Why does Microsoft charge a fortune for its developer tools?

Question

Microsoft charges thousands of dollars for most versions of Visual Studio. Compare this with companies like Apple and Google and with organizations like GNU and Eclipse that give away developer tools for free, it makes me wonder where the difference lies.

The rationale behind Apple and Google giving away the tools for free is to make it easier for developers to develop for the platform, which in turn results in increased unit sales. Is Windows considered so ubiquitous that it doesn't need additional promotion, and can instead be leveraged by Microsoft to make money on the tools to develop for it? Is it simply because they can charge as much as they do and that some people are willing to pay it?

I'm also curious if the high cost of the tools has limited the number of small software shops that developing for Windows, if the existing shops either use the free (crippled) version, or other, less expensive tools.

Answer 1

This is kind of a "have you stopped beating your wife?" question. While there are Microsoft products that cost thousands of dollars, there are plenty more (from Microsoft) that are free, always, to everyone (eg Express) and ways (legitimate, real, ways) to get the expensive products for free. See https://softwareengineering.stackexchange.com/questions/82785/are-there-deals-free-or-low-cost-to-license-visual-studio-for-open-source-devel/82787 and Can a developer get a discount for Microsoft products? for example.

Answer 2

There is a VERY long, yet very informative, post by Joel Spolsky on his blog that explains some of this... Basically it amounts to the notion that large corporations with tons of money will pay that hefty fee. The mid sized and smaller companies will go for something cheaper, and the tiny shops will use the free version (or the expensive version acquired cheaply through one of MS' programs for small shops). He refers to this pricing strategy as "Segmentation" to extract the maximum "consumer surplus" from customers.

Answer 3

To expand on the "because they can" notion:

Microsoft is a huge player in a lot of areas of software, and has been for long enough that they are, to some extent, pretty well entrenched. One consequence of this is that a lot of consumers will look at Microsoft and say "They're the big guys. We'll use what they have because that's what our customers/vendors/collaborators are most likely to be using." And this assumption holds true because it's an assumption a lot of people make simultaneously.

There are a large number of reasons for choosing a particular environment, platform, or technology, but the biggest ones I see with Microsoft are:

• Their tools integrate well with each other
• There is a sense of "Everybody's doing it"
• There is still a popular misconception (not just in computing) that the more something costs, the better it is. To put it another way, there's an assumption that you always get what you pay for, on both ends of the price spectrum.

Because of these and other factors, Microsoft knows that the price they set will be met by a large portion of the industry, and they can toe the 'almost too expensive to be worth it line' with abandon.

Answer 4

It's hard to say what the "right" price for their products is. Generally, prices are determined by the market, i.e., supply and demand. Quality and polish incur a greater cost to the supplier, which is then passed along to the consumer...and I would say Microsoft's products are generally of a higher quality (features + polish + support + company stability) than many cheaper development tools.

As one example, compare Google's Android emulator with any of the emulators that come with Visual Studio.

Answer 5

Other answers here are good, but consider the opposite: why do their competitors charge little-to-nothing?

One possible answer is to attempt to commoditize a competitor's product(s) in order to displace their dominance in a market.

There's a famous (well, at least it was famous among some economics circles) study of a barbecue manufacturer that built barbecues in Asia and shipped them to North America (Canada mostly IIRC) and charged next to nothing for them, for a good number of years. They purposely took a big loss on every single sale. After a few years, no-one bothered to buy domestic barbecues because they were 'too expensive'.

After the domestic manufacturers were out of business, or near to it, the eastern manufacturer raised their prices to normal/higher than normal for a few years because there was very little competition.

This is, as I see it, what a lot of people have been trying to do to certain Microsoft products for a long time. Specifically, I believe Sun was engaged in this practice with Solaris vs Windows Server, StarOffice (eventually OpenOffice) vs Microsoft Office, MySQL vs SQL Server.

I'd be willing to bet money that if MS tools went away tomorrow, Eclipse and XCode wouldn't be free for very long. There'd be money to be made and every (publicly traded) company has a responsibility to make as much money as possible.

Answer 6

There are several reasons that MS charges what they do and get away with it.

1. There is a good supply of .NET programmers out there. Businesses generally decide on tools based on how easy it is to hire people that can use them.
2. The tools MS has produced generally make development quicker. Faster deploy time means more money in the company's pocket.
3. MS has many programs to make things cheaper for businesses. Also, if you for instance buy a Visual Studio Ultimate with MSDN subscription for almost $12,000 chances are you'll renew it every year since the renewal costs a third of the original price. So, they get you hooked.
4. The simple fact is, we are still living in a world dominated by Windows. If you want to create a desktop application, and you're a business, most likely you'll end up developing it on MS tools.
5. And the final reason is.... everyone else charges a fortune too. http://shop.embarcadero.com/dr/v2/ec_Main.Entry17c?SID=39696&SP=10024&CID=0&PID=&PN=29&V1=31047844&V2=31047844&CUR=840&DSP=&PGRP=0&ABCODE=&CACHE_ID=419426

Answer 7

For one, they have a well-known and trusted name in the business space. Using this notoriety and the ubiquity of Windows in the enterprise world, they make it more desirable than you would think to invest in and develop with their technology stack.

Building on that point, developers fluent in Microsoft technologies can charge more for their products and/or expect a higher salary from a Microsoft-based dev house.

I'm not sure how or if it limits smaller shops (especially with the most recent focus on the open source community by Microsoft), but I'd imagine it's like any other technology stack: you invest in it. Investment is investment, be it time, money or a combination of the two.