After Hours

The only game in town?


I was just reading the blog posting of Mary Jo Foley, "Google is failing the Microsoft litmus test," and although she raises an interesting question, I think she may have overlooked a very important point: Why all the hatred toward Microsoft in the first place?

There are probably dozens if not hundreds of reasons for the angst that people direct toward Microsoft. However, I believe much of it stems from one single source. This source is that for all intents and purposes, Microsoft is believed to be a monopoly. Unlike Google, which does have competition in the form of Yahoo, Microsoft Live Search, DogPile, Ask, etc., Microsoft, in my opinion (and many others), has no real competition for the majority of its products.

Just to remind people what Monopoly is besides a board game: a monopoly is an economic phenomenon in which there is a persistent market situation of there being only one provider for a product or service. This situation is characterized by the following:

  • "Single Seller: For a pure monopoly to take place, only one company can be selling the good. A company can have a monopoly on certain goods and not on other goods.
  • Significant Barrier of Entry: In a monopoly, it is usually harder for other firms to get into the industry to provide the same goods or services as the company who is already the dominant firm of the industry.
  • No close substitutes: Monopoly is not merely the state of having a unique or recognizable product, but also that there are no close substitutes available for the function the good fills.
  • Price maker: Because a single firm controls the total supply in a pure monopoly, it is able to exert a significant degree of control over the price by changing the quantity supplied."

Most countries consider monopolies a bad thing and have written laws that are supposed to address them. The U.S. has the Sherman Act, the European Union has the Treaty of Rome, and Canada has the Competition Act.

Whether you or not you agree that Microsoft is a pure monopoly and should be dealt with more forcefully according to the Sherman Act, I think most will agree that per the market there are few if any real competitors to Microsoft.

I know from a negotiating standpoint that if I am negotiating a price on a database product I can use my ability to choose another product that is a close equivalent as a bargaining tool. I can choose Oracle, DB2, SQL Server, and even MySQL as a database depending on my needs and pit the vendors of these products against one another or use the fear of choosing a competing product to my advantage.

This doesn't work so well when negotiating with a monopoly. As a buyer, one starts out at a disadvantage in negotiations with a vendor who has a monopoly because they are the only game in town, so to speak. I might be able to whittle the price down somewhat based on volume, but at the end of the day -- the vendor knows they have you pretty much over a barrel. Being in this type of situation tends to tick people off.

People enjoy alternatives and they want competition to drive prices down for them. Not having these choices and having things "done" to them causes people to become angry if not furious!

Let's use desktop operating systems as an example. With the release of Vista, the clock has started on the life expectancy of XP. While you may put off the purchase for as long as you can, you will eventually be put into a situation where you will be "forced" into switching either to Vista or an alternative.

What's the alternative? If you say Linux or Mac OS, you are not talking about a real alternative for the mainstream user. Most of their software is designed to run on a Windows machine and some categories of software (such as games) have little if any presence in the Linux and Mac world.

If you are old enough to remember back to the DOS days, you might recall that Lotus 123 was quite the heavyweight when it came to spreadsheets and came at a significant price; at one point I remember it being around $500 a copy. However, it was not long before competition from Borland in the form of Quattro Pro and Excel from Microsoft drove the price down.

Unfortunately (in my opinion) Lotus came to the Windows dance a little too late and got shut out, more or less. By then, organizations had bought into the office concept, and at that time the Microsoft Office suite was a bit of a steal, compared to buying the products individually.

Fast forward to today and Office Professional will run you around $350 bucks. Your possible alternative is OpenOffice or StarOffice. They are significantly cheaper, yet I still say only possible alternatives because there are few organizations of significant size that one could walk into and announce, "Hey folks, in order to save significant dollars, we are going to take away MS Office starting next month or even in 6 months."

You would have a potential riot on your hands or a situation much like they had in Connecticut (where the State CIO was forced to resign), if you were a large enough organization. I don't see too many Fortune 500 companies boasting that they are running an Office alternative. For many of the potential buyers of Office, there IS no alternative available.

All this gets us back to the fact that historically in the U.S., we tend to dislike (even loathe) organizations which have a monopoly in a particular area. As a society, we value competition in our market system. Competition is a regulating force, along with the self-interest of the consumer in the economy. They work together to keep prices low, drive innovation, and bring new products to the market place.

If you go back to the late 60s and early 70s, you will find that people hated "Ma Bell". In the 1800s, it was the Railroads. So, I am not surprised that Microsoft is the focal point for a lot of animosity.

