rcd@ico.ISC.COM (Dick Dunn) (08/22/89)
It began with: > | " I really would like to express my displeasure to the marketing bozo's > | " who ever came up with this idea of 1-2 user versions of UNIX. Darryl answered that it's not an ISC idea: > | Talk to AT&T. This is their idea. We wouldn't have bothered with it > | (I believe) if their lawyers hadn't decided to make us do it. It's > | their scheme and their implementation. Bill Davidsen objects: > I doubt that AT&T "made you do it." You say they get a higher royalty > for the unlimited version, why would they force you to offer a less > expensive version? OK, let's turn it around so you will have a harder time avoiding under- standing it: They force us to charge more for a system which allows more than 2 users. We have to offer licenses in two classes because: - We have to offer the 1-2 user license due to economic pressure. Someone who's shopping among 386 UNIX vendors, particularly for a single-user system, will look at price. If we can pay AT&T less, we can maintain margin and sell the system cheaper. - We have to offer the >2 user license because people want multi- user systems. AT&T charges us more, so we charge more. > As far as I know every vendor who offers the 2 user version also > offers the unlimited. Why do people think that there is something wrong > with having the option of buying something less expensive? The 1-2 user system costs $X. For $dx more, you get a system which is **virtually identical** to the 1-2 user system, except that it will let more than two people log in. The ONLY change is the login limit. If you want to look at it as getting a 1-2 user system for $dx less than an unlimited-login system with all the other capabilities the same, fine. I look at it as paying $dx more to have an unnecessary restriction removed from the system. It's as if you could buy a car with a governor to prevent it from going over 45 mph, or the same car for $2000 more without the governor. It's a time-honored practice in the computer industry (anybody remember the IBM 407?)--selling hardware or software with a "crippler" at a cheaper price, then charging for the "upgrade" which removes the crippling. But customers still chafe at the practice, and justifiably so. Darryl's point is that ISC is simply passing along AT&T's price-tiering--to do otherwise we'd either have to cut into the margin on the multiuser systems or inflate our profit on the 1-2's. -- Dick Dunn rcd@ico.isc.com uucp: {ncar,nbires}!ico!rcd (303)449-2870 ...Are you making this up as you go along?
pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) (08/23/89)
In article <16031@vail.ICO.ISC.COM> rcd@ico.ISC.COM (Dick Dunn) writes: Bill Davidsen objects: > I doubt that AT&T "made you do it." You say they get a higher royalty > for the unlimited version, why would they force you to offer a less > expensive version? My dim remembrance is that the AT&T royalty is (depending on volume) under $50 for 1-2 users and under $150 for unlimited (complete system, I think). Their explicit reason for the not high level of royalties was to encourage the diffusion of UNIX by making it possible to resell its binaries for cheap, e.g. like BellTech, Microport and Everex do; AT&T wants people to buy UNIX/386 for *much* cheaper than OS/2, both runtime and development system. The reason for 1-2 and unlimited was that 1-2 was for PC users (e.g. the ill fated 7300, or on a 386 UNIX as a competitor to OS/2) and workstations, and unlimited was for minis and other multiuser systems. AT&T decided to 'segment' their market this way. OK, let's turn it around so you will have a harder time avoiding under- standing it: They force us to charge more for a system which allows more than 2 users. We have to offer licenses in two classes because: - We have to offer the 1-2 user license due to economic pressure. Someone who's shopping among 386 UNIX vendors, particularly for a single-user system, will look at price. If we can pay AT&T less, we can maintain margin and sell the system cheaper. Note that the entire AT&T royalty is under 10% of the 386/ix selling price, i.e. just a fraction of the likely margin that ISC has on it. If the royalty were more like 30%, as for the low cost Microport, Everex, Belltech products, then the difference between the two royalties would excusably be too large to ignore. Darryl's point is that ISC is simply passing along AT&T's price-tiering--to do otherwise we'd either have to cut into the margin on the multiuser systems or inflate our profit on the 1-2's. Of course it is passing along the X Consortium's price-tiering that forces poor ISC to sell the X development system for $795 (more than the price of the Unix development system); or maybe it is true as somebody once wrote that ISC has huge QA costs (in validating free sw that is running successfully off the shelf at a few hundred or thousand sites around the world, and that is regularly updated by the X Consortium). Now an interesting aside: is it possible to just compile the X development system off the X Consortium distributed sources and use it with the ISC X server? If not, why? Has by any