OS costs

[Warren D. Calhoun]

In article <1990Aug28.182758.29036 at ico.isc.com>, rcd at ico.isc.com (Dick Dunn) writes:
* In an article following up on looking for good prices on 386ish UNIX,
* calhoun at usaos.UUCP (Warren D. Calhoun) writes about finding a good deal on
* SCO software...
* 
* * ...Considering that even at ~$400.00, there is still more than a
* * 100% profit margin (discounting R&D), this is still not a bad deal for
* * SCO or for the reseller...
* 
* My first reaction to the parenthetical note was to recall physics courses
* where we were always searching for the right simplifying assumption...we
* joked about "frictionless elephants whose mass can be neglected..."
* 
* You can't discount the R&D cost, or the analysis won't make sense.  Now, I
* certainly don't mean to flame Mr. Calhoun--it's a common belief that soft-
* ware should be very cheap because the production costs are so small.  But
* I'd like to take the occasion of his comment to talk about (and perhaps get
* a discussion going about) what an OS package really costs, and why.

As I should have known, what I deemed a casual remark managed to strike a
nerve.  This was really not my intent.  My comment about discounting the
R&D costs was not meant the way it was apparently interpreted.  What I did
mean was that I am not qualified to judge the R&D costs.  I know that they
are high and that they most definitely figure in to the overall cost of a
product ESPECIALLY software.  The 100% I spoke of was "profit" above and
beyond the "material costs" (i.e. disks, documentation, packaging, etc.).
The point that I was trying to make is that whatever SCO gets, it must be
some amount that they figure will enable them to recoup their costs over the
life of the product and still make a profit.  This figure is apparently low
enough that a VAR can set a price of ~$400.00 and still see a profit themselves.

Apologies for seeming to view the R&D aspect as trivial.
-- 
| SSG W.D. Calhoun                  |       UUCP: ...!uunet!usaos!calhoun    |
| Gas Turbine Engine (52F) Branch   |   INTERNET: calhoun%usaos at uunet.uu.net |
| The U.S. Army Ordnance School     | CompUServe: 76336.2212 at compuserve.com  |
| Fort Belvoir, Virginia  22060     |      Voice: (703) 664-3396/3595        |