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(CNN)   Microsoft settles suit for 1.1 billion (in vouchers)   ( divider line
    More: Followup  
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7052 clicks; posted to Main » on 13 Jan 2003 at 11:39 AM (15 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»

74 Comments     (+0 »)

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2003-01-13 11:42:34 AM  
3 flamewars in an afternoon?

2003-01-13 11:42:40 AM  
The should have been forced to pay by creating the office suite for Linux.
2003-01-13 11:43:50 AM  
Cripes. A sell-out indeed. Hasen't anyone learned that MS is a predatory and unethical corporation yet?
2003-01-13 11:43:50 AM  
Judge: Microsoft must pay $1.1 billion!
Bill Gates: Hand me my wallet.
2003-01-13 11:44:39 AM  
How long till that dickhead posts his add banner?
2003-01-13 11:45:01 AM  
`Microsodomy' 5.2 now available.
2003-01-13 11:45:25 AM  
Error 404
Voucher Not Found
2003-01-13 11:46:12 AM  
Sounds like a good investment for Microsoft.

Give away free software and wait for the upgrades to start rolling in.
2003-01-13 11:46:24 AM  
Thanks Bill...
2003-01-13 11:46:42 AM  
[image from too old to be available]

One million dollars.
2003-01-13 11:48:16 AM  
Gawd. Microsoft lawsuits are so year 2001.
2003-01-13 11:48:40 AM  
Let me be the first of dozens to whine about the repeat.
2003-01-13 11:49:07 AM  
This is pure genius on Microsoft's part. Settle for a billion in vouchers. Most will be thrown away or lost. THe ones that are redeemed ensure that a certain percentage will reup the license/upgrade the software when the next rev is released. Buy MS stock.
2003-01-13 11:49:24 AM  
Monk: Don't contaminate Linux like that! :)

My poem du jour:

Open Office
will suffice us.
2003-01-13 11:50:16 AM  

The tag does say follow-up so the poster is covered. It still won't stop people from crying repeat though.
2003-01-13 11:50:33 AM  
And the lawyer presumably will not be taking their fee in vouchers.

Also something seems amiss.

"The settlement requires Microsoft to provide $1.1 billion in vouchers, equivalent to 28.4 percent of all the money that California consumers and businesses paid for Microsoft products from February 1995 to December 2001."

Over the last seven years, Microsoft's sales to all California consumer and businesses have totalled $3.9 billion? Unlikely.
2003-01-13 11:51:30 AM  
Microsoft's agreement is akin to letting the wolf take care of the sheep as long as he wears sheeps clothing. Come on, punishing MS but increasing their market share (i.e. giving away more of their software)? Why not just make them donate $5 million to some Free software foundation? Help promote diversity dammit!

BTW, lookie me, my fr1st Fark frosted poast!
2003-01-13 11:52:17 AM  
So their big sellout is a 1.1Bil bounceback coupon? Hardly punishment. Especially since it's their own stuff that'll be distributed to schools (2/3 of any unclaimed vouchers).

They've managed to further proliferate schools and homes with their software, and may even be able to claim it as a business loss. What's more, they don't have to change their practices (at least according to the article).

Again, hardly punishment.
2003-01-13 11:53:02 AM  
2003-01-13 11:53:19 AM  
Punished with a better market share?
2003-01-13 11:53:20 AM  
Keep your eye out for your vochers, Californians, it should look something like this :

[image from too old to be available]

2003-01-13 11:53:52 AM  
So Microsoft prints up a voucher and calls it cash. Then makes a few more copies of their software for nearly nothing, 10 cents for the CD, 50 cents for the packaging. The voucher values the software at $129 so Microsoft is actually only putting out about 1% of that 1.2 Billion

Microsoft's products are not Bicycles, Cars or pizzas, the stuff Microsoft make costs them almost nothing to mass produce. All the actual cost is loaded into the front, making more copies is nearly free.

I don't have money for my car payment, so here's a voucher good for some random crap I've copied to a CDR.

