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From: hans@nlgvax.UUCP (Hans Zuidam)
Newsgroups: comp.misc
Subject: Re: Ethics of crippler circuitry
Message-ID: <205@nlgvax.UUCP>
Date: 11 Feb 89 09:31:03 GMT
References: <7143@pyr.gatech.EDU> <11630010@hpsmtc1.HP.COM> <4602@tekgvs.LABS.TEK.COM> <89156@sun.uucp> <36320@think.UUCP>
Reply-To: hans@nlgvax.UUCP (Hans Zuidam)
Organization: Philips Research Geldrop
Lines: 28

You might want to read the following book:

	"Big Blue. IBM's use and abuse of power",
	Richard Thomas DeLamarter,
	Dodd, Mead & Company, 1986, 393 pages.

The author was one the laywers on the antitrust case "US versus IBM".
Allthough the author is (understandably) biased against IBM, he gives
a good deal of factual information on IBMs use of functional pricing.

Functional pricing is the method where you have a customer pay for
functions and not for actual development and production costs plus a
profit margin. By this method you ask more money for a product with
extra features allthough the production costs are not much higher than
a less featured version. By this token it is often cheaper to produce
the full featured machine and cripple it a little to a less featured
one. Of course you can substitute the word performance for feature.

IBM and the computer industry at large are not the only ones using this
pricing strategy. You see the same effect in pricing of audio equipement
(CD players!), pocket calculators, and so on.

						Hans
-- 
Hans Zuidam                                    E-Mail: hans@pcg.philips.nl
Philips Telecommunications and Data Systems,   Tel: +31 40 892288
Project Centre Geldrop, Building XR
Willem Alexanderlaan 7B, 5664 AN Geldrop       The Netherlands