Path: utzoo!utgpu!jarvis.csri.toronto.edu!rutgers!cs.utexas.edu!uunet!mcsun!ukc!dcl-cs!aber-cs!thor!pcg
From: pcg@thor.cs.aber.ac.uk (Piercarlo Grandi)
Newsgroups: comp.unix.i386
Subject: Re: 1-2 vs unlimited licenses (Unix for a 386)
Message-ID: <PCG.89Sep2225631@thor.cs.aber.ac.uk>
Date: 2 Sep 89 21:56:31 GMT
References: <1989Aug16.020438.5662@esegue.uucp> <7186@megatest.UUCP>
	<1792@crdgw1.crd.ge.com> <16031@vail.ICO.ISC.COM>
	<PCG.89Aug23164912@thor.cs.aber.ac.uk> <32254@ism780c.isc.com>
	<828@cirrusl.UUCP> <243@van-bc.UUCP>
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In-reply-to: sl@van-bc.UUCP's message of 2 Sep 89 09:29:17 GMT

In article <243@van-bc.UUCP> sl@van-bc.UUCP (Stuart Lynne) writes:

   And up till now their distributor channels have
   been very effective at producing sales. So they tend to try and push
   customers to the distributors and resellers. 

Actaully the problem for the likes of SCO and ISC is how to *reduce*
sales. They are usually badly undercapitalized, and/or growing very
fast; therefore they have no interest in low price and volume sales.

Feeding sales thru expensive distribution channels both offloads some
of the capital requirements onto them, and constrains sales.

This is also one, important, reason why importers/distributors
e.g. in Europe jack up prices well beyond the USA+transport etc... level;
the importer/distributor tries to minimize sales, as this minimizes
capital requirements, which is usually scarce and entirely a function
of volume, and maximize margin.

The manufacturer has different priorities; in particular its capital
requirements have a large component that is not dependent on volume
(e.g. development costs) and thus there is an incentive to have higher
volume, even if the per unit margin is lower.

In other words, manufacturers tend to maximize *absolute* margin,
and have little problem with capital, while distributors try to
maximize *percent* margin, and try to minimize capital.

It is a recurrent nightmare of manufacturers in the computer business
to have distribution channels that boycott sales growth by maximizing
price; this is bad news for the manufacturer that aims for higher sales
volume to cover fixed costs. The conflicting interests and cost/capital
profiles of manufactuers and distributors are often loads of trouble.

Now back to our favourite subject, Unix on the 386:

I think that AT&T is the manufacturer, and SCO/ISC the first tier
distributors, and retailers the second tier ones.

Too bad for the end users...
--
Piercarlo "Peter" Grandi           | ARPA: pcg%cs.aber.ac.uk@nsfnet-relay.ac.uk
Dept of CS, UCW Aberystwyth        | UUCP: ...!mcvax!ukc!aber-cs!pcg
Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@cs.aber.ac.uk