Wish I could pay all my bills with $100 vouchers that I will exchange on demand for 10 cent CDR's...
2003-01-13 11:55:16 AM  
Lordjupiter: Also, you have to bear in mind that much of the cost of their products is their profits, so you can basically can take this away from the 1.1 billion figure.
2003-01-13 11:56:02 AM  
Oops, should have hit refresh before posting. What RandomRandom said.
2003-01-13 11:56:58 AM  
If I collect enough vouchers, can I get a new computer system for free?
2003-01-13 11:58:05 AM  
Microsoft is being punished for being sucessfull. Screw the courts.
2003-01-13 12:00:59 PM  
No, they are being punished for breaking the law, idiot.
2003-01-13 12:01:52 PM  
I hate coupons.
2003-01-13 12:01:52 PM  
"Microsoft is being punished for being sucessfull. Screw the courts."

Ha! That's a good one.
2003-01-13 12:04:25 PM  
The cost per piece of software can't be easily said as 10 cents for a cd and 50 cents for packaging, the rest of the cost is front-loaded.

You have to add in marketing/advertising, employee costs, employee benefits, implementation, etc, into a per piece cost of the software. There is still a good margin on the sales of the software, but hopefully nobody can kid themselves that Microsoft is going to spend $.60 and mark it at $129.00.
2003-01-13 12:05:36 PM  
Consumers and businesses may use the refund to purchase desktop, laptop or tablet computers that run on Microsoft Windows or any other operating system, including rivals from Apple Computer or Linux. They may also purchase monitors, scanners, pointing devices, keyboards or other hardware, as well as software from any provider.

Oh, so the vouchers can be used to buy anyone else's stuff too. That's something anyway.
2003-01-13 12:07:47 PM  
Damn you Jay_Vee for subtly pointing out that most of us did not read the article.
2003-01-13 12:07:53 PM  
Microsoft says: Chump Change!

I love my wittle ibook!
2003-01-13 12:11:00 PM  
It's the same AP article, just from CNN instead of Fox News. Repeat.
2003-01-13 12:13:18 PM  
So what does that add up to? 15 copies of Microsoft Office?
2003-01-13 12:15:09 PM  
How much money was the voucher good for? A coke at CompUSA?
2003-01-13 12:17:06 PM  
I don't have anything against Microsoft, since I use and enjoy their products daily (so sue, no don't). But this sounds like California really got bent over the washing machine on this one. M$ 0wnz j00 C4lifr0nya!!!
2003-01-13 12:18:56 PM  
Economics 101 for simpletons:

A bar buys a keg of beer for $60. The get holds 100 glasses. The bar usually sells the glasses for $2.

If the bar gives away all the beer in the keg to its customers, how much money has the bar lost?

a)$60 - the price of the keg.
b)$0 - it has created new customers.
c)$200 - the amount of lost revenue that the keg would have generated.

The correct answer is C.

if you answered A, you will be out of business very shortly, as you have to pay your rent and utilities and staff and marketing, and don't understand where you lost $140.

If you answered B, you'll be out of business even faster, as you don't realize you've given away beer to people who were already your customers anyway.

Thanks for playing, kids.
2003-01-13 12:20:12 PM  
I need to buy MORE crap to get my money back for the crap I bought before? What the crap!
2003-01-13 12:20:44 PM  
Stevem224 wrote "You have to add in marketing/advertising, employee costs, employee benefits, implementation, etc, into a per piece cost of the software."

You are wrong. Microsoft isn't building any of those costs into this Voucher-Ware. I agree, their regular software products have marketing and all sorts of costs built into them. But these Voucher-Ware products don't have any of that overhead. These things are given away and don't require "any" marketing. Furthermore, these give-aways won't be cutting into or diluting regular sales because they are only valid for educational use.

So next you'll say, Microsoft will loose all that money they would have made selling software to the educational market. Wrong again. At a time when a lot of schools are using Mac's or considering the move to Linux, Microsoft shows up with boatloads of free software. They kill off the competition with a settlement that is "supposed" to punish them. If they gave the schools this much software for free without the wrapper of this "settlement", they would likely be accused of unfair trade practices and dumping.

