Great article 235
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That depends on the business don't you think? If you have a business where price is important and margins are small, $20 could very well be a big deal even on a an item that sells for $2000 at retail.
In fact, the PC hardware business is price-sensitive. You can't sell 10% above your compebreastor and expect to keep your market share unless you offer value for that. Raising your price 10% without adding anything is not a good plan.
mlw Sure there was. There were negotiations on volume, price, delivery schedules, packaging, installation, etc. MS didn't write a "one size fits all OEMs" contract. They had (and still have) to...
Because of price compebreastion, margins in the PC hardware business are a fraction of the 70+ percent that Microsoft manages. Dell for instance had a 20% margin in one randomly-googled sample in late 2000 (a good year for PC's IIRC).
Since overhead, marketing, taxes, etc, come out of that $400 gross profit, the OEM could easily be making less than $200 on that PC. $20 out of that is pretty significant to the shareholders.
It could be, of course, that gross margins were much higher in the DOS era than they are now, but I'm doubtful of that. PC's have had fierce price compebreastion from early on.
mlw Which willing actions by the OEMs, of course, effectively and completely negates every argument you cola bozos have ever made about MS forcing them to do anything. So the realities...
Whether $6 million is a big deal depends entirely on your margins and on what the price-demand curve looks like. The total sales dollars is not a meaningful figure by itself.
-- - Bob Hauck - A proud member of the reality-based community.