chance ISC hacked the protocol recognized by the X server so that it is now compatible only with their libraries, incidentally destroying interoperability? Otherwise, is there any *compelling* technical reason to buy the X library binaries from ISC for $795 instead of getting the sources with which everybody is already quite pleased from any friend for free? Another interesting pricing policy was DEC's with VAX Ultrix; each extra block of eight authorized users was priced to the tune of several *thousand* dollars, i.e. several hundred dollars per user, up to a maximum of 64 users. Is this still true for DEC? Is ISC going to adopt a similar pricing policy? :-> :->. The conclusion is that if companies want to charge what the market will bear, and/or charge high prices so as to dampen sales because their organization is already strained under the volume of those it makes now, they can, but please without blaming AT&T relatively very low royalties or QA that is terribly expensive, or... -- Piercarlo "Peter" Grandi | ARPA: pcg%cs.aber.ac.uk@nsfnet-relay.ac.uk Dept of CS, UCW Aberystwyth | UUCP: ...!mcvax!ukc!aber-cs!pcg Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@cs.aber.ac.uk
jcm@mtunb.ATT.COM (was-John McMillan) (08/24/89)
In article <PCG.89Aug23164912@thor.cs.aber.ac.uk> pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) writes:
];-) :
];-) >The reason for 1-2 and unlimited was that 1-2 was for PC users
];-) >(e.g. the ill fated 7300, or on a 386 UNIX as a competitor to
];-) >OS/2) and workstations, and unlimited was for minis and other
];-) >multiuser systems. AT&T decided to 'segment' their market this
];-) >way.
];-) :
The "ill fated 7300" allowed "unlimited" users.
john mcmillan -- att!mtunb!jcm -- ill fated product support.darryl@ism780c.isc.com (Darryl Richman) (08/25/89)
In article <PCG.89Aug23164912@thor.cs.aber.ac.uk> pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) writes:
"My dim remembrance is that the AT&T royalty is (depending on
"volume) under $50 for 1-2 users and under $150 for unlimited
"(complete system, I think).
"
"Note that the entire AT&T royalty is under 10% of the 386/ix
"selling price, i.e. just a fraction of the likely margin that
"ISC has on it.
Harldy a (small) fraction of our margin. Perhaps you forget that the
list price has to cover everyone's cost, from reproduction of the
floppies, printing our manuals, packaging the subsets, to
distribution. Usually, manufacturers see between 10 and 25% of the
list price from the distributors.
"If the royalty were more like 30%, as for the low cost Microport,
"Everex, Belltech products, then the difference between the two
"royalties would excusably be too large to ignore.
Also note that Microport is in Chapter 11, Belltech is now owned by
INTEL, and Everex sells hardware into a lot of other markets. We are
now owned by Kodak. I don't claim to know what the other owners want
out of their businesses, but Kodak wants us to make a profit. (We want
to make a profit, since I see in the paper that Kodak is thinking of
laying off 10s of thousands of workers next year. I'd rather not be
one of them.)
"Of course it is passing along the X Consortium's price-tiering
"that forces poor ISC to sell the X development system for $795
"(more than the price of the Unix development system); or maybe it
"is true as somebody once wrote that ISC has huge QA costs (in
"validating free sw that is running successfully off the shelf at
"a few hundred or thousand sites around the world, and that is
"regularly updated by the X Consortium).
Feel free to get the X software and run it yourself. I guarantee
you we are saving you a *lot* of headaches for the cost of X from
us. We also pushed hard to bring you X11.3 when everyone else
was sending out 11.2. Just as we have pushed hard to bring you V.3.2
6 months ahead of the rest.
"The conclusion is that if companies want to charge what the
"market will bear, and/or charge high prices so as to dampen sales
"because their organization is already strained under the volume
"of those it makes now, they can, but please without blaming AT&T
"relatively very low royalties or QA that is terribly expensive, or...
"--
"Piercarlo "Peter" Grandi | ARPA: pcg%cs.aber.ac.uk@nsfnet-relay.ac.uk
"Dept of CS, UCW Aberystwyth | UUCP: ...!mcvax!ukc!aber-cs!pcg
"Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@cs.aber.ac.uk
That's a very smug conclusion to reach from your ivory tower. The
AT&T royalties are in the same ballpark as our profits. If it's so
easy, why don't you make a go of it, eh? There are obviously lots of
profits to be made undercutting the rest. I've just spent 6 months
making V.3.2 boot on a large number of "clones"--and I'm going to be
spending another 6 months making it talk to a lot of "compatible"
devices. If you think we're out there trying to take you for a ride,
buy someone else's product. But we definitely supply a lot of value
added, and it costs a lot to keep from messing it up. Ask SCO--they're
the only ones that have been in this market longer than us. And they
charge a bit more. Perhaps they know something that the Johnny-come-latelys
don't.
