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The Mythic Microsoft Monopoly

Microsoft was never a monopoly, is not a monopoly now, and will likely never be a monopoly.

But before you grab your pitchforks and torches, let me explain.

A monopoly is a company who has *no* competition, nothing more.  There is no implication of wrong-doing in the term.

Back in the day, you had a choice between Standard Oil and um, nothing!  If you didn't choose gas from SO, you didn't drive a car.  Because of this stance and some greedy executives, SO began raising prices to an unreasonable level.

After enough complaint, laws were passed prohibiting monopolies, because if a company has an entire industry, and absolute power corrupts absolutely, the *consumer* (*not* competitor) suffers.

And so SO was broken up into some of the companies we know today:  Exxon, Chevron, and Mobil.  In Europe there is still Esso (SO spelled out).

Later in the 20th century people had a choice of AT&T and not having phone service.  And as technology got cheaper and operational costs lowered, prices increased because of greedy executives.  So consumers complained until the government stepped in.  Unfortunately, they botched the job and only created the micro-monopolies we know and hate today.

Welcome to the last 20 years.  Microsoft Corporation has major success with a product called Windows.  Everyone on Earth (except Apple) is rejoicing because the GUI can now sit on top of DOS, making PC's a lot more appealing, and shattering Mac's micro-monopoly of GUI enabled computers for the home.  Consumers win big.

Enter 1995.  Until now, networking in Windows has been difficult and buggy, and the Internet has entered the arena.  Both of these areas are of hot interest, and Microsoft knows that these things need to be integrated into operating systems.

Novell has been making millions selling software that replaces Microsoft's difficult networking.  But with the introduction of Windows 95 and dramatically improved networking, Netware takes huge hits.  Novell doesn't like this, since they haven't done enough R&D to put out a product before they get killed.  So the only recourse they have is to start lobbying that Microsoft is trying to take over everything.

WordPerfect is a very similar story to Novell.  They didn't invest in R&D to make a GUI word processor, and then it was too late.  They sell off to Novell who starts complaining for them.

Netscape is developing a web browser, but since that's their business, they have to sell it.  But the browser doesn't have significanly more features than Internet Explorer, so people take what they get for free. [If you disagree with this argument, think about this:  If a Sony car stereo doesn't have better features than the AC Delco in your new GM car, will you buy the Sony?  But if it does, you most likely will.]  Netscape has no other recourse than to follow the example of Novell and accuse Microsoft of being monopolistic.

As people who liked Novell, WordPerfect and Netscape products rallied, they found a new banner to follow:  open source.  They didn't like it because it was good.  They liked it because they could use it against Microsoft.  And they used it only because it was *free*. [Contradiction: They resorted to competitors' free products to fight Microsoft giving away free products (IE)]

At the same time, Microsoft is making ordinary contracts with computer manufacturers to ship Windows with new systems.  One of the clauses is that the manufacturer can get a good deal on software if they only sell MS.  This is ordinary.  Coca-cola pop machines don't sell Pepsi, do they?  The anti-MS coalition calls it anti-competitive and monopolistic, which is true, but remember, it's far from unique.

Enter Sun and their Java platform.  They resurrect an old idea from the 60's into a new coffee-flavored name: one language that could be used on all platforms via a virtual machine.  They want strict control over the platform so they can make sure no one takes away their cash flow, because in software it's often the second guy to come along who wins.  It gets implemented by many companies (MS included), and the idea doesn't work at first.  Everyone has made proprietary changes, so you don't get the true platform independence.  Sun doesn't want MS to be the second guy (who might win), and MS is the only one with money.  So Sun joins the anti-MS group with a lawsuit.  And yet today, Sun is still trying to get everyone in line so that their idea can work.

After successful political lobbying by these corporations, the government agrees that MS can be a government cash-cow.  So they lay charges of being a monopoly.

But wait!  Does MS have competitors?  Yes, tons!  How can you have a monopoly with competitors existing?  You can't!

Have the complaints come from consumers?  No, Windows is still flying off the shelves.  Win9x is less than $100, and upgrades are half that.  NT/2000/XP Pro are priced for businesses at $300 or less.  [Compare that to Photoshop which has maybe a 20th the code, but retails for $1000]  Complaints have come from competitors.  The monopoly laws were meant to protect consumers, not competitors.

Is MS a monopoly?  No.  Were they judged as such?  No.  They were prosecuted under the only law available.

Are they guilty of practices that shut down their competition?  Yes.  Is every company alive guilty of that?  Yes.  Is it illegal to do that?  No.

The lawsuit was dreamed up and they were guaranteed to lose.  Why?  The government and the anti-MS coalition wanted a cash cow.  They never got a fair trial, since the lawsuit was a mean to an end, and not an end.

The Microsoft Monopoly is a myth.  They are only guilty of being successful at doing what every software company wants:  being a household name.

Conspiracy Anti-Theorist
Thursday, June 12, 2003

Dear conspiracy anti-theorist,
                                              Read the findings of fact in the DOJ v MS case. It states quite clearly that MIcorosft is in a monopoly position in the OS market, and that it abused that postion.

                                              Consumers are complaing about Windows; they actually took out a class action in California over Win 95 and MS settled.

