Tech Doctor: Monopoly, Shmonopoly

I don’t have many sympathies for Microsoft. On a big scale, I find their business tactics questionable at best. Their attempts to make industry standards proprietary betray a bully mentality, and I don’t believe for one second that they didn’t use their OS dominance to push their own browser and office package.

On a small scale, I am more than slightly irritated when Office 2000 forces me to upgrade to Internet Explorer 5, much in the same way Outlook 98 forced me to upgrade to IE 4. My work machine is running Office 97 and IE4, and it will stay that way for a while for the sake of speed and a slimmer registry. I hate the fact that MS products tend to be huge in size, and the annoying manner in which they usurp the desktop.

That said, I believe that the whole anti-trust trial is a bunch of baloney. What’s the deal here? IBM, Apple and all the other development firms out there can’t get a successful competing product to take market share away from Microsoft, and all of a sudden Big Daddy Government needs to jump to the rescue? Microsoft made a smart move by licensing their mediocre operating system to hardware makers early on, and they bet on the right horse. Their profits went through the roof, as MS-DOS was just about the cheapest and most readily available OS for the IBM clone boxes. Apple went the other way, trying to keep their hardware and software under their own control. This was the natural course of action for MS and Apple, something that all the “monopoly” whiners out there don’t understand. Apple is a hardware company. They make the machines, and the MacOS is a necessary afterthought because the hardware needs an OS to be usable. Microsoft is a software company–they don’t make computers, and they could care less about making PCs, so naturally they have to try and put their OS on as many PCs as possible in order to keep the money rolling in. Microsoft makes money by selling software. Apple makes money by selling hardware. This is why the Microsoft way didn’t work for Apple: their brief foray into clone licensing made them realize that every non-Apple system with the MacOS on it sapped profit away from Apple. With Microsoft, every system with MS-DOS or Windows 95 on it increased their profits.

Any CEO in Bill Gates’ shoes would have gone the exact same route, maximizing the OS presence on the desktop while using the OS dominance to push the company’s other software offerings. (Well, maybe with the exception of Gil Amelio, who left the impresssion that he can’t strategize his way out of a wet paper bag. But to be fair, this is the Era of Steve Jobs, and everybody suddenly has 20/20 hindsight.)

Incidentally, Windows 95/98 with its massive user base does not even bring the cash in for Microsoft. They sucked up the development costs for Windows in order to gain marketshare and a solid platform from which to push the real cash cows, such as Office. That’s right, boys and girls, Windows 95/98 does not make Bill Gates much money, at least not directly. The biggest profit margins come with Office in all its incarnations, and Windows NT server and seat licenses for the corporate market.

Bill’s strategy has paid off big time. Suck up the development costs, sell the OS license for a song to the hardware builders, and sucker the user base into buying more profitable stuff once you have them running your OS. Now the other guys are envious because they didn’t hop on this train in the early Eighties–they didn’t even see the train pass through town, and they were laughing at Billy Gates with his two dollar haircut, trying to play with the big boys like Big Blue and Digital. Now Bill is thumbing the proverbial nose at them from Redmond, and all of a sudden the other players go to Big Daddy to complain about cheating.

Microsoft is not a monopoly. Nobody is forcing Joe and Jane User to go out and buy a Windows PC…they just do it anyway because “that’s what everybody is using”. The average computer user is blissfully ignorant about their choices in personal computing, and they will buy whatever the Comp-U-World salesman wants to get rid of on that particular day. What is the government going to do about that? Maybe develop some “affirmative action” program for computer purchases, or penalize those computer stores that don’t sell at least 20% non-Windows systems?

It’s a free market, and those who are backing the suit against Microsoft better put up or shut up. Anybody can complain, but they’d be better off grabbing a copy of C++ and coming up with something better if they honestly think they have a better solution than Microsoft. The market is self-regulating and does not need government interference. Such interference is undemocratic and acts against the principle of a free market.

And to those who are happily riding the government’s coattails in this case: this is the U.S. Government you have in your corner. The same government that blows billions of tax dollars every year to fight a war against drugs that is just as unwinnable as the Prohibition war against alcohol. This is the same government that can’t even keep drugs out of federal prisons, the same government that buys $600 toilet seats, and the same government that can’t teach half the school kids in this country to read at their grade level by the time they get out of high school. And you trust them and their lawyers to know (and act on) what is best for the consumer?

If you believe that, I have a lovely bridge I’d like to sell you.