Uncle,
If they are still selling XP, they have to still support it. I mean, do I really have to explain this to you???? So, as long as they are selling XP licenses, it's not a free ride, and they have to support it. If they aren't selling licenses, then how could any sales for a license be profit? What kind of pretzel logic is that? Either they are selling it, and profiting from it and supporting it, or they aren't selling it.
However, even after they stop making it, if there is a security issue, they have to patch it and will release a fix. I still get fixes for Windows 2000. Do they still sell it?
You are aware there is a virtual mode for running Windows XP in Windows 7, right? Just a guess, but Microsoft will probably want that work well, and will probably stay on top of it if there are issues there. More costs.
Your logic with regards to costs regarding Microsoft licenses just shows you have no experience in this field. Development costs have to be considered as part of the licenses. There's also bandwidth for sending this data. And notifying certain customers of problems. And directly dealing with high profile accounts. Microsoft will send people directly to big companies (I have been part of this, this is not conjecture) to help with solutions, especially if it means selling more licenses. These are costs the incur, and all go against the profit of the OS. Where do you think the money comes from?
It's a lot more complicated than someone would think without being part of the industry. Software support is expensive, software sales are also not free. The more licenses you sell, the more you have to support, and that increases support costs. The fact is, if Microsoft says they make x amount of dollars in profit for a sale of an item costing y amount of dollars, who are you to say they are wrong? Don't you think they know better than you or I do what their profits are? I wouldn't even care to take a guess, other than knowing they exist, and I have worked in this part of the industry. How would you know when you clearly have no experience or visibility into either Microsoft or the industry?
Igot, they hire people based on what their call volume is, and pay careful attention to how long people have to wait to talk to people. So, yes, your license, on average, will have a cost to them. If they say it's $10, then I believe them, but I'd have no way of knowing what it is, with that volume. So, there's that cost, and it is pretty linear with the number of licenses. There is also development cost, and that's not really going to change very much based on number of users, but it does have to be shared. So, in essence, it goes down with more purchases. That's the part I think people get confused with - they figure it's already made, so if Microsoft sells the product, they shouldn't have to pay for the development costs. Let me put it in a way that makes more sense - when you buy Vista, you are paying for development costs for service packs, and fixes, and also, for Windows 7. When you bought Windows XP, you were paying for Vista, etc... Microsoft is constantly spending money on operating systems, and they are paid for by the sales of the version that is still selling. So, forget that they might not be doing more development on XP anymore, and it's paid for and you'll get a better understanding. They are STILL developing new operating systems, and most of the money goes to that. The other goes to fix packs, and service packs. Keep in mind, licenses have to pay for the next generation, or the company stagnates and dies. Obviously, with Microsoft's volumes, they don't need to charge nearly as much as they do, so I'm not defending their prices, just that there are costs involved. And before you say, but, even if I didn't buy the OS, they'd still have to make the next generation, just remember. If not you, then who? Who pays for development with that logic?
Linux is written for free, basically, but, even so, people pay money for it so they can get support by the seller. That should illustrate this point, not compromise it. Red Hat costs money why? In a word, support. And people willingly pay for it.