At the end of the day, they'll have expended less than 1% of the total cost of that 1.2 billion dollar settlement and expanded their hold on the California educational market, win-win for Microsoft.
2003-01-13 12:24:54 PM  

Kegs 101:

1 Keg holds 165 12 oz. glasses of beer.

[image from too old to be available]

Newcastle: 24-7 in my living room, a present from the misses on our aniversary.
2003-01-13 12:25:51 PM  
MSFT. Buy! Buy! Buy!
2003-01-13 12:25:52 PM  
Kerouac - that's true, for every M$ product bought with those vouchers it costs them money, so it is a loss. But using your example... what if you got the beer for free but had to play for the glass (1$), and the coaster (1$) before you could use it. Then you had to upgrade the glass and coaster (another 2$) everytime you purchased another glass of beer (2$). Even though you got that original beer for free, it could end up costing you, and providing the bar, with more money than a single glass alone would have generated. And don't forget...the bar still gets to say that they had people drinking all that beer in their place, and don't have to say it was free, which makes them look like they are doing much more business than they really are.
2003-01-13 12:26:12 PM  
Anyone evern read Good Omens? I think Bill Gates is really Crawley...
2003-01-13 12:32:11 PM  

I used 100 because up here in Canada, we don't buy glasses, we buy pints, and i wanted a simple analogy.

RandomRandom -

you're wrong in so many places I don't even know where to begin.

1. The educational market is not a target market for indoctrination later. It is Microsoft's second-biggest market.

2. Saying these products don't have any overhead is ludicrous. Again: all the overhead costs are built into a product. If MS sells a product for $200, and has to give it away, they lose the $200 - not the cost of the CD. Being forced to give away $1 nillion worth of product to a target market is a loss of $1 billion - because it's lost sales.

you are oprating under an incorrect assumption that the educational market is not a big one for the company, and therefore this is an add-on where all they have to do is create more CDs. It's entirely incorrect.

If the L.A. Lakers were forced to give away 18,000 tickets per game, and those tickets were given exclusively to basketball fans living in California, would you say they'd only lost the cost of printing the tickets?
2003-01-13 12:32:24 PM  
Yep, everybody but 2 states have now sold out to M$. Led by the biggest group of idiots ever to "grace the stage" (their personal opinion of themself), Asscroft and his Nazi henchmen.

Enjoy shoving more MicroCRAP in your consumption_Hole America!
2003-01-13 12:36:00 PM  
Punished by increasing market share? And those who get the vouchers have to use them for MS stock? Huh? This isn't a settlement, it's a marketing startegy!
2003-01-13 12:37:48 PM  

nice try.

Although the upgrade/licensing argument is actually ridiculously silly, I'll play along.

If the bar always charged for the coaster and the glass anyway, they still lose the $2 per glass that they've given away. undder your scenario, for every 2 beers, the bar makes $8. Now tey make $6. They've lost 25% of their revenue.

as for this:"the bar still gets to say that they had people drinking all that beer in their place" -

yeah - they get to say it to their own customers, who were already there anyway.

Again, Ithis is a silly argument for people who don't realize how big a chunk education is of MS's market.
2003-01-13 12:50:12 PM  
RandomRandom, the settlement also states the vouchers could be used for hardware/software of rivals. So, if a school district buys a MAC with one of it's vouchers, who pays for it? Did Microsoft just pay to put a rival computer in a school, or did Apple re-imburse them?
2003-01-13 12:51:01 PM  
Kerouac wrote: 2. Saying these products don't have any overhead is ludicrous. Again: all the overhead costs are built into a product. If MS sells a product for $200, and has to give it away, they lose the $200 - not the cost of the CD. Being forced to give away $1 nillion worth of product to a target market is a loss of $1 billion - because it's lost sales.

So you're suggesting that Microsoft's 1.2 Billions dollar voucher-ware deal is going to cost the company the "same as cash"? They why did Microsoft argue so long and hard for the voucher-scheme, why not pay cash? Because this deal is "not" the same as cash, not even close.

And yes, the educational market is large, so is the computer chip market, it doesn't stop uncompetitive dumping. The facts are that Microsoft has far less of a hold in the educational market than they do in the business and consumer market. Because of the large Mac presence, education is one of the last areas Microsoft can actually improve it's market share by an appreciable amount.

I've been in the software business for years, marketing no less. The cost of software production is so ridiculously cheap that all your analogies fail. Microsoft is not in a normal business that produces normal goods, they print money and happen to call it software, they can always print more. The market is so big, they rarely dilute it with overproduction, it's not a zero sum game. Making a few more copies costs "Nothing".

This deal is "not" a valid "Business 101" lesson, but it "is" representative of the software industry.
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