[brlug-poly] M$ Tax for all LSU Students.

[Will Hill]

Goaded off list, I've considered the Microsoft perspective on this deal.  They 
are going to make a hell of a lot of money per copy of software they 
distribute.  In fact, they are going to do better than ever this way.

The tax is about 1/8th of the $150 per year tech fee.  Per student $18.75  
almost looks like a reasonable price to pay for a new version of XP, Office, 
and Outlook.  

How about $18.75 for the mere ability to download that set?  A safety blanket, 
in case you decide what you have is not good enough and you are afraid of 
free software.  That's not such a great deal, but we are still not thinking 
straight.

Let's compute the revenue from Microsoft's perspective, per copy.  It's far 
more expensive when you consider how many students will actually use the 
service.  If my friends are any guide, most students already have new 
versions of the very same programs.  That's what they are counting on.

If every student goes to the trouble of reinstalling all of their software 
every year, Microsoft will see a meager $18.75 per copy.  That's still good 
money for a binary copy shot through the web, but not the kind of Michael 
Dell money that keeps Microsoft's profit margins at 70%.  Here's a little 
table:

18.75 for all,
37.50 for half,
75 for on quarter of the student population.

Now we are up into Michael Dell revenue, but that's not a realistic estimate 
is it?  I'll be very surprised if 25% of the student population bothers to 
swap out all of their software every year.  25% every four years sounds more 
reasonable to me, so let's multiply that table by four years:

75 x 4 = $300 / per software set.

You can tack on the additional $40 or so that they made when Dell sold the 
computer in the first place. 

So, with this deal, Microsoft is going to make better than retail profits 
keeping LSU students using Microsoft software.  Students won't find a cheaper 
deal when they want it, and I can't imagine a better deal for Microsoft.  If 
I did imagine a better deal, I would not tell you.

That's the kind of money Microsoft will report to their share holders, who 
like them, still think of bits as things that you can put into a box and sell 
copies of.  



On Monday 24 October 2005 08:51 pm, Will Hill wrote:
> If you thought you could avoid the Microsoft tax by building your own
> computer while studying at LSU, guess again!