>What does it take to beat Microsoft?
>Let us review the history of auto
>industry. It was dominated by Ford. But it took a combination of smaller car makers
>(GM) to overtake it.
Yes, let's review it, but start in the '50's, not the '20's.
Ford, GM, Chrysler and the now defunct AMC had a nice, cozy oligopoly going through the '50's and most of the '60's. They sold schlock cars to an American public that bought them because it did not have any alternatives and did not know any better.
Then, along came the Japanese. At first, their cars were schlocky, too. But they saw how crappy the American cars were, and how lazy the American oligopolist buisinessmen and labor unions were about making them better, so they decided to grab market share by making small, affordable, reliable cars.
And they almost pulled it off. Americans started buying Japanese cars en masse. Why? Because Japanese cars were cheaper and better, and American business oligopolists were too lazy and arrogant to make their products better. It was so much easier to just jack the price up 5-10 percent a year and rake in short-term profits to share with Big Labor than to make a quality vehicle Americans would want to buy. Competing in that environment was how the Japanese earned their reputation for integrity, reliability and quality.
When the Japanese automobile market share got really high and things really got out of hand, what did American Big Business and Big Labor do?
Did they make better cars? Well, yes, the cars did get a little better -- just enough better to cure some of the most outrageous quality problems and placate their critics a little. But Japanese cars are still better than American cars.
But the real thrust of the Big Auto Makers' response to the Japanese was more political:
1. Slap a bunch of tariffs and quotas on Japanese auto imports. That way, they could continue to jack prices up 5 percent or more a year, and, with both domestic and forign auto makers able to rake off monopoly profits at the expense of the consumer, everyone (except the poor consumer-saps who now have to pay $30,000 for an "average" car) would be happy.
2. Start a buy-American campaign to make it "un-patriotic" to buy a foreign-made car. Big Labor could play a role in this by, for example, vandalizing the foreign-made autos in company parking lots, setting up picket lines, and other forms of intimidation.
3. Get the government to devalue and debase the currency vis a' vis that of foreign rivals. Who cares if inflation rears its head, as long as the government can raise the envelope within which Big Auto can jack up prices?
Why did Big Business and Big Labor adopt these tactics? Because it's so much easier and cheaper to whine and cry to Washington for protection from foreign competition than it is to retool your whole manufacturing process to compete effectively on price and quality with foreign companies who are more efficient and better managed than you are. After all, foreign companies and immigrants can't vote, so the politicians don't have to pay any attention to them. American Big Business and Big Labor do vote and have big bucks to boot, so any sane politician would be crazy not to listen to them.
SO, now we're back to where we were before, a nice, comfy oligopoly. Yes, Toyota, Nissan and a few other foreigners are now part of it, but it's back to what it used to be: a few really big companies still don't really compete very hard on either price or quality in selling their product to a domestic market held captive, in the '50's by a lack of alternatives, today by high tariff walls and quotas. World wide overcapacity in autos won't matter much, either, as long as they can get the politicians to make the tariffs a little higher, the quotas and other barriers to trade a little stricter. It should not be hard to do if Gephardt and others succeed in making protectionism a "populist" cause.
Why do I recount this history here (aside from my obvious anger at feeling shafted all these years by both government and the auto industry)?
Because the lesson I derive from this little history lesson is that, from a cost-benefit perspective, for both Big Business (of which Microosft is already a part) and Big Labor (which, if they are not careful, they will soon have to deal with), the political approach is much cheaper and easier than to moderize products and production processes.
I think the same thing will happen in the software industry as happened in the auto industry. When the going gets really tough, as it almost did for Intel and some of the microprocessor makers in the early '90's, the tough will get going -- to Washington.
It's already happening. The ossification process is already well under way at Microsoft, which is intent on "Preserving The Windows Monopoly" at all costs rather than embracing the future as represented by Java and the Internet. The reason for this choice is obvious: facing the future means restructuring the company and its products, and facing sharply lower profit margins on their current line of OS and business applications products. Make no mistake: theirs is a "circle the wagons" business strategy. They want to slow down and impede change.
And Microsoft is inexorably, unavoidably being drawn into the political process by the whole DOJ ongoing investigation process of which the latest government brouhaha over IE and Windows 95 is only one tiny part. They HAVE to hire expensive lobbyists so their voice will be heard in Washington, since Washington is going to play a growing role in determining their future direction.
My question is, what if they turn out to have been wrong about Preserving The Windows Monopoly (something we won't know for 5-10 years)? What if Java wins the war they have started? What will Microsoft do when they figure that out? Will they retool their whole product line or production process, or will they, like the auto industry before them, go the political route? |
