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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 181.55+3.2%2:47 PM EST

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To: SKIP PAUL who wrote (37962)8/12/1999 9:03:00 PM
From: Maurice Winn  Read Replies (3) of 152472
 
Okay, let's follow the trail. Dell has a choice - sell MSFT or sell Linux. Dell decides to go with MSFT. BUT, being a cunning businessman, sets up another company which uses Linux exclusively.

Or, if Dell agrees to total abandonment of Linux under any guise, personal or family association whatsoever, then some other computer maker will decide that it is worth it, undercutting the MSFT/Dell axis. There are plenty of computer parts for sale. Then the Linux business will grow and the MSFT/Dell business will shrink because it is so much cheaper than the evil monopoly and does a BETTER job.

The answer for MSFT is to discount their product so that the Linux people can't sell much. There are two problems with that.

One is that MSFT would have to give up $$billions to stop a pathetic little competitor getting 0.01% market share. If MSFT didn't stop it, Linux would soon be 0.1% market share and pretty soon 1%.

The other is that if MSFT gives up profit to stop competition, then it is not a monopoly. Personally, I find MSFT software a bargain. Winfax Pro, Eudora Pro and other software is comparable in price and much less functional.

That is just the nature of market shares and pricing. So, ordering Dell to use MSFT only is not going to work to maintain a monopoly, but it will help a little. The other problem with 'ordering' people around, is that they get angry. So MSFT would not be too smart to be unpleasant in their dealings.

It's a bit like in the oil industry, we would sell an exclusive supply arrangement. If they want the good discount, they have to agree to buy the big volume and not buy from other suppliers [unless there was no 'equivalent' product - not that any product is identical, but it was a willing agreement, so it works okay]. None of my customers thought I had a monopoly. They could change supplier any time they liked. Or buy something from another company, but if they did, then they'd lose the special discount. The economic basis for exclusivity is that unit costs are lower.

Some would insist on buying lubricants from one supplier and fuels from another, but very few! It there was an engine problem, that would cause a 4 way argument among the engine maker, lubricant and fuel suppliers and customer as to who did what wrong. With a single fuel and lubricant supplier, you know who to blame [if not the engine]. They also get a better price with a single supplier.

So, got any more suggestions on how $ill could stop Linux?

It's the same with Q! How the hell could they stop OFDM or any other technology? Sure there are big barriers to entry and we have software and hardware combined for extra market power, but there are still a million ways around the Q! monopoly.

Mqurice
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