--Darryl Richman
--
Copyright (c) 1989 Darryl Richman The views expressed are the author's alone
darryl@ism780c.isc.com INTERACTIVE Systems Corp.-A Kodak Company
"For every problem, there is a solution that is simple, elegant, and wrong."
-- H. L. Menckenles@chinet.chi.il.us (Leslie Mikesell) (08/25/89)
In article <PCG.89Aug23164912@thor.cs.aber.ac.uk> pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) writes: >My dim remembrance is that the AT&T royalty is (depending on >volume) under $50 for 1-2 users and under $150 for unlimited >(complete system, I think). Their explicit reason for the not >high level of royalties was to encourage the diffusion of UNIX by >making it possible to resell its binaries for cheap, e.g. like >BellTech, Microport and Everex do; AT&T wants people to buy >UNIX/386 for *much* cheaper than OS/2, both runtime and >development system. Great! Why don't they bundle the online documentation and unbundle the printed version instead. Most of the real cost of the system is paying people to cart the books around and store them somewhere (which never turns out to be the place you need them). >The reason for 1-2 and unlimited was that 1-2 was for PC users >(e.g. the ill fated 7300, or on a 386 UNIX as a competitor to >OS/2) and workstations, and unlimited was for minis and other >multiuser systems. AT&T decided to 'segment' their market this >way. Umm.. I don't recall ever seeing such things available directly from AT&T. That is, their 7300 and 386 UNIX are only sold in unlimited versions. So, the 'segmenting' is between "real" AT&T unix and "others" and from the looks of things here, it has the effect of creating ill will towards the "others" because it is a case of intentional crippling. Les Mikesell
rcd@ico.ISC.COM (Dick Dunn) (08/26/89)
pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) writes: > My dim remembrance is that the AT&T royalty is (depending on > volume) under $50 for 1-2 users and under $150 for unlimited > (complete system, I think)... I don't know the exact numbers either, so we ought to check that before going too much farther. Remember that this is for the V.3.2 licensing. >...Note that the entire AT&T royalty is under 10% of the 386/ix > selling price, i.e. just a fraction of the likely margin that > ISC has on it. I think you may have a somewhat exaggerated idea of our margins...but be that as it may. The AT&T royalty itself looks small, but that's what we pay AT&T--so it's an unburdened cost. To analyze the proportion of cost due to AT&T royalty fairly, you need to refigure with some magical margin multiplier (which I don't know and certainly couldn't quote in public even if I did). I don't think this explains all the difference, though I won't know until we have the real license costs. >... Has by any chance ISC hacked the protocol recognized by the X > server so that it is now compatible only with their > libraries, incidentally destroying interoperability? No. But there's more than a hint of contentiousness in that question; why do you ask it that way? (Is it just that you think for the price we charge, we must have screwed around with it?:-) Is there some reason to doubt that our X software would interoperate with others? > Otherwise, is there any *compelling* technical reason > to buy the X library binaries from ISC for $795 instead > of getting the sources with which everybody is already > quite pleased from any friend for free? If you don't think we've added value in what we provide--or, for that matter, if you don't think what we've added is worth the price--then go ahead! I don't think that anyone in ISC is going to quarrel that you've got a free choice there; I'm not even going to try a hard sell. I would suggest that you spend a little time to see what you'd get from us and whether it's of sufficient value to you. -- Dick Dunn rcd@ico.isc.com uucp: {ncar,nbires}!ico!rcd (303)449-2870 ...Are you making this up as you go along?
pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) (08/27/89)
In article <16043@vail.ICO.ISC.COM> rcd@ico.ISC.COM (Dick Dunn) writes: > Otherwise, is there any *compelling* technical reason > to buy the X library binaries from ISC for $795 instead > of getting the sources with which everybody is already > quite pleased from any friend for free? If you don't think we've added value in what we provide--or, for that matter, if you don't think what we've added is worth the price--then go ahead! I have been using ISC Unix ports for many many years (from the pdp-11 days) and they have always been cleaner and neater than most (even if I never like INed :->). SO I have no question that ISC adds value to the the standard AT&T product (I wish I could afford 386/ix and have the HPDD and FFS, by the way, but I am content enough with the much cheaper ESIX thing). I don't think that anyone in ISC is going to quarrel that you've got a free choice there; I'm not even going to try a hard sell. I would suggest that you spend a little time to see what you'd get from us and whether it's of sufficient value to you. Ahhhh, but the argument was not on whether you add value to your products (unquestionable), and not even on whether the higher price is worth the higher value, it was on whether the 1-2 vs. unlimited price differential was really "justified" as it reflected the differential in part of your cost structure (the royalties to AT&T). My points were that ISC's price differential (which is way above the difference in royalties, by the way) might conceivably have been absorbed without too much pain by you (after all, you are selling a deluxe product, so why be miserly?), and that in any case your prices and your cost structure do not seem to be very much related. There is ground for the suspicion that your 1-2 users vs. unlimited price differential, as well the high level of your prices in general, bear little relationship to the AT&T royalties or actual value added; it is maybe more the result of marketing decisions, where you, just like AT&T, want to segment your market (between workstations and multiuser systems, and between developers and end users), or want to slow your sales with a high price policy. The pricing of X11 server vs. library is the prime example: the library is derived from fully free sources, costs almost three times the server, and moreover if your literature is truthful you have hacked the server a lot, while I cannot imagine that you have done much work to the libraries, which are *designed* to be very portable. It is also cause for thought that the X11 libraries cost more than the base Unix itself, on which you do indeed pay a royalty and to which you also have added some value. In the end your pricing seems to bear little relationship to the level of royalties (none, in this case), or even to your value added (unquestionably much greater for the server than the libraries). It correlates only with 'what the market will bear' ("development systems" are sold to developers, "runtimes" to the end users, so you try to milk the latter as much as possible), and maybe with the idea that you don't want to strain your support organization with too many sales of the library (while you expect the developers to support the runtimes they sell to end users along with their applications). Given the substantial discount you offer to developers, the latter explanation seems more reasonable, i.e. you are trying to discourage end users from buying the libraries. You have all the rights to price your wares as you please, but not to ask the public to believe your claims that those prices are "justified"... -- Piercarlo "Peter" Grandi | ARPA: pcg%cs.aber.ac.uk@nsfnet-relay.ac.uk Dept of CS, UCW Aberystwyth | UUCP: ...!mcvax!ukc!aber-cs!pcg Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@cs.aber.ac.uk
dhesi@sun505.UUCP (Rahul Dhesi) (09/01/89)
Let's assume that the company porting UNIX pays AT&T a royalty of $50 for a 1-2 user license and $150 for an unlimited user license. If the 1-2 user system can be profitably sold for $x, then the unlimited user system can be profitably sold for $x+100. -- Rahul Dhesi <cirrusl!dhesi@oliveb.ATC.olivetti.com> UUCP: oliveb!cirrusl!dhesi
cpcahil@virtech.UUCP (Conor P. Cahill) (09/01/89)
In article <828@cirrusl.UUCP>, dhesi@sun505.UUCP (Rahul Dhesi) writes: > Let's assume that the company porting UNIX pays AT&T a royalty of $50 > for a 1-2 user license and $150 for an unlimited user license. > > If the 1-2 user system can be profitably sold for $x, then the > unlimited user system can be profitably sold for $x+100. wrongo. A minimum algorithm would be if the 1-2 user system can profitably be sold for $x + $x*markup, then the unlimited user system can profitably be sold for $x+100 + ($x+100)*markup where markup is the profit percentage for the retailers. A side issue would be that the seller has the choic to accept a smaller profit margin on it's minimal package in the hope that it will encourage sales of the items with a more acceptable profit margin. This is mechanism used by most grocery stores where they have sale items that are acutally priced below the store cost. The store hopes that the buyer will purchase additional items once they get into the store. A second side issue is that I too am not all that happy about paying $3,000 for my 386 OS, especially when I call the customer service line and am told that I cannot get any direct support (I must go through my vendor who knows less about the product than I do). -- +-----------------------------------------------------------------------+ | Conor P. Cahill uunet!virtech!cpcahil 703-430-9247 ! | Virtual Technologies Inc., P. O. Box 876, Sterling, VA 22170 | +-----------------------------------------------------------------------+
