William H. Magill on Sun, 7 Sep 2003 16:08:04 -0400

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Re: [PLUG] Microsoft Run High School?

On Friday, September 5, 2003, at 02:01 PM, Paul wrote:
William H. Magill wrote:
Didn't Microsoft get dragged through the courts recently about this kind of "non-monetary" contribution ... especially in the Education Market?

Doesn't Apple donate computers to schools?

Don't we wish....

Apple's "standard" Education discount is basically $100 on hardware and 50% on software.

In the cases where Apple has "partnered" with schools, Maine comes to mind, they basically have negotiated a big single buy and therefore hardware discounts were much larger, probably on the order of the industry "standard" of 50-75% (i.e. 2 or 3 for one deals).

Virtually no "Iron vendor" (Apple, IBM, Compaq, Dell, Sun, etc.) give away hardware anymore. They simply do not have the margins to do it. None of the Iron folks have the capital to "buy market share" they way they did in the past. And the tax incentives are long gone. (And besides, you have to have profits before you can use tax credits anyway.)

"Long ago" Digital (DEC) pioneered the idea which later Sun and now Microsoft picked-up on ... give stuff to the schools so that the kids "grow up" using our stuff, and then they will buy it when they move out into industry! This was really the engine that propelled the mini-computers to replace the mainframes. Later we saw the same thing happen with the original PCs. IBM literally gave them away to schools like there was no tomorrow. (Which there wasn't. But that's a different story. IBM is the only one who survived.)

Then as the PC improved the margins vanished, and the ability to give away "stuff" vanished almost overnight. "Routine" 50% discounts were replaced by price cuts and 10% discounts on "big-iron" and as Dell, and to a lesser extent Gateway, pushed the old line sales-force driven "buy 1000 units and we'll give you a big discount" sales scheme into oblivion, the margins on "iron" began to emulate those of the Supermarket world -- 1-2% on most items.

We saw virtually the same thing happen in the Network Hardware market. Throughout the 90s, EVERYBODY was giving stuff to the "edus" for "evaluation" ... which wound up being "long-term loans" to the point where, 18 months later, cisco, Cabletron or 3Comm, etc. didn't want the stuff back because it had been replaced by new models. Now you can't get stuff for more than 2 weeks (if that) without a purchase order first.

No, the only place the margins are still big enough to give it away for free is in the software business. And really only at Microsoft. This is really one of the biggest selling points of Open Source Software. But you still have a generation (or maybe 2) of "Computing and Financial management" who doesn't understand that issue.

Years ago, there were a series of ads... the tag line was essentially, "You'll never get fired for recommending IBM." It probably took more than 10 years before the bean counters realized that the cost disparity was real. Today just change IBM to Microsoft.

William H. Magill
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