Same logic you used on the AAPL thread. In theory, you're correct, and I agree with you. No monopoly lasts forever, and neither will MSFT. HOWEVER, the rules of the game are slightly different here, due to the nature of the game. It's about increasing returns, and how to generate them. Some monopolies occur "naturally", and increasing returns accrue due to the natural arrangement (DeBeers) and how it can be manipulated.
Others occur because of state intervention (utilities). Finally, most occur due to good marketing, lots of money, and lots of deception. MSFT, of course, falls into this final category, just as AT&T, Standard Oil, and IBM did. Difference is that the last 3 lost their leads not because of the DOJ, but because they had commodities that eventually had margins chipped away, which allowed competition to grow and the DOJ pounced when weakness was evident.
MSFT is not weak, has fought off at least 3 threats to its dominance, is about to dispose of 2 more (potentially - JAVA and LINUX), and has the cash/marketing/deception down so pat, that any available choice other than MSFT represents not a lot of real choice at all.
Why is that? Because MSFT generates increasing returns based on a perceived lack of choice, a perception they are happy to continue generating via OEM agreements, and exclusionary deals.
NOBODY chose Windows as a standard. MSFT set up OEM deals which prevented people from choosing an OS. Well, not really. They could (and still can) choose an OS other than Windows, but it will cost additional money and considerable time to do so. The same is true of browsers (according to AOL's counsel David Colburn, who stated this under oath). The question is then asked "is this bad for the consumer?" Well, then it becomes an issue of viewpoint. Is it okay for MSFT to offer a low-cost, pre-installed solution? Immediate answer - no, that's not bad for the consumer. However, when you place it into context of all other associated applications and how MSFT benefits, you raise an eyebrow. Then you place it in the context of "well, what if I DO choose another OS?" Then, it becomes a money and time issue for the consumer. Now, other OS's might be cheaper. However, due to OEM agreements, it costs money to not install Windows, and install another OS, thereby adding a cost to any OS that chooses to price itself competitively.....
It's a Catch-22 for the consumer. You can choose, but if you do, you stand to lose.
Why take that chance? Most consumers are uninitiated, and aren't willing to take the risk and buy Apple like you, or run UNIX like I do at work. Can doing it payoff? In spades, if you're smart. But in most cases, it won't.
All this adds up to: MSFT's current arrangement is bad for the consumer. It needs to be altered.
One other reason this DOJ case is different from all other before it: the vultures are starting to circle on MSFT like they were on all previous cases. For once, the DOJ moved on a pro-active basis. All previous cases were too much, too late. This one is most likely too little, too late. We'll see. |
