iPad BOM Satire: Microsoft Windows, Office $0.27 Component Costs Leave Room for PC Price Cuts

Wednesday, February 10, 2010
By OP Editor

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Price Cut Speculation: Microsoft Copies Apple Nimble Pricing

Microsoft has a history of copying Apple. Even with a decade of Apple wins, Microsoft is expected to continue to copy Apple or even rumors about Apple in an attempt to minimize spending money on R&D.

There is a new speculative rumor that Apple might cut iPad prices with its “nimble pricing” strategy, so of course Microsoft is likely to copy that rumored strategy.

The relatively low price of Windows retail box bill of materials gives Microsoft room to reduce the retail price over time, ObamaPacman analyst says. Thus, Microsoft could potentially copy the speculative Apple strategy of iPad nimble pricing.

Microsoft Price Cutting: Screwing Windows Adapters

Analysts report Microsoft price cutting has happened before. After slow sales of Windows Vista, Microsoft cut the price on the whole line of Windows Vista.

Microsoft was selling Windows Vista Ultimate for $399, then later reduced the price by 20% to $319. That’s a prime example of how Microsoft drops the price to screw early adapters of Microsoft Windows.

To maintain their extremely high profitability, Microsoft resorted to firing a number of its own workers, underpaid some workers, and even asked many workers to return part of their pay.

Thus, with firing more Microsoft employees an option, Microsoft could remain nimble on its product pricing while retaining 99% profitability.

Office Productivity Suite Raw Materials Costs of $0.27, Microsoft Makes Over 99.9% Profit

Microsoft’s other money maker, the Office productivity suite, is estimated to to have even higher profit margin, with the similar BOM cost of $0.27 per unit, plus or minus few pennies.

The most profitable version of Office, the Microsoft Office 2007 Ultimate has a listed $679.95 retail price. Even with some retail discounts, Microsoft’s high price translates to over 99.9% profit margin for the Redmond company. The least profitable Microsoft software still makes 99% profit after deducting the cost of materials.

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Tags: Analysis, Apple, Humor, iPad, Microsoft, Myths, Windows

4 Responses to “iPad BOM Satire: Microsoft Windows, Office $0.27 Component Costs Leave Room for PC Price Cuts”

  1. Some Guy

    Interesting spoof article…think you should check your math skills, though. 99% markup would make windows sell for $0.537. Percent markup and percent profit are a little different, my friend. The actual markup, for windows 7 ultimate, would be closer to 118148%.

    1
    • Thanks! Meant to change that. Yes, markup was used in place of profit by mistake. I blame the snow, and the contagious shoddy journalism that’s going around. Updated, with bonus over 9000 percent reference in conclusion. =)

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  2. nick

    Haha… good article. But let’s not forget, of course, the labour costs for the programming and manufacture, distribution costs, rent for premises, legal fees, artists for packaging… we’re not talking just the raw materials that they sell. And I say this as an adamant anti-Windows Mac user.

    2

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