I try to avoid the term "monopoly" when discussing MSFT. If memory serves correctly, the term isn't used in The Gorilla Game (at least it's not in the index). Since there have always been alternatives to MSFT products, it's certainly not a monopoly compared to the government, your local cable company, local newspapers, the gas company, etc. The Gorilla Game teaches that as the mass market accepts an many technologies, there's a strong tendency to concentrate power. The applicable laws were written long before the book. In the case of MSFT, a key point is whether it acted like a monopoly, and it's probably guilty of this. Certainly the words "lack of restraint" and "hubris" come to mind.
The book "high St@kes No Prisoners" by Charles H. Ferguson has an entire chapter on MSFT. This is the best discussion of the pros and cons I have ever read. The author is a very smart (if unlikeable) guy who has had personal experience in the software business and has dealt with MSFT. Anyone interested in an investment in MSFT should consider this a must read. To quote, concerning a split up "The resulting companies would still be the largest, most profitable software companies in the world, well able to compete and innovate" Personally I would put stress on the possibility of innovation, which is far less likely with a company structured like the present MSFT. MSFT is too big for maximum efficiency - larger companies get some synergy, but past a certain point this is overcome by the drag of extra layers of management. MSFT is Bill Gates baby, and he resists the Solomonic decision (pun intended) to split it asunder. I suspect he is acting more like a proud daddy here than a rational manager.
The bad news is out. I have a very small position in MSFT now, and am seriously considering starting to buy more. As others on the thread have mentioned, real gorillas are so rare that most of us wind up buying kings and lesser creatures also. With a split MSFT we get at a minimum a king and gorilla, maybe 2 gorillas. Even opening up the API might be good for the new OS company since it will increase the value chain.
The legal case so far has turned out as I expected. I also believe MSFT will lose the appeal process, though undoubtedly MSFT's outside lawyers will be willing to fight the case to MSFT last dollar. Prolonged litigation has a very enervating effect on a company, so buyers may have to be very patient.In any case the government will not present this victory to the public as creating 2 smaller "monopolies" from one larger one, so their liberal backers will be happy. They will also have achieved a main goal of the litigation- forcing tech companies to contribute more money to Democrats. The ones who should really worry are competitors faced with invigorated agile innovative post break up MSFT. This is a bit ironic since they helped jump start the DOJ case. |