peter@ficc.uu.net (Peter da Silva) (09/01/89)
In article <1109@virtech.UUCP>, cpcahil@virtech.UUCP (Conor P. Cahill) writes: > wrongo. A minimum algorithm would be if the 1-2 user system > can profitably be sold for $x + $x*markup, then the unlimited > user system can profitably be sold for $x+100 + ($x+100)*markup This doesn't follow, because the retailer has no money at risk on the unlimited license. They don't have to send the cash to AT&T until the product sold, so the only capital at risk (which is what you should be judging profit margins against) is the packaging and warehouse space. If the cost on that is $x, with y% profit, then they can make the same real profit (for salaries, stockholders, expansion, etc) on a limited license at $(x *y%) + $50, or an unlimited license at $(x * y%) + $150. They get a higher profit margin for the multiuser systems. I suspect, actually, that this is justified... since I suspect that larger multiuser systems suck up more of their support time. > A second side issue is that I too am not all that happy about paying > $3,000 for my 386 OS, especially when I call the customer service line > and am told that I cannot get any direct support (I must go through > my vendor who knows less about the product than I do). Of course, if they're not providing support... -- Peter da Silva, *NIX support guy @ Ferranti International Controls Corporation. Biz: peter@ficc.uu.net, +1 713 274 5180. Fun: peter@sugar.hackercorp.com. `-_-' "Your mother applies makeup with a hot-glue gun. Your sister bites mailmen.'U` Your face looks like it's been washed in acid and dried with a cheese-grater."
dhesi@sun505.UUCP (Rahul Dhesi) (09/02/89)
In article <1109@virtech.UUCP> cpcahil@virtech.UUCP (Conor P. Cahill) writes: > If the 1-2 user system can be profitably sold for $x, then the > unlimited user system can be profitably sold for $x+100. wrongo. A minimum algorithm would be if the 1-2 user system can profitably be sold for $x + $x*markup... Uh, confusion. "Selling price" is what the end user pays. There is no further markup. -- Rahul Dhesi <cirrusl!dhesi@oliveb.ATC.olivetti.com> UUCP: oliveb!cirrusl!dhesi
sl@van-bc.UUCP (Stuart Lynne) (09/02/89)
In article <828@cirrusl.UUCP> dhesi@cirrusl.UUCP (Rahul Dhesi) writes: >Let's assume that the company porting UNIX pays AT&T a royalty of $50 >for a 1-2 user license and $150 for an unlimited user license. > >If the 1-2 user system can be profitably sold for $x, then the >unlimited user system can be profitably sold for $x+100. Not necessarily. Part of what you are paying for is support and the amount of support is proportional to the number of users on a system. It is much more complicated to setup a Unix system to run well and be secure for say four to eight users than it is for your own personal workstation. This will generate more support calls for setup during that initial "free" support period. Also almost everyone I know realizes that every level of the distribution chain adds on it's own percentage. Personally I dislike multi-level distribution channels and *much* prefer to deal directly with the product manufacturer. In this day of instant communications this is becoming much easier and effective as well. An excellent example of how well this can work is Cincinatti Microwave. They manufacture and sell what are (arguably) the best radar detectors available. But you can't buy them at your local car shop. You pick up your phone, visa card in hand and phone their 800 number. Within a day or so it arrives UPS Blue. CM sells their products at prices slightly less than the other (not quite) equivalent products that are available from your local automotive shop. But in their case they get 100% of the price (less sales support costs) compared to their competitors getting probably around 30% of the selling price. While it may be arguable about whether or not they have the best products it is not arguable about who is biggest. The problem for company like SCO or ISC is that if they start giving discounts to people who deal directly with them their distributor channels start to get very upset. And up till now their distributor channels have been very effective at producing sales. So they tend to try and push customers to the distributors and resellers. -- Stuart.Lynne@wimsey.bc.ca uunet!van-bc!sl 604-937-7532(voice) 604-939-4768(fax)
pcg@thor.cs.aber.ac.uk (Piercarlo Grandi) (09/03/89)
In article <243@van-bc.UUCP> sl@van-bc.UUCP (Stuart Lynne) writes:
And up till now their distributor channels have
been very effective at producing sales. So they tend to try and push
customers to the distributors and resellers.
Actaully the problem for the likes of SCO and ISC is how to *reduce*
sales. They are usually badly undercapitalized, and/or growing very
fast; therefore they have no interest in low price and volume sales.
