Microsoft is slowly dying as a consumer brand. As recently as five or six years ago, though, left liberals and other anti-business ideologues were still making comments about how Microsoft was a monopoly that was crushing competition in the market place.
The less sophisticated of these critiques centered on nothing more than the fact that Microsoft enjoyed huge market share ten years ago. The more sophisticated critiques noted that Microsoft had been successful at expanding market share through agreements with PC providers like Dell who pre-packaged their PCs with Microsoft software.
Anti-IP libertarians have made convincing arguments about patents, but the IP-loving competitors of Microsoft (and the Feds who make IP possible) hardly have a problem with IP.
None of this behavior around bundling products is remotely “monopolist” of course, since there were no real barriers to entry into the market beyond the fact that people really liked Microsoft’s products and weren’t interested in going out of their way to get other products. Linux and Apple’s OS have always been available for purchase and use. People simply didn’t like them as much.
We should mention, of course, that a lot of this anti-Microsoft hysteria came form the early Apple fanbois who saw (and still see) one’s choice of computing products as some kind of moral issue. Thus, the Apple disciples never tired of portraying Microsoft as an evil corporation contrasted with the cute and cuddly people at Apple.
Other competitors of Microsoft resorted to monopolist talk also, and Sun Microsystems, which had been producing far less popular products for many years, sued Microsoft for “anti-competitive behavior.”
Eventually, the federal judiciary sided with Microsoft’s competitors, and federal judges who could not even turn a computer on, started making sweeping judgments about the software industry and computing and forced a variety of reforms in Microsoft’s structure to make it less “monopolistic.”
In spite of all of these efforts by competitors to use the power of the state to crush Microsoft, Microsoft continued for several years to dominate the computing market with both businesses and consumers.
Eventually, however, Microsoft ceased to be inventive and its browser, operating system and platforms either failed to impress, or were never adapted at all to deal with the new realities of modern computing.
The decline of Microsoft simply illustrates what many free market economists had predicted all along. Namely, that Microsoft, never having been a actual monopolist (monopoly only being possible within a framework of government privilege) would some day fade from view as other, more inventive organizations took over Microsoft’s market share.
This happened to IBM, of course. IBM was once denounced as a monpolist, yet today, who could make such a claim without producing smirks in response?
Microsoft’s retreat has little to do with the rent-seeking lawsuits levied against it by Sun and others, but has everything to do with the fact that Microsoft hasn’t produced any interesting or inventive products in years.
With losing market share, Microsoft is no longer the bogeyman of the anti-monpolist crowd. Now it’s Google that is supposedly forcing us all to bend the knee before its monopolist power.
(Better get the federal courts involved, or we’ll all be living in Google-owned company towns within a decade!)
Unless they enjoy government privilege, (as was the case with Pan Am under the Civil Aeronautics Board, for example) these alleged “monpolists” come and go, and these reversals of fortune happen all the more quickly in the fast moving technology world.
The fact that Microsoft now struggles to even keep up with the rapidly-changing computing world illustrates just how unconvincing and short-sighted are the claims or monopoly that are usually little more than an expression of personal opinion and self-interest.
{ 42 comments }
“Since there were no real barriers to entry into the market beyond the fact that people really liked Microsoft’s products”
That’s pretty ridiculous statement. “The market” is not the computing market. “The market” is the desktop and possibly server-based OS and Office Productivity Suite market.
Try sharing a Microsoft document even today with any other, even well-funded Productivity Suite and you see the “real barriers” appear rather quickly.
Also consider Microsoft’s usage of Fear, Uncertainty and Doubt concerning “Intellectual Property” in the form of Patents that they may or may not have (no-one ever finds out).
“Microsoft’s retreat has little to do with the rent-seeking lawsuits levied against it by Sun and others”
The only ones I remember are Patent Trolls coming out of the woodwork. Sun doing lawsuits? Not so much.
“but has everything to do with the fact that Microsoft hasn’t produced any interesting or inventive products in years.”
You should add “outside of their former core business”. In fact, they have tried every trick in the bag EXCEPT innovation to keep consumers locked staring into a desktop-only rather insecure operating system. The fact that the environment around Microsoft shifted and that people today are more interested in other things does not exonerate their behaviour.
