Path: utzoo!utgpu!news-server.csri.toronto.edu!cs.utexas.edu!wuarchive!zaphod.mps.ohio-state.edu!usc!snorkelwacker!bloom-beacon!eru!hagbard!sunic!mcsun!ukc!dcl-cs!aber-cs!athene!pcg From: pcg@cs.aber.ac.uk (Piercarlo Grandi) Newsgroups: comp.unix.i386 Subject: Re: OS costs Message-ID: Date: 31 Aug 90 20:24:33 GMT References: <350@usaos.UUCP> <1990Aug28.182758.29036@ico.isc.com> <1990Aug30.032304.84@pegasus.com> Sender: pcg@aber-cs.UUCP Organization: Coleg Prifysgol Cymru Lines: 41 In-reply-to: richard@pegasus.com's message of 30 Aug 90 03:23:04 GMT On 30 Aug 90 03:23:04 GMT, richard@pegasus.com (Richard Foulk) said: richard> Guessing the optimal price is perhaps a marketeers most richard> difficult job. But there's always the possibility that if you richard> reduce your price by 50% you'll increase your sales by 200%. richard> With no way to prove it except to try it. richard> It is my distinct impression that ISC and SCO are erroring on richard> the high side. It is my impression is that they are trying very hard to limit sales, and thus will strive to keep the price as high as they can. In case this sounds crazy to you, sales must be backed by capital; if you are short of capital, the best way to increase absolute net income is not to increase sales, but price; this will reduce sales and thus the demand for capital. For manufacturing companies this is counteracted by economies of scale, and by the fact that once capital has got invested into fixed equipment you want to maximize revenue, not margin, because the bulk of your capital has already been sunk. This is the reason why foreign distributors normally try hard to sell as little as possible of the products they import at as high a price as they can; sales to them are just a bother, and they do not have the incentive a manufactuer has to spread the initial fixed investment on as large a volume of sales as they can. To them more volume means more trouble. This is also true for software companies, especially those, like SCO and ISC, which are in market that is growing very fast on its own on the demand side, and where the supply of capital, in the form of competent system programmers, is very scarce. ESIX and Microport are betting on different economics: they bet they can provide a product for people that does not put a lot of demand on their capital resources, and they can just resell AT&T's product as a bookseller would do. Not exactly cash and carry, but... -- Piercarlo "Peter" Grandi | ARPA: pcg%uk.ac.aber.cs@nsfnet-relay.ac.uk Dept of CS, UCW Aberystwyth | UUCP: ...!mcsun!ukc!aber-cs!pcg Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@cs.aber.ac.uk