Feeding sales thru expensive distribution channels both offloads some
of the capital requirements onto them, and constrains sales.
This is also one, important, reason why importers/distributors
e.g. in Europe jack up prices well beyond the USA+transport etc... level;
the importer/distributor tries to minimize sales, as this minimizes
capital requirements, which is usually scarce and entirely a function
of volume, and maximize margin.
The manufacturer has different priorities; in particular its capital
requirements have a large component that is not dependent on volume
(e.g. development costs) and thus there is an incentive to have higher
volume, even if the per unit margin is lower.
In other words, manufacturers tend to maximize *absolute* margin,
and have little problem with capital, while distributors try to
maximize *percent* margin, and try to minimize capital.
It is a recurrent nightmare of manufacturers in the computer business
to have distribution channels that boycott sales growth by maximizing
price; this is bad news for the manufacturer that aims for higher sales
volume to cover fixed costs. The conflicting interests and cost/capital
profiles of manufactuers and distributors are often loads of trouble.
Now back to our favourite subject, Unix on the 386:
I think that AT&T is the manufacturer, and SCO/ISC the first tier
distributors, and retailers the second tier ones.
Too bad for the end users...
--
Piercarlo "Peter" Grandi | ARPA: pcg%cs.aber.ac.uk@nsfnet-relay.ac.uk
Dept of CS, UCW Aberystwyth | UUCP: ...!mcvax!ukc!aber-cs!pcg
Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@cs.aber.ac.ukpalowoda@fiver.UUCP (Bob Palowoda) (09/03/89)
From article <5956@ficc.uu.net>, by peter@ficc.uu.net (Peter da Silva): > In article <1109@virtech.UUCP>, cpcahil@virtech.UUCP (Conor P. Cahill) writes: [some stuff deleted] [referenceing var's and multi-user support] > I suspect, actually, that this is justified... since I suspect that larger > multiuser systems suck up more of their support time. I'll call you on this one. If you have a hundred single user systems I would make a guess that these one hundred individuals would call the var or manufacture for support more often. In a mult-user situation more times than not thier is someone available that can resoulve small problems that would otherwise be off loaded to the var. > >> A second side issue is that I too am not all that happy about paying >> $3,000 for my 386 OS, especially when I call the customer service line Than again you don't have to pay $3000.00. Shop till you drop. ---Bob -- Bob Palowoda *Home of Fiver BBS* login: bbs Home {sun,dasiy}!ys2!fiver!palowoda (415)-623-8809 1200/2400 Work {sun,pyramid,decwrl}!megatest!palowoda (415)-623-8806 1200/2400/9600/19200 Voice: (415)-623-7495 Public access UNIX system
palowoda@fiver.UUCP (Bob Palowoda) (09/04/89)
From article <243@van-bc.UUCP>, by sl@van-bc.UUCP (Stuart Lynne): > In article <828@cirrusl.UUCP> dhesi@cirrusl.UUCP (Rahul Dhesi) writes: >>Let's assume that the company porting UNIX pays AT&T a royalty of $50 >>for a 1-2 user license and $150 for an unlimited user license. >> >>If the 1-2 user system can be profitably sold for $x, then the >>unlimited user system can be profitably sold for $x+100. > > Not necessarily. Part of what you are paying for is support and the amount > of support is proportional to the number of users on a system. It is much > more complicated to setup a Unix system to run well and be secure for say > four to eight users than it is for your own personal workstation. This will > generate more support calls for setup during that initial "free" support > period. The price of support should NEVER NEVER NEVER be included in the cost of the package. The is no way to judge what the quaility of support is worth until it is needed. Just how in the real world can you come up with a value for this. On the other hand if SCO want's to sell a 600.00 product support package that is separate than it has value. If you want to talk about free support (software) than compare it to the GNU products. > > Also almost everyone I know realizes that every level of the distribution > chain adds on it's own percentage. Personally I dislike multi-level > distribution channels and *much* prefer to deal directly with the product > manufacturer. In this day of instant communications this is becoming much > easier and effective as well. Seems that this type of market would be limited by the manufacture all the time. I doubt that SCO has the resources to support a market that grows to fast. Of coarse than if they do this all the competition will take their customers away. > The problem for company like SCO or ISC is that if they start giving > discounts to people who deal directly with them their distributor channels > start to get very upset. And up till now their distributor channels