Try sharing an Apple-based program with a Microsoft one. Or UNIX on Microsoft. Or Linux on Apple. Or Lotus 3-2-1 with OpenOffice. What you describe is a basic cross computing problem, not some insidious monopolistic plot. Getting two separate (or more) programs talking with each other is an immensely difficult task. The various operating systems are built on different architectures. Programming, to the uninformed (and even to those who have a simple understanding of it) isn’t a uniform creation. Most people treat programming like Keynesians treat capital. It’s all the same thing to them. It’s not. It’s a tremendous task just to get programs functioning correctly with the myriad of hardware profiles that they’re thrown at, let alone the operating system. People even go so far as to refer to these coders and designers as lazy if their Windows7 designed program fails to function on MacOS, never once considering that the program almost needs to be redesigned from scratch to get it to work.
An operating system is basically the modern version of a railroad. You can’t just pick up one train from one track that has an 18″ width and drop it off on a track that has a 20″ width. Either deal with the headache of changing over to the new track or stick with a standard.
Further, Microsoft is not the only, or even worse, offender of patent litigation. Apple (the worst of the bunch), Sun, Unix, Oracle, the whole lot of them do it. It isn’t some uniquely Microsoft abuse, it’s a systematic abuse becuase of the very existence of the patent system.
Murray – I agree with the last paragraph.
But not with:
“Getting two separate (or more) programs talking with each other is an immensely difficult task.”
Not it’s not. At least not of those programs are supposed to do similar functions. And I know because I do such things for a living. Have been doing that for a long time. It is immensely difficult *only* if the respective parties sits on the specification on how their program or whatever interfaces to the world at large. Hearing “Non-Disclosure Agreement” or “Proprietary Interface” makes me spit blood because I know that I will hear a demand for Top Dollar just to be able to start doing my work or do (illegal) reverse-engineering (for which I have neither time nor inclination). Sharp business practices, sure – keeping the competition away from your hearth. Ultimately self-defeating though customers will tend to ask the offending company if they need extensions rather than any third-party products provider. Microsoft is definitely a well-versed strategist here – always has been.
http://en.wikipedia.org/wiki/Embrace,_extend_and_extinguish
“Excuse could you post your credit details here? ” this is the kind of question you are asking to a company when you’re trying to force them to disclose specifications about their products that they believe being in their best interests better to be kept secret.
Even without IP, no company is required to disclose anything, as the absence of IP does not mean a free for all socialistic “utopia” that forces every citizen to disclose anything other citizen wants.
Also contracts signed by both parties in their own free will (NDAs) are in no way a monopolist plot, people only sign them because they want to.
Forcing is also a very unlibertarian act, as the very word suggests it means to make one act against their own wishes.
There are plenty of standards, MS (not only them of course, but they’re a topic here) often _chose_ to ignore or derail them for no good reason other than strengthening their lock-in of the users.
For a recent example – Open Document Format vs. the farce of Office “Open” XML. And signing of NLAs, etc. is often very much forced, in practice – just to be able to participate at all.
I think the point is, NO monopoly can survive (or even exist) without the enforcement power of the state. The virtue or non-virtue of Microsoft is way beside the point.
I’m somewhat skeptical. The IT guys at my former employer used to tell me that very, very restrictive licensing agreements kept them from installing certain programs that were substantially better performing and safer on the network. I think they used to say only Autodesk was worse.
And yet where is MS now? What was the nature of these “restrictive agreements” even? They don’t obviate the existence of competitors…
People used economic coercion to destroy other people’s lives without having to resort to “the enforcement power of the state”. It actually happened, the free market was used to oppress and destroy people, you can’t simply rewrite history to agree with your political/economic theories. It amazes me that people can discuss “market forces” and, nearly in the same breath, deny that the market has any kind of force.
Honestly, it’s hard to claim that the litigation didn’t have an impact on Microsoft’s innovation. It assumes that Microsoft has unlimited resources at its command. If we look at the company’s other business segments, they try hard to create new products and expand the market share. For instance, they single handedly insured that home videogame consoles could connect 24/7 to the Internet and abolished the concept of buying expensive, proprietary, low-storage devices by making a built-in hard drive a standard. A number of Zune innovations have found their way into the iPod and iPhone.
