An Omen At Lotus Spooks Investors

Some recent bad news for Lotus Development could be a sign of lower computer software prices to come. Implicitly conceding the damage done to its prize 1-2-3 spreadsheet programs by two years of punishing competition, Lotus announced it would sell its latest version to owners of rival products for just $150--75% off the list price. Lotus had long resisted deep discounts on 1-2-3, even while Microsoft and Borland International stole market share using similar tactics. This price cut directly hits only a fraction of Lotus' revenues. Yet investors worry that gross profit margins in PC software--historically, about 80%--may never be so fat again.

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