have > been very effective at producing sales. So they tend to try and push > customers to the distributors and resellers. A dangerous trap for a customer. He/she buys from the distributor/reseller and finds out that both of them tell them to call each other for support. I'm not saying that distributors or resellers do not provide good support but they tend not to budget that into the prices. I'm sure their is good one's. If they provide *free* support that works than they value add to thier market. If anything I like the way SCO structured it pay for the support but don't think of hideing it in the product resale value. If SCO or ISC has a problem with their distributors complaining they can lower the price of their price to the distributors and their price also. Problems soulved. ---Bob -- Bob Palowoda *Home of Fiver BBS* login: bbs Home {sun,dasiy}!ys2!fiver!palowoda (415)-623-8809 1200/2400 Work {sun,pyramid,decwrl}!megatest!palowoda (415)-623-8806 1200/2400/9600/19200 Voice: (415)-623-7495 Public access UNIX system
chasm@attctc.Dallas.TX.US (Charles Marslett) (09/05/89)
In article <5956@ficc.uu.net>, peter@ficc.uu.net (Peter da Silva) writes: > In article <1109@virtech.UUCP>, cpcahil@virtech.UUCP (Conor P. Cahill) writes: > > wrongo. A minimum algorithm would be if the 1-2 user system > > can profitably be sold for $x + $x*markup, then the unlimited > > user system can profitably be sold for $x+100 + ($x+100)*markup > > This doesn't follow, because the retailer has no money at risk on the > unlimited license. They don't have to send the cash to AT&T until the > product sold, so the only capital at risk (which is what you should be > judging profit margins against) is the packaging and warehouse space. It may be true that dealers do not need to pay for the AT&T license fees until the product is sold, but in those cases the dealer also does not have to pay any other money for the product until it is sold. AT&T's license fees are not identified seperatly on the Unix invoices I have had to pay (This applies to both Interactive and SCO Xenix packages). If the retailer pays $X wholesale on the box he DOES have $X at risk. And if the other box cost him $(X+100) he DOES have $(X+100) at risk. > If the cost on that is $x, with y% profit, then they can make the same > real profit (for salaries, stockholders, expansion, etc) on a limited > license at $(x *y%) + $50, or an unlimited license at $(x * y%) + $150. Again, he makes the same profit, but not the same margin (if he invested the $100 per package in the bank, he would make the same profit from his business, and he'd make some interest off the deposits in the bank). > They get a higher profit margin for the multiuser systems. This had better be true (as you mention in the paragraph below), but it is not as much higher as the naieve analysis might indicate. > I suspect, actually, that this is justified... since I suspect that larger > multiuser systems suck up more of their support time. > -- > Peter da Silva, *NIX support guy @ Ferranti International Controls Corporation. > Biz: peter@ficc.uu.net, +1 713 274 5180. Fun: peter@sugar.hackercorp.com. `-_-' =========================================================================== Charles Marslett STB Systems, Inc. <== Apply all standard disclaimers Wordmark Systems <== No disclaimers required -- that's just me chasm@attctc.dallas.tx.us
peter@ficc.uu.net (Peter da Silva) (09/06/89)
I think I confused my terminology in several places here... let me restate what I said so it makes more sense: In article <9234@attctc.Dallas.TX.US>, chasm@attctc.Dallas.TX.US (Charles Marslett) writes: > In article <5956@ficc.uu.net>, peter@ficc.uu.net (Peter da Silva) writes: > > This doesn't follow, because [ISC] has no money at risk on the > > unlimited license. They don't have to send the cash to AT&T until the > > product sold, so the only capital at risk (which is what you should be > > judging profit margins against) is the packaging and warehouse space. > If the retailer pays $X wholesale on the box he DOES have $X at risk. > And if the other box cost him $(X+100) he DOES have $(X+100) at risk. You're right. I meant ISC, not the retailer. The retailer has to charge $(x+100) * (1+markup). But ISC doesn't. So why do they? > This had better be true (as you mention in the paragraph below), but it is > not as much higher as the naieve analysis might indicate. Pretty close, once you get the players right. Of course, ISC doesn't seem to be providing the support one would expect from their higher profits... -- Peter da Silva, *NIX support guy @ Ferranti International Controls Corporation. Biz: peter@ficc.uu.net, +1 713 274 5180. Fun: peter@sugar.hackercorp.com. `-_-' "The Distribution: field on the header has been modified so as not to 'U` violate Information Export laws." -- eugene miya, NASA Ames Research Center.