Microsloth

Microsloth

I don't believe that Microsloth's massive profits are justified, but than I am a pseudo-commie Mac user.....

WSJ's Lee Gomes

Do We Get Enough In Innovation for What We Give to Microsoft?

One can learn a lot about the computer industry by looking at the breakdown of manufacturing costs in an average desktop PC, as compiled by iSuppli Corp., a market-research firm. Excluding labor and shipping, and leaving out the costs of a monitor, keyboard or mouse, the typical desktop PC these days costs the Dells or the H-Ps of the world roughly $437 in parts.

The biggest portion of that -- 30%, or $134 -- goes to Intel for a Pentium processor. The disk drives, including whatever CD or DVD is installed, cost around $104; the RAM memory 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.

Because these prices are never disclosed, the figures here represent best guesses. 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.

....That leaves Microsoft, and the question: What does the world get for the 10% Microsoft tax on every PC?

No one could ever say Microsoft is sitting idle. That was clear last week at a Research TechFest the company held at its Redmond, Wash., campus. Microsoft has an advanced research operation that employs about 600 people all over the world. These are some of the smartest people around, and they don't work on specific Microsoft products, but rather on long-range ideas, usually matching their own interests.

But is the innovation from Microsoft commensurate with the awesome resources it has been given? The average Microsoft customer probably wouldn't say so. Indeed, the advances the company 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.

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.

Now playing: Everything Goes To Hell, from the album Blood Money by Waits, Tom (released 2002)