The anti-trust litigation suffered in the European Union and United States was an immensely expensive affair. Legal costs, fines, and reduced sales due to a hobbled product. How many innovations were destroyed because resources were diverted to appease a bunch of judges who remember travelling the country on the back of a horse as the primary mode of transportation?
Additionally, these anti-trust suits effectively forbade Microsoft from innovating in their operating system and office suite business segments. Microsoft got into trouble by being too competitive. Why continue pushing your product above and beyond the competition when all it gets you is more trouble? Innovation only causes your product to stand apart from everyone else and the anti-trust lawsuits were entirely because the product stood apart from everyone else. This effectively placed Microsoft in a position where it is required to throttle back its R&D and hold back product innovations to the pace the next competitor can produce it at. All this produces is an “as good as” product, not a better one.
Microsoft doesn’t want to lose its market dominance, but they have little choice in the matter because any efforts they put forth in keeping it will just get them fined further. That’s why it seems that Microsoft updates the Windows platform months or even weeks after Apple or Google introduces something. It’s clear that Microsoft was just sitting on that code, waiting for someone else to come up with it, before releasing it into the wild. With the sheer size and complexity of the Windows operating system, it’s impossible to copy the competition within such a short timeframe they’ve been doing so.
It’s impossible to tell where Microsoft would be today had it not been for the Department of Justice and the European Union. It’s no surprise to me that Microsoft’s slowed pace of innovation coincides with them getting sent to the courtroom over anti-trust issues.
J Murray is onto something when he sas anti-trust had an impact. On the part about just sitting on code, I’m not so sure.
The sitting on code thing is pure speculation on my part. It’s just too convenient, in my opinion, for them to keep so abreast of OS advancements of their competition in such a short timeframe.
They were almost 3 years late on the touch screen phones.
I believe declaring death of Microsoft is a little premature. It is true that they will need to execute their mobile strategy well. Apple is taking customers away through their phones, pads etc. My wife started using iPhone and pretty soon she wanted a Macbook. They still have a great hold over gaming with Xbox, Desktop/Laptop markets, Office Suite etc. Good thing is there is pressure on them to do better than they did in the past. I’m sure MS can handle that pressure. Windows NT was a flop for serveral years but they persisted with it until they got a foothold inside the datacenter. Now they have strong presence there with their Windows Servers.
I think losing Bill Gates hasn’t quite worked out well for MS. I wonder what will happen to Apple if it ever end up losing its celebrity CEO. CEO is even more important to Apple than it is to MS.
Gotta nitpick again here..
“Additionally, these anti-trust suits effectively forbade Microsoft from innovating in their operating system and office suite business segments.”
Well, that’s just not true. While this (http://en.wikipedia.org/wiki/United_States_v._Microsoft) was going on, this (http://en.wikipedia.org/wiki/Windows_NT_4.0) came out: finally a pretty good OS from a company formerly known for Bad Stuff Happens On Your Workstation. Some might say the Last Known Good OS from the MS shop.
“It’s impossible to tell where Microsoft would be today had it not been for the Department of Justice and the European Union. ”
My feeling is that they would be pretty much exactly where they are today. You just need to look at their warchest. Is it still 30 billion USD? They don’t even know how to use it! Like wine, technology must mature over long times.
I disagree. Different companies grow differently. One thing that MS could have done which they, arguably, couldn’t, was to aggressively acquire other companies that did interesting things. The only major acquisition attempt that MS has made in the last decade is the unsuccessful bid to buy Yahoo.
Look at the balance sheets of other tech companies like Apple, Cisco etc. They are all sitting on huge piles of cash.
I am converting to Apple this Christmas. Hail Steve!
As I sit here, watching tv shows streamed to my Xbox, and working on some development work involving Microsoft business packages (which are constantly being improved with some rather useful technologies), on a machine running Windows 7, I wonder wtf this blog post is talking about.
Sure they have totally failed in the mobile market, but it’s not like that’s the only market out there. And the CNN article is a complete joke in so many ways. They pretend like Microsoft is about to die because they are losing browser marketshare. Most people pay $100+ for an OS for their computer. Everyone pays $0 for browser. If you were interested in making money, which would you focus on?
