto:[EMAIL PROTECTED]]On Behalf Of Seth David Schoen Sent: Friday, February 16, 2001 11:45 AM To: [EMAIL PROTECTED] Subject: Re: boomberg bloopers David Johnson writes: On Friday 16 February 2001 02:20 am, Seth David Schoen wrote: If there were a big market for some kind of labor and a lot of people began to do that same labor as volunteers, or as a hobby, the people who did it for a living would see their livelihood threatened, even though the activities of the volunteers or hobbyists are totally legitimate. Bullocks! If I donate my time to a soup kitchen I am not threatening the sandwich shop. And my letters to the editors do not threaten the daily columnists. I probably should have been more specific about "that same labor". The reason these things don't threaten the livelihoods of the other laborers is that they are not good substitutes for what they displace. (If you want to write a daily column for free, and donate it to a newspaper, you do threaten the daily columnists. If you want to run a sandwich shop as a hobby -- like the Internet cafe in my early example -- you do threaten the commercial sandwich shop.) Since I think free software is a good substitute for proprietary software most of the time, I think it is a threat to the livelihoods of many proprietary software developers, and the business of their employers. Maybe Allchin doesn't think free software is a good substitute for proprietary software, so he thinks it's not a threat. Except perhaps he's saying that the public hasn't yet noticed that open source software isn't as good as Microsoft software? It's difficult (as other people have pointed out) to understand the exact nature of Allchin's concern. If he doesn't think that the free software community produces a good rival product, he doesn't have a long-term reason to worry; but he is, he says, concerned. If you look at bottom lines instead of ethical or legal principles, _any_ competition -- especially competition from competitors who experience fewer costs -- is undesirable and harmful. Bullocks again! Competition is an aid to an industry. A monopolist, regardless of your moral position on the topic, is prone to poor quality and high prices, while even two competitors in an industry will at least "raise the bar". Given that the competition is voluntary, and not an artificial product of a court ruling, it can only be a benefit. The bottom line of a monopolist who can extract monopoly prices is still better than the bottom line of a competitor who produces a great product. There are some exceptions to that (where competition led to innovation and growth in a market), but in the short term being a monopolist is much better for bottom lines (not for "an industry"). Of course, most, if not all, Open Source is "free beer" and not sold as a product (although the shrink wrap, service or support is). It is not in competition with closed source software anymore. That Open Source has become a significant enough factor to make Jim Allchin sweat is an indicator that least certain sectors of the closed source market are obsolete. I don't understand how you can say both of those things. If those sectors are "obsolete" (because of open source software?), how is that open source software not competing with the proprietary software? The profession of scribe used to be a lucrative trade. But the invention of the printing press vastly lowered the producing copies of books. The profession of scribe didn't go away, it just had to find new market niches. I'm sure the Jim Allchins of those times accused Gutenburg of Uneuropean activities. In the same way, digital meda and networks have vastly lowered the cost of producing copies of software. And the public is starting to find this out. It won't take the closed source industry out of business. But closed source will have to find new market niches besides the "one size fits all" niche they
Re: boomberg bloopers
On Friday 16 February 2001 11:00 am, Tom Hull wrote: 2) It pushes the argument that Microsoft is not a monpoloy, that Microsoft faces serious, threatening competition, and therefore that breakup is unnecessary and possibly counterproductive. Actually, it's a very good argument. This specific case started because of Internet Explorer. I now have before me the choice between Netscape, Opera, Konqueror and Mozilla. From my position, and perhaps I've led a sheltered life, Netscape lost market share solely because of Netscape. They spent far too long coming out with an HTML-4 compliant browser, and when they did they released it before it was ready (catch-22). Don't get me wrong, there's a ton of stuff that Microsoft should be held criminally and civilly liable for. But having too large of a market share does not qualify as a monopoly. And being a monopoly, by itself, is not a crime. I dislike Microsoft as much as the next guy, maybe even more so, but the Justice Department went about this all the wrong way. -- David Johnson ___ http://www.usermode.org
Re: boomberg bloopers
Of course, this is a blatant FUD (Fear, Uncertainty, Doubt) strategy at work -- tossing out ridiculously muddled thoughts in hopes that they can cause IP anxieties surrounding Napster to be associated with the phrase "open source". No shame! QUOTE from the article: Microsoft has told U.S. lawmakers of its concern while discussing protection of intellectual property rights. Linux is developed in a so-called open-source environment in which the software code generally isn't owned by any one company. That, as well as programs such as music-sharing software from Napster, means the world's largest software maker has to do a better job of talking to policymakers, Allchin said. ''Open source is an intellectual-property destroyer,'' Allchin said. ''I can't imagine something that could be worse than this for the software business and the intellectual-property business.'' END QUOTE This is the start of a concerted effort by MS to attack Linux on non-technical fronts. I don't doubt that such a campaign is in the offing, but Microsoft's most pressing problem is their antitrust appeal. They're busy hiring political clout: http://www.salon.com/tech/wire/2001/02/16/big_guns/index.html Attacking open source does two things for them: 1) It provides cover for their political lobbying, and spin for people on their payroll. 2) It pushes the argument that Microsoft is not a monpoloy, that Microsoft faces serious, threatening competition, and therefore that breakup is unnecessary and possibly counterproductive. The latter point will, of course, be amplified by the inevitable response. Not that one should shy away from response: it seems like an excellent opportunity to point out the chilling effects that monopolistic business has on innovation. -- /* * Tom Hull * thull at kscable.com * http://www.ocston.org/~thull/ */
Re: boomberg bloopers
begin Jordan Logos Greenhall quotation: So, would a world powered by Linux be worse-off than a world powered by Windows? http://www.perlguy.net/images/opensource1.gif -- Cheers,Before enlightenment, caffeine. Rick Moen After enlightenment, caffeine. [EMAIL PROTECTED]
Re: boomberg bloopers
--- Brian Behlendorf [EMAIL PROTECTED] wrote: when a group of entities get together and decide to "sell" a thing at a cost substantially lower than the cost of production, *with the intent to affect other parties who can not make a similar unreturned investment*, then that is usually called "price fixing", a category of antitrust. I believe the term dumping applies here as well. RAM pricing from Asia was the focus of an enormous amount of government attention, not that long ago, when U.S. firms were allegedly forced from the market. - Martin Zam __ Do You Yahoo!? Get personalized email addresses from Yahoo! Mail - only $35 a year! http://personal.mail.yahoo.com/
