From Online Blog comes an interesting look at this article on Micrososft’s Windows profit margins. It seems that MS pulls off an 86% profit margin on all of it’s sales of Windows and some consumer groups are outraged. To quote:
Cooper said the Microsoft profit margin had been sustained through illegal use of Microsoft’s monopoly power.
“That stuff is the best indicator of unbridled monopoly power,” he said.
“There is just no way to explain that away.”
But as Online blog goes on to discuss, and the article goes out of it’s way not to discuss, (in fact they quote exactly one other software company’s profit margin, a German company that makes 21%, which is probably just the lowest they could find!) is that other large software companies have an even higher profit margin, and no one is going around claiming that it’s all because of their monopoly. Adobe brings in a nice mid-90’s profit margin, so where’s the outrage from consumer groups? I’ll let you read their conclusion:
The really shocking thing about Windows is that the margins are not closer to 100%, since it is basically a royalties business. The PC manufacturer bears the cost of duplication, supplies the manuals, distributes the product, and provides the support. Microsoft just has to ship a couple of “masters” to, say, Dell, at negligible cost, then collect the fees for 16 million sales. Microsoft is hugely profitable, of course, but it could clearly make more if it did not spend vast sums on programmers and R&D.
Maybe MS isn’t really just a money-sucking beast after all?
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