                                              When the Koreans or Chinese dump goods for less than the cost of production on the American market it's not the consumer who asks for retaliatory tariffs, it's the American company which cliaims it is unfarly being driven out of business.

                                                With regard to Standard Oil it was Rockefeller's firm belief that capitalism and unfettered competition was bad for America and for business, and that a cartel or monopoly would provide the seciurity necessary to provide a stable marketplace and protect the consumer. Exactly the same argument you are using more than a hundred years later.

                                             

Stephen Jones
Thursday, June 12, 2003

Let me add some details: (1) The very first version of the Netscape browser has not been written from scratch, but rather used the codebase of NCSA's Mosaic browser. Isn't it ironic that the primal accusation against Microsoft in the so-called browser war was: "first they'll give it away, then charge for it"? (2) Until the late 90's IBM was making more money from software than Microsoft did. (3) Sun's primary goal for Java was to give their product (sic!) Java away for free, then, once a firm user base was established, sell Java-affine hardware.

Johnny Bravo
Thursday, June 12, 2003

Stephen,

I am not advocating monopolies, since they tend to hyper-inflate prices which is bad for consumers.

The group in CA was a small group that saw an opportunity to get some cash back at the expense of manipulating media hype.  I bet most still use Windows and are happy with the capabilities of the system.

Conspiracy Anti-Theorist
Thursday, June 12, 2003

By law, a monopoly controls around 85% of the market. Microsoft has been found to be a monopoly in the desktop software market.

Being a monopoly is not illegal. The government doesn't care if you can only get something from one place. What *is* illegal is abuse of monopoly power - once you have customers locked in, do you take advantage of them?

FWIW, I don't think MS is particularly successful at abusing monopoly power - they only win because the other side routinely screws up. They went after Quicken and lost, badly. Now Quicken is screwing around with copy protection and Kiplinger's is reaping the rewards.

Philo

Philo
Thursday, June 12, 2003

Wow.

Great posting. I must say that I completely agree with what you wrote; it's concise, eloquent and correct(in my book anyway).
  Most people can't seem to fathom that Microsoft is doing a good job at their task; sure, they have their flaws like any other company on the earth, and they take their fair share of flakk for it.
  People seem to think that you can keep selling crud to people and expect them to keep jumping on the proverbial bandwagon. That's just not true.
If Microsoft sold really, really awful products they wouldn't *have* a monopoly. You really can't build a monopoly on crud. Look at the dotcom era. How many of those sold air? Lots. How many of those that sold air still sell air or are even around? Close to none.
  Why? You can't sell pee, call it lemonade and then go on to build an empire based on your 'magic recipe'.
  If it's not the "destructive marketing" it's the prices. Case in point: Microsoft Office XP Full is priced in at $437.82 dollars at Wal-Mart. Sure, that's a lot of money if you're a home-user; but, then again, most home-users own OEM and not Alienware or their own homebuilt machine. Most OEMs come with Microsoft Works or Microsoft Word bundled with the machine. That leaves those who roll their own machines or those who own businesses. For a small business this price is little compared to the increase in productivity they gain with the product. Why is it not important? They use it to further their own business, speed up processes by typing in their letters, budgets and whatnots vs. using a pencil or a typewriter.
Those who roll their own have to decide if they REALLY need it and either buy only the parts they need, or suck it up and pony up the cash for it and then stick with it for all ternity. (There's still the factors of development costs and whatnot, but explaining that here would be redundant, eh?)

Mickey Petersen
Thursday, June 12, 2003

"          Read the findings of fact in the DOJ v MS case. It states quite clearly that MIcorosft is in a monopoly position in the OS market, and that it abused that postion. "

They may be true, but it doesn't mean that the Court was correct. It just means that is what that Court felt and MS felt it wasn't in their best interest to keep appealing.

And people suing an enormously wealthy company by no means proves anything. Large companies are sued every day for silly things. It's the Great American Lottery. Find a company; sue; hope you win and win big.

Mark Hoffman
Thursday, June 12, 2003

The courts say that Microsoft (M$) is a monopoly.
The courts say that OJ is innocent. (At least the first time around)

Who cares?  I like M$ being a monopoly.  That way I only have to code for one OS, and have a very high chance of getting M$ type jobs for many years to come.

In the mean time, I will hedge my bets and stay current on MySQL, PHP, and perl.

Long live M$!

--
ee

eclectic_echidna
Thursday, June 12, 2003

It is absolutely NOT fair for MS to force companies who want to sell Windows computers to ONLY sell windows computers.

It's like I own a beer company, and by beer has 75% of the market.

Then, I say: any bar or shop that wants to sell my beer must NOT sell another brand of beer - otherwise, I won't give them my beer to sell.

And so I instantly increase my market share from 75% to 98%, or something.

This practice is absolutely unfair!

JJ
Thursday, June 12, 2003

Actually, the anti-Microsoft movement is quite popular over here in the European Union, especially in Germany. But alas - any major company is subject to be sued or publicly offended, be it for it's so-called monopoly, discrimination against women, exploitation of the Third World, etc.pp. Same applies to other countries (cf. Dubya).
Recently, there's been a pitch in Munich, Linux vs. Microsoft, regarding the OS on the 14.000 desktops belonging to Munich's administration. Linux won. IBM got the contract. So it's not "grass roots vs. big business".

Johnny Bravo
Thursday, June 12, 2003

To the original poster:

Amen brother! I couldn't have said it better myself.

Sgt. Sausage
Thursday, June 12, 2003

You're right, it's not fair, but not unique to MS.

Companies rarely like the word fair.

My argument is we should not build MS into this empire of evil.

Let's get on with the world and write great software.  MS hasn't stepped in my way to doing that.

Conspiracy Anti-Theorist
Thursday, June 12, 2003

To clarify the latter post: bashing Microsoft is as popular as bashing George W. Bush in Germany, for the same reason: people believe (sic!) they fight against the Great Evil.

Johnny Bravo
Thursday, June 12, 2003

I personally think Microsoft Windows has a monopoly.  The reason being, yes you can purchase other operating systems, but in a lot of cases there is no practical alternate choice for the business or vertical applications that users might need, so in effect customers have no choice.

I think most of the things MS is accused of, seem to be hokey claims.

For example: Integrating the web browser with the OS and file browsing?Practically every browser was trying that to some extent

The most serious allegations to me are none of the technical stuff about OS features, but simply the pricing schemes for OS (now reformed) - i.e. per computer type or per CPU shipped -- and the allegations about reverse bounties.

And I agree most of Microsoft's competitors have tripped themselves up.

One thing people never seem to mention about the DOS->Windows switch, is there was a step change in numerous application markets. The dominant vendor tended to be the one who got a good Windows version out first, rather than the previous dominant vendor.  Only case I can think of that wasn't like that - AutoCAD.

Right now I think MS is going off the rails. To maintain their stock price they need constantly growing revenues. As they have more or less filled their main market, this is why they have been experimenting with other stuff, which I expect them to lose money on or at best break-even on.

S. Tanna
Thursday, June 12, 2003

Microsoft does not depend on a high stock-price, as they are told to have some 40 billion dollars in their pockets.

Johnny Bravo
Thursday, June 12, 2003

Microsoft has indulged in some very nasty illegal tricks (apart from the legal ones such as false promises and spreading of FUD).

Remember the Caldera DOS case; MS wanted to make people use MS DOS with Windows 3.1 instead of any other DOS, which would have worked just as well. To cut out the competition in the DOS market it put in subtle bugs tnat made Windows 3.1 unstable with those OS's.

Then there is the forcing OEM's to pay for MS OS's even if they don't ship them, and then refusing to let OEM's ship a second OS in a dual boot configuration, or even to partition the Hard drive so the owner could install a second OS himself (ever wondered why your HD came as one huge partition even though most sensible people want to keep their data on a separate partition?)

The class action against MS was based on lack of support for Win 95. Basically they released it but didn't provide support for the bugs; I was in Spain at the time and small companies were finding their systems crashing, and they went to the vendors, who then found that all the MS support lines for OEM's were permanently engaged.

I really fail to see why it can't be accepted that Microsoft often produces good products, and that even when it doesn't it gains market share through the gross incompetence of the competition, yet in other cases its commercial practises are immoral, and often illegal, and certainly would not be tolerated in any other industry.

Stephen Jones
Thursday, June 12, 2003

Yes they will continue to operate for a long time, regardless if their stock crashes because of cash reserves

But all key execs, and many employees own stock and are therefore motivated by stock price.

S. Tanna
Thursday, June 12, 2003

Just a quick note.  I would love it if Microsoft bought or built anti-virus software and embedded it for free in Windows.  One less thing to worry about.

Why should I have to pay 3rd party companies for
-- backup tool
-- file compression utilities
-- browsers
-- intranet web servers

all stuff missing from MS-DOS/Win 3.1 that MS has added over time.

Every new Windows version brings more capability for the same price.  I enjoy using Linux and Java (esp on the server), but I've got a Win XP box on my desk.  I appreciate its ease of use and the fact that so much comes with it.

Voice of Rationality
Thursday, June 12, 2003

---"I would love it if Microsoft bought or built anti-virus software and embedded it for free in Windows.  One less thing to worry about."----

And have it updated by Windows update?!

I quoted Dvorak in the other artilcle about how he thought MS wanted to include anti-virus software because it would mean that you would have to connect to them every day, and thus be more prepared for a subscription model for everything else.

And imagine the horror of it if MS managed to see off the oppostion, as it has almost done with browsers. Now at least you can say you don't want an upgrade but with AV stuff you won't have a choice, and of course, then you will find that they will not let you just get the virus definition file updates but must pay for the updates to the whole program.

Stephen Jones
Thursday, June 12, 2003

JJ,

You analogy is completely wrong. They didn't they you *couldn't* sell other software, just that it will cost less if you sell them exclusively.

This is EXTREMELY common in business. Anyone who owns a restaurant will tell you that selecting a number of products exclusively will lead to better pricing.

Coke will give you steep discounts to exclusively sell their product.

Scotts will give you a free towel dispenser for your bathroom, if you agree only buy from them.

marc
Thursday, June 12, 2003

By the court's decision, Microsoft don't even compete in the market they're supposed to have a monopoly in. No recent version of Windows (either the NT or 9x line) fits the definition given for "desktop operating system".

And the horse you rode in on
Thursday, June 12, 2003

Microsoft are certainly no saints, but their current de facto monopoly has much more to do with their competitors not understanding how business works as it does with Microsoft using shady tactics.

And, in response to S. Tanna's above:

Why should Microsoft be punished because third party developers don't write software for other operating systems?  Hell, MS even writes the occasional update to MS Office for Mac... 

Most people just seem to gloss over the fact that Microsoft wasn't granted a monopoly through government regulations, ala AT&T.  They fought to the top, mostly against a company (IBM) that people thought was as unbeatable as people currently think Microsoft is.

When you ask most Linux zealots why Microsoft is 'number 1' their only answer is "because they abuse their monopoly", but that's a chicken and egg answer, they can't have gotten in their #1/monopoly position by abusing their #1/monopoly power if there is no government granted monopoly.

Mister Fancypants
Thursday, June 12, 2003

> And, in response to S. Tanna's above:

I don't think I said they should be punished for merely being a monopoly.

My point is merely that they have a monopoly at least in certain application types

If MS should be punished for anything, it is for if and when they abuse their monopoly.

S. Tanna
Thursday, June 12, 2003

> When you ask most Linux zealots

BTW I hope you are not including me in that category. I do not use now, have never used, and have no plans to use Linux. I write Windows software, though in the past have used/programmed other OSs.

I have also written some articles upset/enraged one or two Linux/Open-Source folks

S. Tanna
Thursday, June 12, 2003

"This is EXTREMELY common in business. Anyone who owns a restaurant will tell you that selecting a number of products exclusively will lead to better pricing."

That is fine as long as you're not a monopoly.  If a shop sells only one non-monopolistic brand, consumers will be able to easily find somebody else who sells a different brand.  But with a monopoly, consumers have to search long and hard to find any alternatives, and are often unsuccessful at doing so.  Try buying a new laptop with Linux installed instead of Windows.  Or a laptop with no operating system at all.  You almost certainly won't be able to find a shop that sells one within 20 miles of your house, and once you get on the internet, you'll be lucky to find more than 3 vendors in the country who will do that.  And even then those may not sell laptops with the specs you want.

T. Norman
Thursday, June 12, 2003

Microsoft has done a superb job of exactly one thing: letting smaller, weaker companies research new areas of SW business and letting them pour money into product development and other trailblazing. Basically, knock themselves out as the "evangelists". Once the market need is established, MS basically clones the concept and runs the pioneers out of business, more or less.


They've done this with: windowing OSs; disk compression software; financial software; office productivity software; networking platforms; web browsers; development tools - to name just a very significant few. I think if you look carefully, MS has never really invented or pioneered ANY new area of business. They're not stupid!


Why is this, that is, why can MS keep re-inventing itself? I think it keeps coming back to the fact that MS is an empire composed of semi-autonomous "soviet republics".  They haven't yet gotten big, stupid and complacent, as most of their once-competitors did. The divisions within MS operate like survival obsessed small companies.


They watch and observe the marketplace... "oh, look, Borland's doing RAD with Delphi... hmm, when we do .Net, let's "adopt" that concept of component based programming in C#." IE: VB was a somewhat inept trailblazer of a product (unique for MS to pioneer anything, really); Delphi was brought out as the VB-killer which it never really became; and Delphi more or less taught MS what really effective development tools ought to do. For free. And, Borland stupidly bungled the marketing of Delphi - pricing it out of reach of their core solo developer/fans, for one major thing.


Borland was and is a stupid company that toyed with the "enterprise" market (Inprise? hahahaha) and disregarded its long suffering hacker loyalists. Novell was a big, stupid, arrogant company that reamed its customers. Wordperfect was once a big, stupid company that lost its market position by not embracing Windows at the outset.


Anyway, that's an aspect of MS's behavior that I didn't see discussed in this thread. Basically, it's neither illegal nor immoral to use your competitor's stupidity against them. Rather, I see it almost as admirable...

Bored Bystander
Friday, June 13, 2003

I think that follows the principle of the second guy often winning in software.

Someone will spend a lot of cash to make a product.  The second guy adds a cupholder to it, slaps a Disney logo on it and kills the original vendor.

Conspiracy Anti-Theorist
Friday, June 13, 2003

We all need to consider the longer term consequences of a monopolistic power abusing their position. Less choice, less innovation and higher prices.

Microsoft have been fantastically successful and I don't think they should be punished for this, however, when you reach a position of monopoly you need to act with more social long term responsibility. Your actions can cause significant damage.

Yanwoo
Friday, June 13, 2003

Insisting that a company only use your products and offering a huge discount for them has been common practise for as long as I have been alive. It has also been illegal for most of that time.

Even buying a distribution company to sell your ownproducts is likely to cause government intervention. It used to be common in the UK for pubs to be owned by breweries that forced their managers or tenants to serve only their beer. This practise was stopped many years ago.

The worst offenders are in fact the members of the Motion Pictures of America Association. Their pet practice is bundling. If you want to buy one movie from them, say "Titanic" or "Gladiator" you have to buy a whole bundle of crap that they'd never be able to sell otherwise. When the Spanish government thought about doing something about that in the early 80's the Minister of Culture, Jordi Solé Tura, got a personal visit two days later from the President of the Association.

It's quite strange. The heads of the "IP" megacorporations spend half their time lobbying governments to kill regulation designed to ensure a level playing field on the grounds that it interferes with their market, and the other half of the time lobbying the same goverrnments to bring in ever more restirctive legislation to protect their dubious intellectual property rights. Then they proceed to get a whole army of followers who voluntarily bombard the web with the half-digested pap from their PR departments.

And these people are the same ones who always said the problem with communism was that you could only have one type of car.

Or one type of petrol. Imagine if a petrol company with 80% market penetration, told car manufacturers that their customers would get a 20% discount if they fitted the car with a chip that only allowed it to accept one kind of petrol. How many car manufacturers would risk not doing that?

Let's give you another example. Mobile phones. In the UK, and many other countries, it was common practise for the telcos to actually give away the phones on condition that the user signed a contrac with the telco for a certain period of time. This is one of the main reasons why you have near 100% mobile phone ownership amongst those that want it in the UK. These phones were deliberately limited to be used by one telco only. However the telcos failed in their attempts to stop people flashing the firmware to make the phone compliant with all other companies once the initial contract period was over.

I can continue, but the point is that people are defending behaviour from Microsoft that they would never defend in any other industry.

Stephen Jones
Friday, June 13, 2003

Actually, Microsoft's CTO William Gates III. is totally aware of his social responsibility. Just browse a little on http://www.gatesfoundation.org/ and compare that to the behavior of Microsoft's competitors.

Johnny Bravo
Friday, June 13, 2003

So Bill Gates makes sure everybody knows about his generosity whilst his "competitors" may keep it under wraps.

The truth is that Gates has been known to use philanthropy as a way of pushing his company. Look at his last visit to India as an example.

Secondly we are not talking about what Gates does with his earnings; we are talking about whether they are ill-gotten in the first place. Any Colombian drug baron spends a much higher proportion of his income on social causes than Gates does, but that doesn't mean we approve of their business practises.

Stephen Jones
Friday, June 13, 2003

Please provide some background information, facts, figures, numbers on the latter statement.

Johnny Bravo
Friday, June 13, 2003

To put it more bluntly: are you in any way affiliated with any of those Colombian drug barons, or where does your insight stem from?

Johnny Bravo
Friday, June 13, 2003

Here are my numbers, taken directly from the foundation's web site: "(...) the Seattle-based foundation has an endowment of approximately $24 billion through the personal generosity of Bill and Melinda Gates." yes, that is a 'b'.

Johnny Bravo
Friday, June 13, 2003

"A monopoly is a company who has *no* competition"

This is completely untrue. The legal definition may differ from one country to another.


Friday, June 13, 2003

Windows is just one side of the Microsoft quasi-monopoly; the other side is Office where MS pursues a pricing scheme that prevents anyone else from breaking into this monopoly. Have a look at the MS Word "How to buy" page:
http://www.microsoft.com/office/word/howtobuy/default.asp

Way down the page, you can buy a new license of Word XP (without the rest of Office) for US$ 229. Okay, now let's look at the pricing for the whole Office XP package:

"Professional": $329, includes Access, Excel, Outlook, PowerPoint, Word.
"Standard": $239, includes Excel, Outlook, PowerPoint, Word.
"Standard" for students & teachers: $149.

Notice something? For TEN extra dollars, you get Excel AND Outlook AND PowerPoint in addition to Word! That's the equivalent of paying an extra $1000 when you buy a new car, and get two more cars for free.

So what will potential Word customers think upon seeing this pricing scheme?  Of course they'll go for the whole suite, either Standard or Pro -- and never even think about checking out competing spreadsheets, or e-mail programs, or presentation programs. Same with buying Excel; similar with Access and Outlook, although the price difference is here around $100 instead of $10 (still way less than the combined price of individual products).

Bundling rebates are common, of course. What's unique is the amount of rebate Microsoft is giving out. You couldn't do this with non-software products that required any significant manufacturing costs. IMO this is a legal loophole that should be closed so as to allow competition for individual office applications. Either Word is really worth $200+, then you can't give it away for $10 in a bundle. Or it's really worth $10 (or $20), then you can't sell it for $200.

(Uh, and why is MS whining about piracy if Word is really just worth $10? :-p)

Chris Nahr
Friday, June 13, 2003

    I would like to raise a question about open source software: do you think it can be seen as unfair competition?

    I mean how do you think ISVs feel when one day they see on the market a competing open source product that is offered for free and whose development was funded by big hardware companies with tons of money?

doesn't really matter
Friday, June 13, 2003

Dear Mr. Bravo,
                        How much of the Gates foundation money is actually in Microsoft shares and how much in hard cash?

                        How much of that money has actually been spent, and how much of the money that has been spent directly or indirectly benefits Microsoft?


                          What evidence do you have as to the charitable donations of other major sharelholders in the software, hardware, telecommunications industries or any other industries that allow you to make a comparison?

                              Do you think that the fact that most of Rockefeller's money was given to the Rockefeller foundation makes arson, extortion and murder legitimate business practises. (All were used by his companies in the 1870's) .

Stephen Jones
Friday, June 13, 2003

Some actual facts.

Until 1993 in South Korea every motherboard manufactured had to have an MS DOS licence paid for.  This was under the guise of protecting against piracy.

It was a cost that every other competitive OS supplier had to overcome in the sale either of OEM product or Retail product.

In 1993 the FTC in South Korea declared such contracts illegal and monopolistic ( before the US or EC got their act together).

Those same contracts persisted in Hong Kong, Taiwan and Thailand after 1993.  This monopoly was supported by Intel, it was AMD that broke that monopoly as a side effect of breaking the Intel stranglehold by undercutting prices and providing performance that Intel struggled to meet.

Simon Lucy
Friday, June 13, 2003

Go to http://www.sciencemag.org/search.dtl and do a search for "Gates foundation" for the incredible impact this institution has on the worldwide public health scene.

Just me (Sir to you)
Friday, June 13, 2003

Er, Just me's link will lead you to a search engine that will give two articles about the Gates foundations spending in public health.

Unfortunatley to read them you need to be a member of the AAAS, or get free partial access, which is not available to those who use Netscape as a browser.

Stephen Jones
Friday, June 13, 2003

And may I point out that the question isn't how Gates is spending his money but how he earned it.

Stephen Jones
Friday, June 13, 2003

The surreal thing about these types of discussion is that Microsoft is in my opinion not the only monopoly in the software business, or even in the PC software business.

It seems that the stock market goes crazy, the whole premise, is often the new company who stock is skyrocketing will hold a monopoly in a certain business area in a few years - although the analysts usually call this something like "high barriers to entry" or "network effects".

Examples of companies that have succeeded:

Anybody know any serious computer artist who doesn't use Adobe Photoshop? Now look at the cost of Photoshop compared to other computer graphics programs

Some other PC-software examples: Adobe/PDF, AutoCAD, Macromedia/Flash/SWF

I actually think the government's role should be to foster CONTINUING innovation and competition:

When network effects get too strong:  break up the company and/or force them to open up their file-formats/APIs/etc.  Breaking up a company is NOT punishing the company, as very often a broken up large company is worth more to the stockholders once broken.

S. Tanna
Friday, June 13, 2003

The problem with breaking up the company is that of valuation. How much would the OS or server division of MS be worth if the Office division made a version for Linux?

The argument against MS's monopoly is that it is using it to embrace and extend. I suppose you could argue that Photoshop has its plugins, and they make it difficult for others to enter, but I doubt if you could claim the same about Quark Express, or AutoCad, or  Flash.

Stephen Jones
Friday, June 13, 2003

Sorry about that. I guess you need a subscription to Science.

Some excerpts:

"The foundation has rearranged the public health universe so speedily that many have yet to comprehend the change. “They're having a huge impact,” says Barry Bloom, dean of Harvard School of Public Health in Boston, which, along with his own lab, has received some of the Gates Foundation's largesse. “There is no other money like that anywhere in the world.” The $400 million investment in AIDS projects, for instance, is having a major ripple effect, says epidemiologist Peter Piot, who heads the Joint United Nations Programme on HIV/AIDS, by “shaming many ‘donor’ governments” into spending more."

some examples of projects funded by the foundation:

Vaccine Fund
Immunization of poor children
$750 million

International AIDS Vaccine Initiative
AIDS vaccine R&D
$126 million

Global Fund to Fight AIDS, Tuberculosis and Malaria
Increase in treatment and prevention
$100 million

Program for Appropriate Technology in Health
Elimination of meningitis in sub-Saharan Africa
$70 million

Save the Children Federation
Global neonatal survival initiative
$50.5 million

African Comprehensive HIV/AIDS Partnerships
HIV treatment in Botswana
$50 million

Harvard Medical School
Tuberculosis control
$44 million

London School of Hygiene and Tropical Medicine
Establishment of malaria center
$40 million

Just me (Sir to you)
Friday, June 13, 2003

> The argument against MS's monopoly is that it is using it to embrace and extend.  I suppose you could argue that Photoshop has its plugins, and they make it difficult for others to enter, but I doubt if you could claim the same about Quark Express, or AutoCad, or  Flash.

That "An argument" not the "The argument".  Another argument is whether consumers are getting a good enough deal because of lack of sufficient competition.

Compare the cost of Photoshop vs other graphics programs. Compare the cost of AutoCAD vs other PC CAD programs

Incidentally AutoCAD has their scripting, plug-ins and APIs, and DWG format, third party products that integrate with AutoCAD.

And with any complex software, there is a huge barrier to entry - in just getting people to understand/switch to other complex software.

S. Tanna
Friday, June 13, 2003

http://www.pbs.org/now/transcript/transcript_gates.html

Christopher Wells
Friday, June 13, 2003

And thus ends this weeks "Moments in History as I Care to Recall Them." 

Join us next week when we tell you who made the GUI

Mike
Friday, June 13, 2003

I can get to see the abstract, but only if I follow a five step registration process that involves accepting advertising emails, and I have to use Internet Explorer to register anyway! I do consider it ironic that MS attempts to cut out the competition result in us not being able to read about his exploits.

The fact that there "isn't this kind of money" going around elsewhere says more about the priorities of governments at present than about the generosity of the Gates foundation.

And I honestly couldn't care if Bill gave all of his money away and lived naked in a mud hut. The matter under discussion here is the nature of MS's monopoly, not what Bill does with the money once he's earned it.

Stephen Jones
Friday, June 13, 2003

> The problem with breaking up the company is that of valuation

I am not a stockbroker (or a lawyer), but can't see why that would be a problem.