Going back to Mary Jo's question, "Do we have a double standard for Google and Microsoft?" I would say absolutely. Many see Google as a foil to Microsoft's dominance and will gladly overlook behavior from Google that Microsoft gets slammed for. Is that wrong? To me, that's the price of being a market leader, especially if that includes being so dominant as to warrant being called a monopoly. Google should enjoy its time as a public favorite because if the search market thins to the point that THEY are the only game in town, people will start to sing a different tune.

As an IT manager, I want as much flexibility in my product choices as possible and low prices. As we (IT) continue to get squeezed to do more with less, I need to be flexible and innovative. A monopoly in any area reduces/hampers my ability to do that. So in the long run, I am actually not really concerned if Microsoft or any other vendor is treated fairly or not in the press, other than the fact that I hate to see companies with superior products struggle or die. I know companies don't lose sleep over me, so I am not going to do so over them. That's what Microsoft's press/marketing people get paid for <g>.

75 comments
Fil0403
Fil0403

"Many see Google as a foil to Microsoft's dominance and will gladly overlook behavior from Google that Microsoft gets slammed for. Is that wrong? To me, that's the price of being a market leader, especially if that includes being so dominant as to warrant being called a monopoly." Monopoly: "a market in which there are many buyers but only one seller". Last time I checked, Microsoft wasn't the only seller in any of the markets it is present on.

tkrikau
tkrikau

Great article, Ramon! Thanks for posting. I say the game needs better players. Whether you like M$ or not, you have to agree (albeit grudgingly) that their software (MS Office in particular) is the most widely used because for the most part, it is easier to learn, widely accessible, and widely supported. My company went from using Outlook to Lotus Notes a few months ago. Talk about taking a step back. I hadn't used Notes in a long time, but I saw IBM's logo on the splash screen. After a week, I thought to myself, "I thought IBM's business solutions was supposed end this kind of software garbage!" I have to applaud my company for breaking away from being reliant on M$, but at the cost having to use inferior software? So where is the competition? Where is the software that give M$ a run for its money? Where is the software that is actually good and stable enough to really COMPETE with MS?

vmaatta
vmaatta

From TechRepublic Catalog a product ID of: TR0038.. And it seems be "This item is currently unavailable". A brief description below: "This presentation, entitled Standardizing On Windows XP Instead of MAC OS X, provides a prepackaged opinion piece for defending Windows XP against MAC OS X. You can use this debrief and defend to educate people about why you chose Windows XP rather than Mac for a desktop operating system. There..." Comes with a presentasion too o). Well.. I thought I'd never see something quite so hilarious.

Old Timer 8080
Old Timer 8080

Remember this? "Windows is a 32-bit extension to a 16-bit graphical shell for an 8-bit operating system originally coded for a 4-bit microprocessor by a 2-bit company that can't stand 1 bit of competition." Yep, we were making the same statements THEN as we are doing NOW... But *NIX wasn't as advanced as is is now. The GUI was a PITA to set up. We have the GUI problem nailed down. We have interoperability nailed down. ( SAMBA helps ) We have Open Office, so the basic needs are covered........but wait, there's more! My Kubuntu O/S has Multimedia capabilities too! Want to watch a movie? want to set up your music catalog? No problem on a 500MHz PIII machine in LINUX! That poor old ( obsolete by M$ standards )hardware works just fine with the NEW, LATEST and GREATEST O/S from the " enemy " of M$, LINUX.. So what does a US ( Not WORLDWIDE ) monopoly do? It makes it's software as incompatible as the law allows. It spreads FUD. Like a living organism, it fights back. The people that have jumped on the M$ bandwagon ( HP ) are starting to regret it.

erick.starren
erick.starren

I began programming (COBOL, dBASE) in 1984. So I've watched much of the industry develop. Microsoft had a decent BASIC interpreter (MBASIC) for CP/M, and a few other things. They got into the big time by riding the coattails of a giant. Since the U.S. business market wore blinders (IBM=business, business=IBM), the "PC" took over the business market (and later the home market), and M$ rode to fortune with it with all those free royalties for DOS for the PC clones and compatibles. In the early 90's I was thrilled to finally have a chance to really get to know M$'s stuff. I would have been glad to be "all M$" if they at least made good stuff. I would not have minded a monopoly of good software. But as I got acquainted with it, my enthusiasm turned to dismay and finally disgust as I saw, everywhere I looked, clear evidence of blatant, flagrant disregard for customers, quality, common sense and even law in software design, support, and business practices. I watched over the years as they lied, cheated, stole and bullied their way into monopoly. I read over and over about serious design flaws that anyone who knows anything about OS design knows you just don't do (if you want it to work well and be stable). If they had smart people, it didn't show in their reckless designs, sloppy coding, or constant avoidable failures. I watched as they set new lows for FUD, for using their own customers as unwitting beta testers, for sabotaging their own customers, and for trampling and cheating their "business partners" in their pursuit of market share. I know this is common in business, especially big business. What M$ really led the pack in was stooping lowest and doing it most aggressively. Microsoft got their widespread hatred the old-fashioned way: they earned it.

