Chapter 18 Question ○ one three

Why do many computer manufacturers provide free software whose market price exceeds the price of the computer itself? Today, when people buy a new computer, they are sure to find that the hard drive contains not only the latest version of the operating system, but also the latest versions of word processing, spreadsheets, slideshow, e-mail, music and photo software, and of course the latest version of virus protection software.Why do manufacturers give away so much software for free? Software users care about product compatibility.Imagine if scientists or historians were collaborating on a project, the task would be much easier if they both used the same word processing program.Likewise, if a business executive uses the same tax software as her accountant, her life at tax time will be much easier.

Another related consideration is that many programs, such as Microsoft Word, can be cumbersome to master.People who are familiar with this set of software are often unwilling to learn other similar software, even if the latter is objectively more useful. This means that the benefits of owning and using a particular piece of software increase with the number of users.This unusual relationship gives the most popular program makers an incalculable advantage and makes it difficult for new programs to break into the market. Recognizing this pattern, Intuit Corporation offered computer makers free of charge the personal financial management software it designed, Quicken: of course the computer makers were willing to pre-install the program on their computers as it added new machines. attractiveness in the eyes of customers.

Quicken quickly became the standard for personal financial management programs.By giving away their software for free, Intuit drove the market, creating huge demand for back-up products like Quicken upgrades, successors, and so on.As a result, Intuit's personal tax software, Turbo Tax and Macintax, has become the standard tax-preparation program. Inspired by this successful example, other software developers jumped in to claim a piece of the action.According to rumors, some software developers even pay computer manufacturers to install their software.