Say you break MS say into 4 or 5 pieces, like
- Operating Systems including IE
- Business Applications (Office)
- Enterprise Applications (Back Office, SQL Server etc)
- Internet sites (MSN, Hotmail)
- XBox / Games / Home (Encarta)

Then you give 1 stock certificate in each new company (5 total) for each stock you held in the old company.

The companies will diverge over time as they do have different interests, especially if you make the insiders sell a good percent of what they own over a preset period of time. (So Gates etc. doesn't own a big chunk of all 5 new companies - he can keep his stock in any one of the 5 he picks)

S. Tanna
Friday, June 13, 2003

Massive problems. If you simply split the companies up but keep the same proportion of stoclk in each then the split is a charade.

And if you don't how do you value them. Remember you are splitting them up because one section is using its ppwer to leverage sales of the other. So which will dominate when they are separated? Will the Office section go down the drain because other companies have the same access to API's as they do, or will the OS system contract because people turn to Linux after MSOffice turn out a Linux version (or even decide to stop supporting the Windows version altogether!)

Stephen Jones
Friday, June 13, 2003

And how do you split the server and desktop market when the OS is basically the same.

Yet MS has always used changes to the one to force sales for the other. Want a client server network; buuy NT server and then the client licenses. Want a mail server, then you need not just Exchange and its client licenses but also W2K server and all of its client licenses. And what happens when they are forced to open up the API's so that you can connect to Samba and avoid the client licenses; they take away the ability to connect to a domain from XP Home, so you have to pay the equivalent in the lost client licenses in discriminatory pricing.

Stephen Jones
Friday, June 13, 2003

> Massive problems. If you simply split the companies up but keep the same proportion of stoclk in each then the split is a charade.

The insiders are forced to sell their shares over a set period. Bill Gates for example is not allowed to own more than 1% of 4 or the 5 (he can keep a big holding in any one) after say 2 years.  Senior execs are only allowed to hold a board position "new" baby-MS company.

Over time the stocker holders of each will diverge. Not everybody who believes in the future business prospects of Windows believes in a good future for X-Box or vice versa, so you might sell you share in one company, hold another, acquire from a third etc.

The stock price for each is determined by the market when people trade. Just like other stocks.

The baby-MS companies interests are different, and differences will increase over time.  For example, from day 1, the MSN/Hotmail company has no particular internal interest in pushing IE.

S. Tanna
Friday, June 13, 2003

The pieces are arguable, it could be

- Operating Systems including IE
- Business Applications (Office) + Enterprise Applications (Back Office, SQL Server etc)
- Internet sites (MSN, Hotmail)
- XBox / Games / Home (Encarta)

or a dozen other variations.

I don't see a problem with pricing. If you buy an Oracle Database server, and an Oracle-based application written by somebody else, the market is able to make this model works - and there is in fact a broad choice of Oracle-based applications, and applications which work with different database servers.  Likewise you could get Exchange being only 1 of many different *popular* mail servers that run on Windows platforms (and a baby-MS server company would presumably encourage this), likewise you'd get mail/groupware clients that worked with various different servers (an the baby-MS business client company would presumably be one of these)

S. Tanna
Friday, June 13, 2003

Dear Stephen Jones,

I'd rather not go as far as saying that Mr. Gates were some kind of modern Robin Hood. But fact is that (1) Microsoft does not pay dividends to it's shareholders, and (2) Bill Gates for sure does not have an annual salaray above 100 Million US-$/year.

So where does Bill's money come from? Partly by selling his own stock, partly through strategic investments in other companies. The bottom line is: he has taken money from his customers, and given part of it to the foundation. The rest of the profit still resides inside his company.

Actually, it _does_ matter how he spends this money, because (cf. Gordon Gecko) money is not created or destroyed, it rather changes its keeper. And I do sleep better knowing that a share of the money spent by buyers of Word helps researching AIDS cures, than seeing it pour into the pockets of SUN or IBM.

On a side-not: If people were not using MS Word, but rather OpenOffice - do you think anyone would really save money? No, because even in the Linux/Unix market large installations of Office Suites are being accompanied by large corporations, namely IBM and Red Hat, or SuSe over here in Germany.

Also, one should notice that the marketing strategies as performed by Microsoft do have their roots in IBM. Microsoft did not invent bundling of software, nor has it been the first company to aim at world dominance ("We are the dot in com.")

Honestly, I'm wondering how you'd imagine a world w/o Microsoft's "monopoly". Free software for free people? Then I'd recommend reading a book about the 80's IT industry, or: How IBM won and lost it's dominance.

Johnny Bravo
Friday, June 13, 2003

(1) Microsoft does not pay dividends to it's shareholders

Yes they do. 8cents/share/year. (Yeah, it's recent. But before the recent federal dividend tax-giveaway changes.)

http://www.microsoft.com/presspass/press/2003/Jan03/01-16ds.asp

mb
Friday, June 13, 2003

Those 28 billion $ have been transferred to the foundation before feb/march 2003. So the aforementioned point regarding the charity of Bill Gates is still valid.

Johnny Bravo
Friday, June 13, 2003

It's sort of hard to see an overall better computing world than the current one.  (Certain) hardware is extremely cheap, ibm didn't go after the clones and msft is said to be keeping hardware prices down.  I prefer a more expensive Windows than expensive hardware.

