Microsoft is exploiting its market-leading position to off-load high volumes of its products by bundling them with computers as part of “package” deals, says a leading research group.
According to research group International Data Group (IDG), 35 per cent of total sales of encyclopedia Encarta have been bundled with computers and 15 per cent of sales of Microsoft’s Flight Simulator series are accounted for in the same way. Flight Simulator is the company’s best-selling game to date.
Bundling is an established computer industry practice where software is pre-loaded onto PCs. It adds value to hardware manufacturers’ products and guarantees a base level of sales for software companies. Large manufacturers like Gateway 2000, Compaq, Olivetti and others all bundle software packages with their PCs.
But critics say that because Microsoft has such power in the software industry, it can get its products into PCs regardless of quality. IDG claims Microsoft provides the operating systems for 91 per cent of the world’s business and home PCs.
By contrast, the well-regarded computer games company Electronic Arts would only bundle five per cent of its products at most.
Gateway 2000 European marketing director Mike Jarvis says: “This is accepted practice. This type of business is huge, with Microsoft accounting for 70 per cent of the trade, followed by Lotus.”
Microsoft’s UK marketing manager of consumer products, Gillian Kent, says the company will bundle fewer of its games in future. “Our games have been viewed as dull in the past. But we will launch a lot more action games this Christmas and we want to go through retail sales with these.”
She added that Microsoft had never bundled Encarta or Flight Simulator in Britain. About ten of its educational and games titles are bundled in the UK at present.