Linked by Thom Holwerda on Tue 9th Oct 2012 22:01 UTC
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Member since:
2011-05-19
Indeed.
The iPhone has better (net) margins than Windows.
The world has truly turned upside down when a hardware device has better margins than a software package with a worldwide monopoly. That's why Microsoft has to move into hardware. It can't afford not to.
There are also some tangible financial benefits from bundling the software inside a device.
For example, China has a piracy rate of 77%. Every Surface tablet that it sells to Chinese consumers is equivalent to the profits that it normally would make from 4-5 Chinese Windows PCs.
In addition, Microsoft currently has over $50 billion of cash stuck overseas, because they do not want to pay the taxes to repatriate it. But it's free to import Surface tablets! In essence, Uncle Sam is subsidizing all US sales of the Surface by 10-15%, under the condition that the Surface be manufactured outside the US. (Talk about perverse incentives.)
Edited 2012-10-10 19:29 UTC