Subject: Re: What should Sun do?
From: "Karsten M. Self" <kmself@ix.netcom.com>
Date: Thu, 3 Feb 2005 15:36:16 -0800
Thu, 3 Feb 2005 15:36:16 -0800
on Tue, Feb 01, 2005 at 05:59:51AM -0500, Anthony Long (along@flexiety.com) wrote:
> 
> Ng Pheng Siong wrote:
> 
> >On Mon, Jan 31, 2005 at 09:52:59PM +0100, Laurent GUERBY wrote:

> >Of course, it is unclear Sun can raise StarOffice's price much higher than
> >what it is now to recoup its investment on StarOffice. (A quick googling
> >didn't turn up the acquisition's $ amount.) 
> >
> It was between $54 and $68 million.  See:  
> http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=469127&Type=HTML

 
> >Is StarOffice and/or OpenOffice
> >succeeding in driving MS Office's price down? 
> >
> Well, MS Office Student and Teacher is the leading retail version of MS 
> Office (at around $129 ASP according to NPD), and retail is 40% of the 
> Office franchise sales.  Before OpenOffice.org/StarOffice, MSFT had 
> never really offered an entry level version of Office (not to be 
> confused with Works).  In certain Asian markets, MSFT has dramatically 
> lowered the price of Office, to the tune of about $35 a copy.  

Not just Asian markets.  Educational discounts within the US are of
about the same order:  $40-80 for client-side software (OS & Office).
Makes the aquisition-cost argument for FLOSS slightly more problematic,
though certainly the benefits don't end there.

Much of the SW spam I'm seeing quotes prices about on par with special
(educational, non-profit) discounts.

There are also groups such as CompuMentor which essentially resell old
copies of legit products, cheap, to non-profits.  Their interest in
GNU/Linux has been markedly tepid.

> Maybe this has to do with OpenOffice.org/StarOffice or maybe it has to
> do with pirates.  I tend to think it's the former.

Both.

It's a dance of maintaining revenues (in the face of piracy) while
minimizing defections (in the face of alternatives).  Old story, I first
noted this in 1998:

    On Software "Piracy", Lies, BSA, Microsoft, Rocks, and Hard Penguins
    http://kmself.home.netcom.com/Rants/piracy.html
 

> >Is Sun making money
> >(operationally, ignoring the initial investment) on StarOffice? Or is Sun's
> >incredibly profitable hardware/OS franchise subsidising its StarOffice
> >business?
> >
> I would assume not.  It seems to have lost significant shelf space at
> retail, and there are few major U.S. enterprise deployments to speak
> of.  I wonder how long Sun can bleed from its investments in
> OpenOffice.org before it decides to pull out.  This is one reason it
> is critical to start moving in the direction of trying to get
> OpenOffice.org into its own non-profit corporate structure, and key
> FLOSS corporations and individuals to contribute to that.

How much is Sun really bleeding here?  And to what extent has the
Microsoft kissy-kissy impinged (already pitiful) marketing efforts?
Seems like Sun can't sell its way out of a paper bag here.


Peace.

-- 
Karsten M. Self <kmself@ix.netcom.com>        http://kmself.home.netcom.com/
 What Part of "Gestalt" don't you understand?
   Data corrupts.  Absolute data corrupts absolutely.
   - Ed Self's corollary of Atkinson's Law.


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