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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Walls who wrote (33728)	11/11/1999 9:43:00 AM
From: Charles T. Russell	Read Replies (2) \| Respond to of 74651

Wow! The Outside Force will work with the auto industry (foreign automakers) but it won't with the computer industry (the Internet, Linux) so we need the storm troopers to come in and torch peoples' asses. That's great. Again, you're evaluation is incomplete. Please look at it from this perspective. What is the cost to switch automotive brands? Pretty low really, just the cost of the vehicle plus the potential cost of additional upkeep. Because the buyer has so many different makes/models a disatisfied consumer can easily switch to a competing brand. This type of market motivates the producer to build it better, faster and cheaper. Compare this to the impact of a disatisfied customer who feels the need to switch operating systems? Well, it could be the cost of the computer and some associated hardware (not in all cases, because there are at least three viable OS's for x86 machine). There is the cost associated with replacing all application/utility software if that is even possible. And there is cost to learn the new OS. Substantially more than just the cost of buying the BE or LINUX operating systems and installing it on the box. The switch to the Mac platform gets really expensive doesn't it? So in reality there are fewer alternatives to switch than anyone on this thread are willing to admit to. Some basic characteristics of a monopoly are: 1. Barriers to entry, high start-up cost structures. 2. Market dominated by one firm. 3. Unusually high switching costs (if it is even possible) Microsoft has a monopoly in the OS market. It broke almost no laws getting there. However, by law, a monopoly must be regulated. Remember increasing returns, first mover advantage and proprietary standards exist in the operating system market. All very strong market forces that lead to the monopoly. Traditional, self-regulating market forces will not work in this situation and can't be expected to remedy the monopoly. I'm not an advocate of a big or strong government. But in this case the market is incapable of lighting the fire and providing a self adjusting remedy.