michaellashinsky
michaellashinsky

Microsoft became a monopoly not just on the merits of it's products, but also by using unfair, (and since outlawed,) practices to shut out the competition. Google was the best search engine and also started giving away applets. If Google has done anything unfair or illegal, I missed that story in the press. M$ does try to give a good product, but it takes more than that to be on the consumer's side. I remember browser wars and word processor wars. When the browser competition died, M$ stopped improving IE. As soon as Firefox showed up they jumped back in with both feet. They didn't do it because they wanted me to have a better browsing experience, they did it because they can't stand to see someone else make a living. It was the same in the Word Processors. M$ always made themselves as incompatible as they could. Every time my preferred word processor, (or other app.) developed the ability to translate or open a M$ file, M$ "improved" their product by some increment to make it not compatible again. It always felt like they were out to get me. Now that for all practical purposes there are no other competitors in the market, MS keeps bloating its software in an attempt to justify selling us something new. Who ever needed more than Office 97 could do? Not many! But we had to get it at work to be compatible with our customers, who got it to be compatible with theirs, who got it bundled on a new PC... And just to make sure you switch, they stop supporting software that otherwise runs just fine. And of course, don't forget Windows Genuine Advantage! Automatic Update says there are critical updates for you. Then it says that it can't download the updates until you install Genuine Advantage. Then there are no more updates after that. Genuine Advantage WAS the critical update. And it was never critical to me, it was critical to M$. A fellow developed a nifty tool to uninstall Genuine advantage notification, since it did not provide an uninstall of its own. M$ sic'ed the Legal Dept. on him and he had to stop providing it in his website. That is some of what a Monopoly does, and that is why I can never trust M$. If this sounds one-sided, it is. But when Google does things like that to me, I will stop trusting them as well. *If you aren't outraged, you aren't paying attention! - (I forgot who to credit this quote to.) Michael

jonf
jonf

That is the real key. If companies do in fact make superior products at a price point that people will jump on, the superior product will take over. You see this time and time again. All these companies that go under or suffer at the hands of Microsoft dominance sue Microsoft right and left but really the issue is weather or not the product is truly superior and at a price point people will accespt for a change of product. Microsoft is frequently (9 times out of 10) unfairly targetted due to their sheer dominace and size. There are companies out there competing with Microsoft and winning in certain enterprise markets. You can't always blame Microsoft's marketing for a failing competitors product. Often these competitors don;t have their act together and lack the experience to compete in any market. If you look at the business world, more than 50% of companies fail and go bankrupt. Microsoft is fingered as the cause of a lot of these companies that fail when the real cause is their lack of business savy.

Quasar Kid
Quasar Kid

First of all, whenever is see a post in which Microsoft is referred to as M$, I dismiss the post as being biased. Your rantings mean nothing because you are so biased. Secondly, I constantly hear the drum beat about MAC, Linux, et al. Just because the masses CHOOSE not to use them, doesn't make MS a bad guy or a monopolist. If you don't like MS, get off your duff and design and market an alternative.

vmaatta
vmaatta

I'd say it was quite a well written piece.. but.. Yes. Windows is a monopoly.. in a way. It certainly does not fit the parameteres of a monopoly because it DOES have competition (and I speak OS here). Linux is not ready for mainstream but Mac OS certainly is buch more than Windows (no joke). I switched over a year ago and haven't looked back. Have you ever used Mac for more than 10mins. The ONLY software area where Mac is behind is games. For ALL other software, media and entertainment needs you get the, same / competing / Mac only software, as Windows. And it works better in my humble opinion (the software that is) The software sector is NOT "designed for Windows". To think so is not-knowing-better. Programming, movies, web, email, what-ever (games excluded) as in both business and pleasure. I'd like to reiterate that I do it on Mac better, faster and much more easily and comfortably than ever on Windows.

No-Dough
No-Dough

You infer on several occasions that Microsoft is not a monopolist, but that we call them that because of their control of the market. I would like to point out that Microsoft was found to be a monopolist by a government court. http://www.usdoj.gov/atr/cases/f3800/msjudgex.htm

Dr_Zinj
Dr_Zinj

It's quite simple really. Microsoft set the standard of behavior. Until they 100% cease to behave that way, it's absolutely fair for Google to do unto the same way.

