![]() ![]() By comparison, in the professional desktop publishing market, where Microsoft has no product, average prices rose from $372 in 1992 to $452 in 1996. So what did it do after becoming the market leader? It lowered its wholesale price from $120 in 1992, when it already led the market, to $60 in 1996, a 50% drop in four years. Microsoft entered the market in 1991 (with Microsoft Publisher) and achieved a leading market share of 60% by 1992. Similar results were found in nonprofessional desktop publishing market. It introduced the first Office Suite in 1990 (for the Macintosh), following up a year later in the Windows market. Obviously, Office Suites helped lower these prices, but who should get credit for the Office Suite? Microsoft. By 1997 the average price of spreadsheets had fallen to $47. Excel took over leadership of this market in the early 1990s, and during Excels reign prices have fallen dramatically. Prices then drifted up and down for a few years so that the average was $210 in 1990 and $177 in 1991. In 1986 the average wholesale price was $213. When Microsoft Word became the dominant product (in the early 90s), prices fell dramatically, to an average of less than $46 in 1997. Of course, this was the period when WordPerfect was dominant. Another blow against the CFA claim that software prices always fall. From 1986 to 1992, the average wholesale price increased from $130 to $168. ![]() ![]() So it seems clear that software prices do not always fall, and that Microsoft engenders price declines, which can be seen even more clearly in individual markets. In the 10 categories where Microsoft had a product, prices fell by 65 percent. In 5 software categories where Microsoft did not have a product, prices fell by an average of 15 percent over the eight year period, with several periods of price increases. We examined how prices changed from 1988 to 1995 in all 15 major categories of consumer software as defined by Dataquest, a firm that analyzes computer markets. What we found was that Microsoft was the driving force behind price declines in many software markets. We examined market shares, quality, and prices in 11 software submarkets. The seeming inconsistencies between our study and theirs result from errors in the CFA study, which is a lemon in need of a serious recall.įirst, let me start with our study. The CFA study results are diametrically opposed to the results in a forthcoming book I have written with Stephen Margolis that I believe to be the most detailed examination of software markets to date. Their conclusions can be summarized in two quotes: Prior to the Microsoft software monopoly, prices invariably declined. and Microsofts prices for its monopoly products have increased dramatically. They then take the difference between the purported increase in Microsoft prices and purported fall in other software prices to calculate a dollar value of Microsofts supposed overcharging. Microsofts pricing policies, which are central to the antitrust case now underway in Washington, D.C., have come under increasing scrutiny since the recent release of a report by the Consumer Federation of America (CFA) and two other consumer groups. Single Issues of The Independent Review.Podcast: Independent Outlook / Conversations.International Economics and Development. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |