Monopoly of Micro$oft


Microsoft is capitalist, but not free market oriented
Daniel Eran writes a remarkable piece on how Micro$oft shut out competition.

Because they are competing against an established product that appears to cost nothing. Microsoft has been able to effectively compete on price, while paradoxically charging more than anyone else in the PC industry for an operating system. They accomplished this by bundling Windows sales with all new PCs. Manufacturers that bought copies of Windows, such as Dell, HP, and IBM, simply passed the cost on to consumers in a way that made Windows to appear to be free.
 
Microsoft signed exclusive OEM licensing contracts with them to effectively deny anyone else the ability to bundle their OS with new hardware sales. Window's competitors had to sell their alternatives as retail products. Consumers don't like to pay for software. They really only want to pay for hardware, and like the idea that software has no cost.
 
By hiding their software and its price tag within OEM hardware sales, Microsoft built themselves a revenue lock on PCs. They weren't competing on the merit of their product, they merely strangled what appeared to be a free market by denying entry to any competition, and then enjoyed high margin software revenue that was automatically generated with every new PC sold.
 
It's important to understand that Microsoft's success with Windows does not mean the company knows how to compete in a free market. Further, their revenue lock strategy won't work against the iPod, as I'll show later.

I do give Micro$oft credit for creating the software market and making it profitable. Bill Gates and his lawyers managed to extend copyright law to software internationally.

But I think Vista is going to be Micro$oft's Edsel. Especially since WalMart sells cheap computers without Windows.

— NeoWayland

Posted: Tue - July 18, 2006 at 04:51 AM  Tag


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