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From: msb@sq.com (Mark Brader)
Date: Thu, 2-Mar-89 19:34:43 EST
Message-ID: <1989Mar2.193443.17196@sq.com>
Newsgroups: comp.misc
Subject: Re: Ethics of crippler circuitry
References: <176@ucl-cs.UUCP>
Reply-To: msb@sq.com (Mark Brader)
Organization: SoftQuad Inc., Toronto

> Do ethics really enter into this?  Nobody actually gets stung,
> and the only reason people feel dissatisfied seems to be some
> kind of resentment because "I could have done that".

If the fast version of the machine sells for $B (B for Big Number), and
the crippled version sells for $S, and the crippling really is done
simply by adding something (something non-functional and of negligible
cost) to the fast version, then the manufacturer must be making $(B-X)
profit on each fast machine and $(S-X) on each crippled one, for some $X.
Unless they're engaging on "loss leader" or similar strategies, both numbers
are positive.

This means that the vendor could have chosen to sell the fast machines
at price $S and still made a profit.  Instead they elected to receive
a profit larger by a substantial amount, namely $(B-S).  Now posit a
second company selling a virtually identical machine but selling the
fast version for $S, with comparable marketing and the like.  Result:
they get all the business.  But what if the second company also decides
to take the crippler approach?  Then each company, maybe, gets half the
business and greater total profit.

The ethical issue arises in two ways:  if several companies are in
the same market and many or all of them are using cripplers, there is
an appearance of price-fixing.  And if only one company is in a market
and is using a crippler, they appear to be taking advantage of a type
of monopoly.  But for these purposes "a market" may mean one segment of a
highly segmented market; computers of different brands sometimes don't
really compete against each other; so these situations do happen.  Now, is
price-fixing ethical?  Is this price-fixing?  There's your ethical question.

The resentment arises from the perception that this may be happening.
It also arises from the fact that the existence of the crippler circuit
makes the buyer feel that the profit increase of $(B-S) is *unreasonable*;
after all, the vendor is earning that increase for nothing.  So the buyer
feels taken advantage of.  Probably if the vendor sold the fast machine
only, the price would be between $B and $S; but the buyer sees only that the
vendor could have sold for $S and still made a profit, and resents that.

I have tried to present this neutrally, but my emotion is with the buyer.

Mark Brader, SoftQuad Inc., Toronto			It's all Henry's fault.
utzoo!sq!msb, msb@sq.com				    -- Geoff Collyer