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>.

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