But Microsoft was a monopoly, they used their patent and copyright portfolio quite well to control markets and forbid competition. Of course, the solution was (and still is) to kill their copyright and patent holdings. I remember, Red Hat even offered that up as a solution when opened up to public suggestion, but the mere notion was entirely ignored. In stead we ended up with this disaster of an anti-trust ruling, that pretty much did nothing to change the status quo.
If we killed their IP, that would have probably forced Microsoft to compete off of service and value, and they would be an attractive investment today as well as an innovator. IP is what trained Microsoft to be a monopolist and non innovative.
I’m glad the other commenters are reminding the Austrians here that they’re *supposed* to be criticizing Microsoft as a terrorist organization because its profits derive from IP rights in software that, by pure coincidence, happens to be software that they wrote; and therefore any profit — indeed, any revenues — they receive are ultimately a government subsidy, free money for doing nothing of value whatsoever.
*rolls eyes*
Red Hat’s business model doesn’t depend a lick on IP and they’re a very successful company.
And what would the relevance of that be to the comment you were replying to?
If you don’t know, then you’ve just crossed you’re own t.
GPL, the licence behind Linux which ties the whole party together, relies on copyright to work.
More from Ray Ozzie’s (Microsoft’s Chief Software Architect) parting opinions here:
http://www.theregister.co.uk/2010/10/27/ozzievision/
With the 25th anniversary of Windows 1.0 coming next month, Ozzie told Microsoft to get over its pride in Windows and to move on — most consumers have, and Microsoft’s adherence to the past is holding the company back. “For the majority of users, the PC is largely indistinguishable even from the ‘browser’ or ‘internet’,” Ozzie said.
Ozzie goes on to “imagine a ‘post-PC world’” — that’s the opposite of Microsoft’s view, where the PC fits in to a world of phones, devices, and TVs all running Windows. These will be heretical words to Microsoft’s ears. Ronald Reagan also “imagined” a world — a world without the Berlin Wall. That world came to pass. Ozzie’s imaginings could, too.
Microsoft is, of course, bound to see the world as a PC-centric thing because of its history — and, oh yeah, an annual $62bn revenue from the Windows franchise. Ozzie tells Microsoft: “Tomorrow’s experiences will be inherently transmedia and trans-device.”
How does Microsoft change? It’s here Ozzie that becomes oblique, but it’s clear he’s got a problem either with the politics or the inertia and process of Microsoft.”
I had to laugh when I saw their tv ad two nights ago for the “new” windows phone. I had to explain to my 15-year-old what the 45-year-old theme song was, Season of the Witch. The song was meant to attract the 50+ year-old pre-retiree crowd, some of whom are pictured in the spot. Are we all going to be humming “You’ve got to pick up every stitch” on the way to the windows phone store?
I’m not a marketing person, but I know that you don’t get young people to buy what they consider to be their fathers’ stuff. Whatever it is that they are trying to communicate in their tv ad is going to fail just as badly as “This is not your father’s Oldsmobile” if they are trying to get anyone under 50 to buy the “new” windows phone. Microsoft will be doing themselves in with dumb marketing here: no government help needed.
http://www.youtube.com/watch?v=EHlN21ebeak
Be Here Now! Are we all to become Baba Ram Das followers?
One of the major reasons people are giving up on Microsoft is the problem with file interoperability. Even Microsoft stops supporting old file formats after a while, and all the documents in Word2 that I have saved are now unreadable by anyone or anything.
When Office 2000 won’t read Word2 documents, that’s a very bad burned finger to forget the next time the “upgrade treadmill” comes to call.
The Open Document Format standard is well established, robust, and exceedingly well documented. Many different productivity suites and individual applications utilize it, and can swap files seamlessly across platforms. PCs, Mainframes, Macs, Windows, Linux, UNIX, everyone.
Microsoft has not implemented ODF because they fear losing their “lock in”, allowing customers to actually choose Microsoft products rather than have their arms twisted to do so.
I was using Linux before Win95 came out. I still am. Microsoft has never been an actual monopoly regardless of their dominant position, specifically because they never had the ability to force anyone to buy their products. But they TRIED, and Microsoft certainly played the bad guy with their FUD, obfuscation, shifting formats, deliberate crippleware, and “Windows isn’t done till Netscape won’t run” software development.