TechExec2
TechExec2

. [b][i]"...Going back to Mary Jo?s question, ?Do we have a double standard for Google and Microsoft?? I would say absolutely..."[/i][/b] I disagree. No double standard. In the case of Microsoft: There are a lot of factors that maintain the Microsoft monopoly. In the view of many end users, there is no better choice for them. It's very difficult to buy an x86 computer with another OS preloaded on it. Many never buy "Windows", they only buy a computer from one of the PC makers and there appears to be no monopoly. Windows is a "hidden" monopoly to many end users. Perhaps they want to run apps that only run on MS Windows. And/or they are concerned about compatibility with others. And/or they want to play games (Windows is "it" for games). And/or they don't want to spend the additional up-front money to buy a Mac (even though they save more later). Then, there are the "other" people. There is a large and growing group of people who greatly dislike Microsoft for its monopoly, high prices, market manipulation, and mistreating customers (WGA, etc). I have recently joined this group (switched to Linux) and plan to never buy any more Microsoft stuff if I can avoid it. I have HAD IT with Microsoft and will assist many others to switch as well. I know I have a lot of company in this. Microsoft has made a mistake in pissing ME off! :p In the case of Google: Google is #1, but it is not a monopoly. In the view of many people, Google is just the best search engine available right now. Furthermore, users don't buy from Google. They use it. Not the same thing at all. The instant that Google starts pissing searchers off (e.g. unblockable popup ads, too many paid search results, etc.), or the instant a clearly better search engine comes along, Google is toast. Now, I don't think Google is going to fall anytime soon. I doubt they are going to start pissing off searchers (stupid mistake) and I doubt anybody is going to come up with a significantly better search engine anytime soon. But, you never know. Microsoft was stupid enough to do WGA. [b][i]"...the vendor knows they have you pretty much over a barrel. Being in this type of situation tends to tick people off..."[/i][/b] Boy! You said it! [b]I see changes coming[/b] It's difficult to predict a reduction in Microsoft's market power. But, it could happen. A year ago, I never would have dreamed of leaving Windows. But, I am doing it today. And, I read about a lot of others doing it as well. I think it is only a matter of time before Linux becomes a viable alternative in the eyes of a lot more end users and businesses. And, Mac market share has been growing rapidly since the Intel-based Mac was introduced. The winds of change are blowing... edit: typo

dsimp
dsimp

Not long after MS released their DOS M$ began rolling and became so big (under bill's guidance),it became unstoppable. I remember m$ buying all competitors and shelving them or absorbing them into what became eventually Win95. As far as searching goes I doubt any competitor will be found to rival google. From memory By about the time win95 was released, Europe became really pissed of at M$ monopolistic tactics. Similar thoughts were raised earlier in the 'states but m$ simply put in the hands of their lawyers (while the $ was rolling in) and was happy to eventually settle for a fine. (whatever the size) [it didnt matter because time had passed & m$ already had the market] the rst is history. :)

aryo.r.h
aryo.r.h

not to mention, microsoft's age old conflict with the open source community, as well as its efforts to undermine linux as an OS by employing bushleague patent tactics (the shady deals with novell). now that i think about it out loud, all that is part of the monopoly strategy.

niall
niall

In case you hadn't noticed, google is recently just churning out tons of irrelevant trash, and so I'm guessing the search engine will soon disappear. Back in the day, AltaVista was the king search engine, and delivered high precision results when searching for strings. But after a while the SEO tactics ensured it was just returning pure rubbish, and its domanice disappeared overnight. The same is happening to google. The vast majority of the hits I get are commercial sales pitches, scraper sites and useless muck. I guess this explains googles major leaps out of searching and into operating system type applications.

Old Timer 8080
Old Timer 8080

And like pools of mercury, some have reformed. Ever check out AT&T lately? M$ appears to have just saved us that intermediate step. To their advantage too. I've watched the M$ / Bill Gates antics from the beginning. His business model got emulated from the first time he showed up with the " new " software " HE " invented ( neither was true ). Now we have the fallout from that model. ENRON. Many accounting firms including members of the big EIGHT. We the people are paying NOW for the business model M$ created THEN. Yep, it's the only game in town. And people are beginning to hate it.

Neon Samurai
Neon Samurai

Being reminded of a bit of history and getting a different view on the MS vs Everybody debate was refreshing.

Editor's Picks