p2pnet - rss feed: Is Microsoft worth $61 billion?
p2pnet.net News:- Leaving out labor and shipping and the costs of monitor, keyboard, mouse, to the Dells or the H-Ps of the world, an average desktop PC coes to roughly $437 in parts, as per figures compiled by market-research firm iSuppli Corp.
Thirty percent, or $134, goes to Intel for a Pentium processor, the disk drives, including whatever CD or DVD is installed, cost around $104, RAM is $54, and the remaining hardware items - power supply, case, circuit boards - total $100.
The final 10%, or $45, goes to Microsoft for the Windows operating system.
So says Lee Gomes in his The Wall Street Journal Online Portals column.
"Because these prices are never disclosed, the figures here represent best guesses," he says, "But you can start to see the contours of the computer industry in that bill of fare. Specifically, you begin to understand how Microsoft could amass its $61 billion in cash and other assets.
"It’s easy when you collect nearly 10% of the cost of every PC that’s shipped, while having no manufacturing costs of your own."
Most technology companies that do well justify the $$$ they make by saying the money funds innovation without which, the industry would be standing still.
However, Gomes goes on, "The claim is suspect. The disk-drive industry, for one, manages to release drives with ever-larger capacities while often barely breaking even. And the technical challenges they face are among the most formidable, involving squeezing more and more bits of data onto ever smaller portions of a rapidly spinning magnetically charged platter."
[Ask Mike Thomas about that - Ed]
So - what does the world get for the 10% Microsoft tax on every PC and is the innovation from Microsoft commensurate with the awesome resources it has been given? - asks Gomes.
The advances it lists for its new products, "all too often involve fixing shortcomings of earlier products, such as security and reliability in the case of its operating systems, and ease of use with its Office suite," he pointgs out.
"In fact, you can argue that genuine innovation is the last thing monopolists want, since it threatens to upset the very applecart that made them rich in the first place.
"When asked which research from its labs has made its way into Microsoft products, the list from Microsoft officials doesn’t exactly bowl over a listener: better software-verification techniques, digital media-player technologies, additions to the SQL database language."
Gomes says in January, he featured the "unsung heroes of the consumer-electronics world" and the list included the likes of lasers and data-compression software.
"After the piece ran, I got an e-mail from the PR director at Bell Labs, once the research arm of onetime-monopoly AT&T, and now part of Lucent," he says, adding:
"He pointed out that four of the five items on the list had been invented by Bell Labs scientists. IBM, too, is famous for its research, and it has five Nobel Prizes to show for its work.
"Of course, Microsoft’s research group is still young, and its best years may still be ahead. They had better be. PC taxpayers might start rebelling."
