Subject: Re: HBS WK: Who will win Microsoft or Linux?
From: "Stephen J. Turnbull" <>
Date: Tue, 07 Jun 2005 11:38:53 +0900

>>>>> "Seth" == Seth Gordon <> writes:

    Seth> Think of a developing country where the vast majority of
    Seth> people with computers would have to spend a year's wages to
    Seth> buy a legitimate copy of Windows,

At US prices, perhaps; I doubt that that is true at the prices in their
country, given the kind of people who have access to computers.

    Seth> All the people who run pirated copies of Windows and have
    Seth> experience using Windows become part of the market for
    Seth> Windows-based applications and tools, *and furthermore*,
    Seth> they (or their employers) have enough money that Microsoft
    Seth> can start enforcing their copyrights.

I really don't think that there's an alternative to piracy, except
closing the company.  ;-)  Microsoft obviously understands price
discrimination, and the cost of providing of copy of Windows would
justify a price well within the reach of anybody who can afford a
computer.  As Ghemawat points out in a different context, Microsoft
can adjust prices to maximize profit country by country, and I'm sure
they do.  Anybody who's been to graduate school with an Indian or
Taiwanese classmate has undoubtedly seen the for-export-only textbooks
that are sold at markdowns of 80, 90, sometimes 95% in those
countries.  Surely you don't think Microsoft would miss that bet!

So Microsoft is not waiting for people to have enough money before it
starts collecting; Microsoft simply has to wait until those countries
have economic infrastructure and social norms that allow it to collect
any money at all.  Of course it puffs and blows about IP, and pushes
the U.S. government (and probably other OECD countries as well) to
pressure those countries into improving their enforcement (not to
mention trying to impose US-style IP policy world-wide).

But at present it's simply not feasible in Russia or Vietnam or China
to market software etc and enforce IP the way it is done in the OECD
countries.  Nor is it possible to prevent leakage of copies of Windows
to them.  So "professional samizdat" (isn't that a nicer phrase? :-)
distribution of Windows is going to happen.

School of Systems and Information Engineering
University of Tsukuba                    Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
               Ask not how you can "do" free software business;
              ask what your business can "do for" free software.