OEM's are resisting

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To: Jon Shirly From: Scott Oki DATE: 23 January 1985 RE: OEM Price List Cc: Bill Gates; Steve Baller; Jim Harris; Carl Stock; Bob O'Rear; Ron Hosogi

There are two major areas of concern: MS_DOS pricing and GW-BASIC pricing. As I interpret the price list, we have significantly increaced the royalties for DOS and have significantly decreased the price for GW-BASIC Interpreter. If we combine the price for the two products, there is very little total change for an OEM who elects to license both products. I assume the undrlying reason for changing the prices in such a manner is two fold: 1) OEM's are resisting the high royalties for GW-BASIC Interpreter and are deciding more and more frequently not to license on a per system basis; and 2) we feel that our market strength for MS-DOS is sufficient to charge prices that are 300% higher than previously.

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For MS-DOS, OEMs will view increasing our prices by 300% as pure linacy and extremely rude. I believe that it would polarize our OEMs to license Concurrent PC-DOS from DRI. Therefore, I recommend strongly that prices for MS-DOS 2.x and 3.x remain unchanged from version 6.0.

For MS-DOS 4.0, I think we have an oppurtunity to raise our prices. This would be justified on the basis of having a superior product compared to Concurrent (I hope this iws tru by the time 4.0 ships).

Full Exhibit
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