Some argue that the tech level would be far better off had msft not existed, but great tech companies often don't survive.  Amiga, Symbolics, Lucid... all these died without Microsoft intervention.  Apple imploded.

Obviously though, msft gets increased public scrutiny because it's a single supplier that can easily take advantage of its position.  It's very easy to get into conflicts when you're dependent on one source.  (Wouldn't Microsoft be paranoid if it had such a dependency?)

sammy (monthly microsoft musings)
Friday, June 13, 2003

Dear Johnny,
                    The original poster claimed that MS did not have a near monopoly, and that it's present position has nothing to do with being bootstrapped on to a prior monoploy by IBM, or deliberately sabotaging others efforts, or breaking solemn agreements made in court not to bundle.

                    This is arrant nonsense, whatever the other reasons for MS's position are.

                    What Gates does with his money has nothing to do with the original purpose of the thread. I don't even know who the chief shareholders of IBM or Sun are and I have no idea what they do with their wealth. But I find it strange that people should identify with Microsoft and view other companies as big bad corporations.

Stephen Jones
Friday, June 13, 2003

Yes, they've broken agreements, yes, they've sabotaged others - but not for the sole purpose of being evil. I do think one has to take into account what Microsoft has done for society, and then consider that Microsoft does not exploit the Third World by hiring engineers in e.g. Indonesia for the fraction of cost compared to US wages (as Intel does), Microsoft does not exchange it's workfore for H1B's (as IBM, HP, Dell do), etc. It's funny to see that the industry argues with Microsoft, but the one people who have most insight into the company, it's employees, seem to be happy the way it is. Are they all brainwashed?

Bottom line is: any company or country being in struggle is tempted to blame others. Just take a look at the other post and the mentioned article about Scott McNealy, or take a look at most arab nations who blame The West/The US - whatever conspiracy there might be.

That's exactly the same socio-cultural pattern. Or, to quote John Milton: "The mind is its own place, and in itself can make a heaven of hell, and a hell of heaven."

Johnny Bravo
Friday, June 13, 2003

Dear Johnny,
                    Did the fact that MS had about one third of its staff hired through contractors and thus denied both health coverage and stock options pass you by. They sure complained; they took MS to court.

                    And who are these Indonesian software engineers hired by Intel. If you're taliking hardware all hardware is contracted out to the Far East. My MS optical mouse has made in China on it. And what is wrong with giving work to developing countries. Surely it is at least as good a way as combatting poverty as paying exorbitant sums of money to Western drug companies for drugs to cure third world diseases which is what the Gates foundation appears to be doing over AIDS.

Stephen Jones
Friday, June 13, 2003

The question is not how you want Microsoft to be, but what other alternatives there are. Clearly, I'd rather live with Microsoft's quasi-monopoly than having it battered to a state where you again have a non-network of incompatible platforms and architectures - what anti-Microsoft advocates tend to call "consumer choice". Remember the days of pre-DirectX, buggy Netscape 3/4, WordPerfect vs. SmartSuite, TRS network drivers, etc.?

So discussing about the failures and mis-behaviors of Microsoft does lead to nowhere. You have no choice at the moment not because of Microsofts strategy, but because other companies have failed to deliver an acceptable alternative. Period.

Johnny Bravo
Friday, June 13, 2003

People are treating this as an either/or when it's not.

I think two things are true:

1) Microsoft makes products that people find useful.
2) Microsoft has engaged in anti-competitive behavior.

I think that (1) is the main reason MS is succesful, but that doesn't mean that (2) isn't an issue.

Matt Christensen
Friday, June 13, 2003

Dear Matt,
                Thank you for expressing things so succintly.

Stephen Jones
Friday, June 13, 2003

Dear Johnny,
                    You're confusing monopoliies with standards. All TV sets have to follow the same standards, as do all music CD's but that doesn't stop there being a variety of vendors you can buy from.

                      And look at the PC. The end of IBM's monopoly did not bring about the chaos and additional expense you describe, but quite the opposite. The cost to the consumer of hardware of ever increasing quality has plummeted, to the extent that you can get a complete computer for the cost of the operating system. The fact that software has remained the same price turns your argument on its head.

Stephen Jones
Friday, June 13, 2003

Oh boy, does it never end ...

You are confusing software with hardware. While I'm totally with you when it comes to IBM's former hardware standards monopoly, I was merely pointing at the software side when I was talking about "pre-DirectX, buggy Netscape 3/4, WordPerfect vs. SmartSuite, TRS network drivers, etc."

Your latest attempt to score was totally pointless.

Anyway, Matt made a good point. Let's leave it this way.

Johnny Bravo
Friday, June 13, 2003

I spend about 75% of my income on charitable issues. That's about average.

Columbian Drug Baron
Friday, June 13, 2003

More than 50% of my income goes to pay for other people's problems.

Overburdened Taxpayer
Friday, June 13, 2003

You're not getting the point. Standards don't have to be tied to a monopoly.

Stephen Jones
Saturday, June 14, 2003

Standards have a better chance of surviving if they are NOT tied to a monopoly, because the monopolist can change the standard at will -- like Microsoft has done with their OS and more so with their Office suite.

T. Norman
Saturday, June 14, 2003

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