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Microsoft Beneficial Monopoly

Microsoft Beneficial Monopoly



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Published by mwjackso
Paper discussing the monopoly nature of Microsoft. However in light of window's vista and today - Microsoft seems to be losing relevance.
Paper discussing the monopoly nature of Microsoft. However in light of window's vista and today - Microsoft seems to be losing relevance.

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Published by: mwjackso on Apr 04, 2009
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Michael W. JacksonA02-92-6779Warren 11B1 February 2000Microsoft: Beneficial Monopoly in Harsh CompetitionWhen Microsoft or Bill Gates is mentioned the normal response by thecomputing public of the United States is one of disgust and disapproval of an industryleader with what appears to be endless wealth. This is a common feeling shared notonly by the consumer but as well by the computing industry, which must devote manyof its resources to competing with Microsoft in hopes of besting the prominent leader in consumer recognition. The term applied to Microsoft is a monopoly, which istraditionally understood to be a company that controls a market and in doing so doesnot allow any competition to challenge its power. The development of Microsoft'scurrent position in the computing industry, however, is not the result of monopolisticsentiments comparable to that of the robber barons of the latter nineteenth century butin fact a result of the unique dynamic of the computer industry itself. The factors thatform this dynamic are intellectual property, rapid change in product requirements, andcompetition in a diverse marketplace.The first distinct component of the computer industry dynamic is the unlimitedscope of intellectual property as a resource to product development. The messageconferred by this statement is that a monopoly such as Standard Oil had a finiteproduct (oil) to control whereas the scope of the human mind is limitless. Thecomputer industry is one in which the next great advancement is just over the horizon.
The distinction that needs to be made between the products of the digital era and therobber baron period are quite heterogeneous. The product of oil is something that nomatter who owns it can not vary in any great detail and to be successful with such acommodity it is clear that a monopoly is required. Compare oil to a computer programand the distinction is made that many companies can provide a wide variety of programs for a computer where as oil can make only a limited number of products.Intellectual property furthers the difference between a monopoly of today and one inthe pre-digital era. With respect to Microsoft one is able to view the necessity of anindustry leader to have a work policy of "sit and think" (Stross 17). This policy is anecessity as it promotes the true development of ideas that seem impossible butbecome a reality in a matter of years. A prime example of this is a move from a user-unfriendly environment of DOS to the graphical user interface (Windows) to promotethe company policy of a computer in every household (Stross 195).The second factor of the computer industry is the rapid change inherent in itsprogress and the subsequent need to maintain innovation. The computer industrywas a relatively new field in the 1970's and 1980's; however, in the time betweenthose two decades a move from computers and operating systems to compute basicmath to a user-friendly interface progressed at lightning speed. The car industry incomparison to achieve such goals would have had to move from the model T to a2000 Crown Victoria in a period of ten years instead of ninety. The computer industryand its innovations have been greatly aided by a set system of standards that haveallowed the idea of compatibility to reign as a motive force for progress. "Architecturalstandards enable rapid innovation to take place without sacrificing compatibility"
(Chang 1). The success of Microsoft can be contributed to the selection of DOS asthe operating system of the first IBM personal computers (Chang 1). The industry,however, does not remain static as is proposed by Moore's Law. Moore's Law statesthat the processing speed of chips of a given cost will double every 18 months (Egan3). This is a direct factor on the development of software as the speed at which thechip can process information faster and faster brings more and more of society'sinformation processing tasks within the feasible range of the computer (Egan 3).Microsoft gained market share with DOS; it however did not sit back and rest on thissuccess, as it was clear that newer and more advanced software was necessary toachieve success in the rapidly changing computer industry. The placement of DOSdoes provide Microsoft a dominant position in the field of operating systems however this advantage does not discourage competition in hopes of replacing an industrystandard. An example of this is IBM's decision to develop an operating system calledOS/2. This program however did not gain consumer demand and subsequentlydisappeared. Microsoft's success is further supported by the presence of positivefeedback cycle (Stross 185). This cycle states that consumers will gain acceptance of a product and in turn continue to support that product even when there may be aproduct of greater value present in the market (i.e. consumer loyalty). The computer and software industry is constantly changing and it is only through innovation thatMicrosoft has maintained its market share.The final factor of the computer industry that is responsible for Microsoft'smonopoly of and industry is competition. The idea that competition is present in amonopoly appears to go against the commonly held opinion that in a monopoly there

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