[Is there some subtle economic theory I'm not aware of that explains how a business can compete when a vastly larger competitor sets the market price of the business's products to 0? ]
No, there's an obvious one. You change the product such that consumers are willing to pay a premium.
Cable TV started out offering exactly what broadcast (free) TV did, but with better reception. If the broadcast TV people had figured out a way to deliver similar reception, cable would have died. But they didn't, and cable went on to exploit the advantages of their business model over the broadcasters by milking and increasing the subscriptions with optional services. They managed to overcome the disadvantages of a vastly smaller audience and lack of advertising revenue.
I believe NSCP set up their business planning to charge a premium for a more advanced browser than MSFT or others could offer. At this point, they are failing to execute on this plan, as they have allowed MSFT to produce a competing browser with similar features, better even according to many reviews.
MSFT has effectively dealt with the disadantage of it's model, the administrative nightmare of updating a large horizontal installed base without alienating customers or collapsing under the cost of legacy support. MSFT has exploited the advantages, by offering integration, saving customers the hassle of installing and configuring a browser.
NSCP, on the other hand, has not shown it is able to take advantage of being leaner and less burdened than MSFT. Nor have they made significant progress developing an alternative to MSFT's integration advantage. They have simply been out executed. IMO, they should seek a large partner, or consider a more vertical business model.
A law requiring all browser technology to be sold for some minimum cost would put to rest this "dumping" theory of NSCP's decline. Do you think such a law would make a significant difference in the battle between NSCP and MSFT? I don't. |