I will be very happy when Microsoft is gone, and chaff every time I see Mises.org’s use of Silverlight. By Cromm, guys, I hope you didn’t spend any of my donation money on that crapware!
Govt contracts certainly helped their market dominance. I worked in a govt office (contractor, not uncivil service) and “Windows PC” was a single line item. So much easier and more successful than trying to justify a Linux/Unix or other machine with multiple lines of specifications.
It’s also telling that during and after the “prosecution” of Microsoft, govt procurement policies didn’t change, and they kept buying Windows. I would have thought the NSA’s Security Enhanced Linux would have been noticed by SOMEONE in govt, but then I am crediting someone in govt with intelligence. Silly me.
Speaking of Microsoft’s reprehensible business practices and bought-and-paid-for politicians, the story of Peter Quinn in Massachusetts should be examined.
He was the state’s Chief Information Officer, and recommended changing from MS-Office to OpenOffice.org and the Open Document Format.
How he was slandered, and by whom, is a fascinating tale.
http://en.wikipedia.org/wiki/Peter_J._Quinn
I fully agree with the “Silverlight please no” interop plea.
This thread makes me feel younger. Just for the hell of it, the extract from Neal Stephenson’s 1999 essay “In the Beginning was the Command Line” http://www.cryptonomicon.com/beginning.html Those were the times..
About twenty years ago Jobs and Wozniak, the founders of Apple, came up with the very strange idea of selling information processing machines for use in the home. The business took off, and its founders made a lot of money and received the credit they deserved for being daring visionaries. But around the same time, Bill Gates and Paul Allen came up with an idea even stranger and more fantastical: selling computer operating systems. This was much weirder than the idea of Jobs and Wozniak. A computer at least had some sort of physical reality to it. It came in a box, you could open it up and plug it in and watch lights blink. An operating system had no tangible incarnation at all. It arrived on a disk, of course, but the disk was, in effect, nothing more than the box that the OS came in. The product itself was a very long string of ones and zeroes that, when properly installed and coddled, gave you the ability to manipulate other very long strings of ones and zeroes. Even those few who actually understood what a computer operating system was were apt to think of it as a fantastically arcane engineering prodigy, like a breeder reactor or a U-2 spy plane, and not something that could ever be (in the parlance of high-tech) “productized.”
Yet now the company that Gates and Allen founded is selling operating systems like Gillette sells razor blades. New releases of operating systems are launched as if they were Hollywood blockbusters, with celebrity endorsements, talk show appearances, and world tours. The market for them is vast enough that people worry about whether it has been monopolized by one company. Even the least technically-minded people in our society now have at least a hazy idea of what operating systems do; what is more, they have strong opinions about their relative merits. It is commonly understood, even by technically unsophisticated computer users, that if you have a piece of software that works on your Macintosh, and you move it over onto a Windows machine, it will not run. That this would, in fact, be a laughable and idiotic mistake, like nailing horseshoes to the tires of a Buick.
A person who went into a coma before Microsoft was founded, and woke up now, could pick up this morning’s New York Times and understand everything in it–almost:
Item: the richest man in the world made his fortune from-what? Railways? Shipping? Oil? No, operating systems. Item: the Department of Justice is tackling Microsoft’s supposed OS monopoly with legal tools that were invented to restrain the power of Nineteenth-Century robber barons. Item: a woman friend of mine recently told me that she’d broken off a (hitherto) stimulating exchange of e-mail with a young man. At first he had seemed like such an intelligent and interesting guy, she said, but then “he started going all PC-versus-Mac on me.”
What the hell is going on here? And does the operating system business have a future, or only a past? Here is my view, which is entirely subjective; but since I have spent a fair amount of time not only using, but programming, Macintoshes, Windows machines, Linux boxes and the BeOS, perhaps it is not so ill-informed as to be completely worthless. This is a subjective essay, more review than research paper, and so it might seem unfair or biased compared to the technical reviews you can find in PC magazines. But ever since the Mac came out, our operating systems have been based on metaphors, and anything with metaphors in it is fair game as far as I’m concerned.
To be fair, Apple didn’t innovate anything it didn’t basically steal from Xerox. PARC is the true, and unsung, hero of the entire computer industry.
