Path: utzoo!utgpu!news-server.csri.toronto.edu!mailrus!uunet!virtech!cpcahil
From: cpcahil@virtech.uucp (Conor P. Cahill)
Newsgroups: comp.unix.sysv386
Subject: Re: OS costs
Message-ID: <1990Sep02.233606.12859@virtech.uucp>
Date: 2 Sep 90 23:36:06 GMT
References: <350@usaos.UUCP> <1990Aug28.182758.29036@ico.isc.com> <1990Aug30.032304.84@pegasus.com> <PCG.90Aug31212433@athene.cs.aber.ac.uk>
Reply-To: cpcahil@virtech.UUCP (Conor P. Cahill)
Organization: Virtual Technologies Inc., Sterling VA
Lines: 38

In article <PCG.90Aug31212433@athene.cs.aber.ac.uk> pcg@cs.aber.ac.uk (Piercarlo Grandi) writes:
>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

The only thing wrong with this is the capital cost of delivering a copy
of the OS is very small.  The big dollar cost items in the software
field are fixed cost items (you only have one development effort reguardless
of the number of copies of a given revision you sell, you only have a 
single quality control costing element, etc.) that must be recovered 
over a given number of copies of the software.


>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.

But no matter how many copies of the final product they sell, they won't
save on the required software development costs (i.e. that cost is fixed).

ISC and SCO have the following question:

	If my development effort has cost me $5 million and I expect to
	sell X copies of the OS, How much must I charge for the OS
	in order to make back that investement plus a bit of profits.

Now the X is a real big question because the larger the amount that ISC
tries to get per copy the lower X will be, and vice-versa.
	
-- 
Conor P. Cahill            (703)430-9247        Virtual Technologies, Inc.,
uunet!virtech!cpcahil                           46030 Manekin Plaza, Suite 160
                                                Sterling, VA 22170