Linked by Thom Holwerda on Mon 13th Sep 2010 20:57 UTC
Microsoft Who said a public outcry - even if it's just on the internet - never helped anyone? Yesterday, we reported on The New York Times' findings that Microsoft lawyers were taking part in raids on opposition groups in Russia. Today, Microsoft has announced a number of steps to fix the situation - the most significant of which is a unilateral software license extended to all NGOs in Russia and several other countries.
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google_ninja
Member since:
2006-02-05

I've seen you make that argument before lemur. You really don't understand the economics of software, or at least selling software in a productized model.

The average developer in the states makes about 75k/yr. MS tends to pay above average, you are probably talking 95-100k/yr. According to this blog, http://blogs.msdn.com/b/e7/archive/2008/08/18/windows_5f00_7_5f00_t..., there are about 23 main product teams for windows. An average software team is about 8-10 people (more then that gets fairly unwieldy). 10x23 = 230 devs at 100k is 23 000 000 big ones. MS also has a policy of hiring developers as testers, and at least tries to have 1.5 tester for each dev on a team. Testers are more like 80k, but we are still talking 345 people, which is 27 600 000. So just in developers and testers, we are talking 50.6m per year in manpower. Win7 was about 3.5 years in development, so we are talking 177.1m, as a rough estimate, in devs + testers.

Now thats a big number, but nothing compared to all the people we aren't counting. Managers (of which MS has _many_), designers, accountants, marketing folks, marketing campaigns, sales people, HR, IT people, and everything else you would expect from a big company. We are still just talking about people,we haven't even talked about the 8 billion per year they spend in R&D. MS has sold 160m copies of windows 7 so far, the vast majority of them being OEM home premium, which they probably get about 50-80$ for at the end of everything. That means that windows 7 could cover about 1 year of R&D for the company. And windows 7 was one of their most successful ones so far. R&D isn't the only division that costs a lot but will never directly make money either, you have stuff like DevDiv that deliberately loses money on their software to bring in more developers, which in turn drives windows (and by extension, office) sales.

A windows release costs an absolutely stupid amount of money. I wouldn't be surprised if it took 100m sales just to break even. Saying that a copy of windows costs as much as the distribution costs shows a profound lack of understanding about how this industry works. You put down a huge amount up front, the only reason you would ever do it is because of the massive margins you can make up in distribution. When you factor in the real costs, you start to realize why the only software retail companies still around are extraordinarily large, or very very small. You need to be an MS or an Adobe or an AutoDesk for this stuff to even make sense. They all make loads of money, but they only do it by spending loads of money on the right things in the right ways.

Reply Parent Score: 5

orfanum Member since:
2006-06-02

Erm,if you subscribe to this capitalistic view of the world, and you assert it works, why are you so unhappy?

Just a thought.

Reply Parent Score: 3

lemur2 Member since:
2007-02-17

A windows release costs an absolutely stupid amount of money.


Correct. Nevertheless, the marignal cost to Microsoft of providing these license to Russian NGOs who either already have licenses, or who weren't going to buy a license anyway, is still effectively zero.

Microsoft are not forgoing any income here. Regardless of how much Windows costs to develop (and how much of Microsoft's labour bill is spent on people fluffing about) the point remains that the marginal cost to Microsoft of providing the licenses that are the topic of this thread is close to zero.

What they are getting, however, is a lot of free PR cred fromm poeple who are apparently too dense to work out that it IS effectively zero cost to Microsoft to provide these kinds of licenses.

Belay that last. Those people who contest this point know all about the true marginal cost of a Windows license to Microsoft, and they are not dense at all ... they just don't want it pointed out to other people. Pointing it out reduces the PR value.

Edited 2010-09-14 04:54 UTC

Reply Parent Score: 4

deathshadow Member since:
2005-07-12

the point remains that the marginal cost to Microsoft of providing the licenses that are the topic of this thread is close to zero.

.. and that's the logic disconnect a lot of people will fail to grasp as well... they're giving it away to people who weren't going to pay for it in the first place, and likely had no plans to ever pay for it. Net Loss ZERO, apart from the PR of "Hey look what we're doing"

they just don't want it pointed out to other people. Pointing it out reduces the PR value.

On both sides of the arguement... since if you do point it out, the question becomes "So just exactly why weren't these NGO's using the legitimately 'free' alternatives?"

