It is the revenue per additional unit of an item sold. For eg lets say the price of an item A is 10$. And a company C sells 100 units on an average. So the revenue is 1000$. To sell an additional unit the company might have to reduce the price of the item. Why..? Since the item is priced at 10$, consumers are buying the product and the consumption is 100 units. To make the consumers to buy one more unit, the company needs to reduce the price for eg by .05 dollar. So the the price is 9.95$ now. Now the
Marginal revenue = Change in revenue/Change in units
(101 * 9.95) - (100 * 10) / 101-100 = 4.95.
So the Marginal revenue is 4.95 against 9.95 that you might have expected.
Thursday, September 10, 2009
With US DoJ approving Oracle-Sun deal, Oracle is slowly revealing its plans for Sun H/W assets. Here is another teaser/advt that Oracle runs about Suns hardware assets. I have seen this on most prominent web sites. It looks Oracle is willing to keep the Sun's Hardware business with itself and is ready to invest more on developing the same.
There is another angle to these teasers. The recent decision by EU to investigate possible antitrust issues in the deal has delayed it. It might take till mid January to complete the investigation. Already IBM and HP are grabbsing Sun's customers utilizing the uncertainity of the deal. The antitrust scrutiny can be dealt by either selling out MySQL or promise future development of MySQL. (I really love the words used by the Eurpean commissioner in his statement "The commission has to examine very carefully the effects on competition in Europe when the world's leading proprietary database company proposes to take over the world's leading open source database company" Oracle wants to thwart customers jumping ships and hence trying to clear the uncertainity by promising that it is still committed with Sun's Hardware.
Its not me alone but most of the experts still feel that Oracle might sell Sun's Hardware business to HP. And that makes real sense.