Wednesday, March 16, 2005

I'll come in again.

Besides market share, total market, and new markets, a company can also grow revenue by raising prices. This of course is why it's good to be a monopoly. There is a limit to how high Microsoft can set prices, because eventually people will get fed up and leave for something cheaper. Another way for software companies to grow is to release new versions, which works for a while. But if there is any way users can continue with the old software or switch to a cheaper option, they will when they notice how often upgrades come along.

For a long time, Microsoft didn't have to worry about people refusing upgrades, since they ended up buying them each time they bought a new computer. And Microsoft could justify raising the price by adding features like web browsers, music players and CD burning software. Recently it has been harder to do these things because of court rulings that limit Microsoft's use of its monopoly.

One advantage Oracle has is it's subscription model. Rather than charging customers to get the latest version, Oracle gives it to everyone who has a support contract. Microsoft is slowly working toward that system with institutions, but it will take a much longer time with individuals.

The basic point remains: Oracle still has more room for growth than Microsoft.

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