Gene

What is spin by Microsoft or true in reality?

The letter implies that the market is less competitive in the rest of
the world than in the US. However, the UK is an extremely competitive
economy and to assert that other economies are all less competitive is
to simplify the situation to such a degree as to make the assertion
meaningless and misleading. Conclusion less competitive market is spin
by Microsoft to deflect criticism from Microsoft and to conceal the
real reason.

The price at which resellers are able to sell is primarily governed by
the price at which they can buy. If the person ( in this case
Microsoft restrict the supply ) to a limited number of resellers or
offer particular resellers preferential terms then this will have a
more material impact on retail prices in a local market than resellers
margins. Control of price in a primitive market will be more easily
achieved than in a sophisticated one such as the UK. Conclusion
resellers margins is spin by Microsoft to deflect criticism from
Microsoft and to conceal the real reason.

Economies of scale achieved through selling to a larger customer base
in the US than in a smaller country. A major cost factor will be
research and development. If Microsoft were to withdraw from the world
market and only sell in the US market would the cost per unit sold go
up or down? The customer base argument only applies to local costs,
which are only a fraction of the total cost outside of the US.
Microsoft are not selling a bulky product e.g a motor car, where
distribution and storage costs may be significant. It is a small high
tech product! Economies of scale are achieved by having a large
customers base; the geographical spread of that customer base, given
that Microsoft have a universal market for their product, is unlikely
to account for a significant price differential. One would expect to
see a significant increase in unit cost were Microsoft to restrict
sales to the US market. Conclusion economies of scale is spin by
Microsoft to deflect criticism from Microsoft and to conceal the real
reason.

EU Regulations do not allow a manufacturer to fix retail prices so to
that extent the Microsoft statement is true where they are selling
through a third party. As, however, stated previously the price paid
by local resellers is determined by Microsoft, not by EU Regulations,
so for Microsoft to say "we cannot set prices ourselves" is
disingenuous ( lacking candour ). In other words it is spin!

Taxation does affect resale prices. For comparable years, taxation in
the US has been reported as 29.6% of gross domestic product compared
to 37.4% in the UK. Tax on goods and services is higher in the UK
than in the US. However, given that only 15% of the UK inclusive of
VAT price is tax compared to the US local sales tax, whatever that
might be, it hardly accounts for the retail price differential between
the two countries.

Advancing local Microsoft promotional discounts is a two edged sword.
Fine for those who get them and infuriating for those who do not get
discount. If Microsoft are advancing this as a material reason for
price differentials then they are inviting further investigations by
the authorities for
abusing their position as a monopoly supplier.

Exchange rates. Another red herring! Recently the rate of exchange
between the US Dollar and £ Sterling has moved against the US Dollar
so one would expect the price paid for US goods and services bought by
the UK to fall. This does not seem to be happening. Quite the reverse
is the impression gained so the reason for the price differential
would seem to be something else!

In dissecting the arguments in the letter I am now reaching the
conclusion that the letter is entirely spin.

--

~~~~

Gerry

~~~~~~~~
Enquire, plan and execute.
Stourport, England
~~~~~~~~~~~~~~~~~


Forgery or not, I cannot answer; however, the Microsoft reply
gives legitimate marketing/operating reasons which are true in
most regions and countries.




Enigmatic wrote:

- Show quoted text -

I contacted Microsoft about this and the reply was as follows:

"Dear Sir/Madam,
Thank you for your email concerning price differences for
Windows Vistaâ,,¢ between the US and the UK.
In response to your query, I can
confirm that the U.S will usually be cheaper owing to the
following
reasons:

U.S resellers, particularly online ones may be able to sell the
product at a
lower price owing to them taking a reduction in their margins.
They
can normally
do this more than resellers in smaller countries due to the
economies
of scale
of selling to a larger customer base. I should point out at this
stage, that as
a result of EU regulations we cannot set prices ourselves.
Taxation, which can
be substantially lower in the U.S than the U.K.
Operation costs such as
distribution and manufacturing can be significantly lower in the
U.S
owing to
the same economies of scale as mentioned above.
Different Microsoft regional
offices can offer promotions and discounts to resellers and
consumers
that are
specific to their own region. Microsoft UK and Microsoft Europe
will
quite often
offer such promotions that are not applicable to our U.S
customers.
Finally,
the differences in price can also vary with the currency exchange
rate
between
the U.S and the U.K.
I hope this information has answered your query, but if
you have any more questions please give us a call on 0870 60 10
100.
Our lines
are open from 8.00am to 6.00pm, Monday to Friday. Telephone
traffic is
at its
lowest early in the morning. Of course if you prefer please send
me an
email.

Many thanks for contacting us.
Kind Regards,
MAMATHA DALEER
Customer Service
Professional
Microsoft Customer Services"



There you go, folks.

Robin