That statement is detached from reality. The platform that is succeeding at the moment is even more closed and proprietary than Windows – Apple. Apple is more closed because they control both hardware & software. It is easy to say MS products are crap, and that again has no connection to reality. Sure, it is no Rodeo drive version of software, but it was functional, useful & cheap compared to its competitors. MS defnitely accelerated the adoption of technology at the household level by making the products cheaper than its existing competitors.
I’m a software Engineer who grew up on MS bashing. I worked for both Sun Microsystems & Oracle(when they were two different companies). I have always worked on UNIX based OS platforms. I live in SIlicon Valley, which hates MS of course.
anti-MS hysteria had a lot to do with its success. Also, the fact that Bill Gates became the richest man in the world contributed to the envy. Success breeds contempt. The celebrity status of the CEO not withstanding, I expect Apple & Jobs will be hated soon for the simple reason that they are immensely successful.
Long live Plan 9!
Oh God! Are we going to be trampled by a HURD of OS zealots now?
Microsoft must be starting to decay, because they find ways to screw up simple things that probably no one would have ever dreamed could be screwed up by a major company.
In MS’s free browser-based hotmail they can’t even display images correctly which are embedded in messages that people send me. They display the text of the message but where the pictures should be there are nothing but gray squares. Why ??? Instead of displaying the images within the email the way it was written, i.e. like any plain ordinary web page, there is a row of thumbnails across the top of the browser frame, but without any of the captions that are supposed to go with the pictures. Under the thumbnails it says “View slide show” and “Download all as zip”. Why ??? Just display the damn pictures the way they were added to the message! And if there are more than 6 pictures in the message, they disappear off the right hand side of the frame – evidently because nobody at MS ever heard of scroll bars or wrapping to display information on multiple rows. And best of all (meaning worst of all), when I click on the “View slide show” link … a black rectangle pops open which says, “Sorry an error has occurred in the slide show. Please try again later.” What’s going to happen later, are their programmers working overtime to write a patch? Well, at least they’re sorry that they’re a ridiculous, bloated joke. Can you imagine where facebook would be if it displayed blank rectangles instead of the pictures that people uploaded?
Thank god the Justice Department “punished” them by allowing them to give millions of copies of software to schools. That way a whole generation of kids will grow up thinking that academic success and job preparedness has something to do with mastering the art of adding little animated thingies to MS powerpoint presentations containing their little projects. Their parents will be forced to buy MS software at home or else they’ll never get their little animated thingies to work by the deadline, their future employers will feel obligated to buy the same stuff that they learned at school, and MS will continue to exist at least another 10 or 20 years beyond its “best before” date.
My pet peeve against MS is simpler than that. When I hit the so-called “stop” button on IE while I’m downloading a page, I want the damned thing to stop downloading! If I were a woman, and MS was f@#$ing me that way, I think I would have a good case for date rape, at the very least. Stop means fricking stop!
LOL. I switched to Chrome a while back.
Simply there is no contemporary OS like Theory of Relativity: all rest on the same core so Windows the best.
Microsoft is not slowly dying. Its sales have tripled in the last 10 years. Without Microsoft, world trade would come to a screeching halt. Product launches of the last couple of years have been huge successes. Many Microsoft products are not visible to the consumer or general public, but they are there and very profitable for Microsoft. Apple fanboys, think again.
For the record, I’m not an Apple fanboy. Haven’t used an Apple in years, other than borrowing my kid’s iPod Touch to read email while on vacation.
Apple too will slide into irrelevancy someday … because great success brings overwhelming market share, which has the paradoxical effect of making it more difficult for an organization to hear and respond to the needs of individual customers.
Microsoft has initial entrepreneurial advantage because they managed their business properly (against those leftists that complain that Microsoft bought the QDOS for a very low price and then started re-selling it with minor changes as MS-DOS, you should know the story).
But the main and most important thing is that Microsoft could hold their “market power” for that long because the existence of IP rights. They played the market game with the current rules, but I don’t think that their power was a product of the free market. Not at all.
The reason why MS could survive for so long as a was through “explicit government privilege” in the monopoly world of IP. With a modicum of skill, the FOSS people have managed to get around that. Hence the government monopoly protection is no longer working.
Although as a gentle challenge to the von Mises fans, I’d suggest that they consider the matter of land ownership in light of their statement that monopolies exist only through explicit government privilege. And what that might imply.
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