Must be strong arm monopolistic tactics and the evil corporations -- couldn't possibly have anything to do with quality of the alleged "alternatives"...

Edited 2010-09-14 05:02 UTC

Reply Parent Score: 3

BluenoseJake Member since:
2005-08-11

It doesn't matter how much it cost MS, 1 buck or 300 million, the reason MS did it was because they looked like a bunch of saps, a patsy, they looked like like they were either involved with the raid, or manipulated by the Russian government. It's bad PR.

This is MS saying "We won't let that happen again", it has nothing to do with money

Reply Parent Score: 2

lemur2 Member since:
2007-02-17

You really don't understand the economics of software, or at least selling software in a productized model.

The average developer in the states makes about 75k/yr. MS tends to pay above average, you are probably talking 95-100k/yr. According to this blog, http://blogs.msdn.com/b/e7/archive/2008/08/18/windows_5f00_7_5f00_t....., there are about 23 main product teams for windows. An average software team is about 8-10 people (more then that gets fairly unwieldy). 10x23 = 230 devs at 100k is 23 000 000 big ones. MS also has a policy of hiring developers as testers, and at least tries to have 1.5 tester for each dev on a team. Testers are more like 80k, but we are still talking 345 people, which is 27 600 000. So just in developers and testers, we are talking 50.6m per year in manpower. Win7 was about 3.5 years in development, so we are talking 177.1m, as a rough estimate, in devs + testers.

Now thats a big number, but nothing compared to all the people we aren't counting. Managers (of which MS has _many_), designers, accountants, marketing folks, marketing campaigns, sales people, HR, IT people, and everything else you would expect from a big company. We are still just talking about people,we haven't even talked about the 8 billion per year they spend in R&D.


It does indeed cost a huge amount to develop large software infrastructure.

Not millions, but rather hundreds of billions:
http://www.blackducksoftware.com/development-cost-of-open-source

$387B (387 billion dollars, or 2.1 million people-years of development) is one estimate for such an undertaking.

The thing is, the people are quite prepared to undertake that cost and effort for themselves on their own behalf, and hence enjoy for themselves the freedom and contol over their own computing that that gives them, rather than siphon all that money through Microsoft, and then still have to wear leagal threats and persecution from BSA/Microsoft for all that.

Edited 2010-09-14 05:38 UTC

Reply Parent Score: 2

Stratoukos Member since:
2009-02-11

A windows release costs an absolutely stupid amount of money. I wouldn't be surprised if it took 100m sales just to break even.

Given that Starcraft II's development cost $100m (development only, not marketing distribution etc), I'd say that the figure for windows would be much higher.

http://www.gamepron.com/news/2010/07/17/starcraft-ii-cost-100-milli...

Reply Parent Score: 2

miker Member since:
2009-07-08

You completely misunderstand the point everyone is making. They are referring to the cost of donation not the cost of development. No where on Microsoft balance sheet will you see a $390 million dollar expense for software donations. The cost of donating those copies has nothing to do with the cost of developing the software or the retail pricing.

Reply Parent Score: 2

lemur2 Member since:
2007-02-17

You completely misunderstand the point everyone is making. They are referring to the cost of donation not the cost of development. No where on Microsoft balance sheet will you see a $390 million dollar expense for software donations. The cost of donating those copies has nothing to do with the cost of developing the software or the retail pricing.


Exactly.

This is the first time that I can recall where Microsoft has got PR cred from even the EFF:
https://www.eff.org/deeplinks/2010/09/jack-booted-thugs-and-copyrigh...
Fortunately, at this juncture, Microsoft has recognized this as an important human rights issue, and has responded responsibly and innovatively. The company plans to offer protection to advocacy groups and others who might be targeted for political reasons by issuing a blanket software license to advocacy groups and opposition newspapers in Russia and at least some other places in the world. The software license — which would allegedly be made easily and widely available — should help groups insulate themselves from political attacks and human rights violations clothed as accusations that Microsoft software has been stolen.


Not bad for a zero-cost-to-Microsoft "donation" from Microsoft.

No where on Microsoft balance sheet will you see a $390 million dollar expense for software donations.


Hmmm, I'd wonder about that. You might see it written down as a tax loss.

Edited 2010-09-16 03:36 UTC

Reply Parent Score: 2