Microsoft/operating system/Varian/Shapiro: Back in the days when Microsoft faced competition in the operating systems market, it licensed DOS to clone manufacturers using a sliding scale that depended on the number of machines that the manufacturer produced, whether or not DOS was installed on them. This was called a per-processor license, because Microsoft’s OEM customers paid royalties to Microsoft for their DOS license depending on how many processors (machines) they sold. Note that the pricing was based on the production of machines, not on the number of machines in which DOS was installed. This meant that when the manufacturers installed an OS on the machine prior to shipping, the natural choice was DOS, since it had already been paid for by virtue of the licensing policy. DOS had zero incremental cost of installation, making it very attractive relative to the competition.
Taken from: Information Rules
Shapiro, Carl. Information Rules: A Strategic Guide to the Network Economy Harvard Business Review Press. Kindle Edition._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Hal R. Varian
Information Rules: A Strategic Guide to the Network Economy Cambridge, MA 1998