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The Only Way Microsoft Can Die is by Suicide
Bitseeker writes "Robert X. Cringley's latest article is online. He opens with: 'When I wrote last week about my conclusion that the legal system -- any legal system -- is unequipped to change Microsoft's monopolistic behavior, I had no idea that within 24 hours, Sun Microsystem would be throwing in the towel, trading its so-called principles for $1.95 billion in cash. So I guess I was right. Only now, a few thousand readers out there expect me to blithely produce an answer to the problem of what to do to bring Microsoft into the civilized world. Well, I say it can't be done.'"
A couple minutes with a spreadsheet will show that 1 - 1% is .99, and 99 - 99% is also 0.99 ... but 50 - 50% is 25! It's a bell curve, and there's definitely a sweet spot there.
So under that "extreme" example, you could have two major competitors in any market operating at, or close to, maximum profitability, while a monopoly would basically self-destruct. Perhaps it's a little smarter than some people think.
Of course, the numbers could be adjusted to move the "sweet spot" higher or lower. You could make it so diminishing returns kicked in if a company had more than, say, 75% market share, so there could still be one big player, but leave room for smaller ones too. Or you could put the sweet spot at 33% or even 25%, thus encouraging the existence of 3 or 4 fairly evenly matched competitors in a market.
But yeah, Cringely's right that it won't happen. The folks who create taxes don't have much incentive to do that, considering who's lining their pockets, and besides, the math might be too hard for them. ;)
You have made two mistakes here. First, you have missed the point altogether, that we want large companies not to get more market share. So your implicit complaint that we are discouraging growth is in fact the goal of this tax. You ask why this is a good thing. It is because when a company grows too much, it becomes harmful to society instead of helpful. (Or at least so some people think. I'm taking that as an assumption in this explanation, not defending it.) You have implicitly assumed that bigger is better. Maybe it is for the person who is bigger, but that does not mean it is better for society in general. E.g., any individual might make themselves safer by getting a bigger, heavier car, but that could make everybody else a bit less safe. If bigger were better, we should merge all businesses into one big huge company. Obviously, that would be awful.
Second, a tax rate that is progressive on market share does not necessarily penalize a company for being "good," or, more accurately, big. Depending on the tax structure, it may decrease the reward for being big. The specific proposal was a sales tax rate equal to market share. That might mean that if Microsoft charges $100 for Windows 3000 and has a 90% market share, they would have to collect $190 from the purchaser and send $90 to the government. In that case, additional sales would get harder and harder, but each sale would still increase post-tax revenue.
- Client (Windows XP)
- Information Worker (Office)
- Server Platforms (Windows Server 2003, SQL Server, etc.)
- CE/Mobile (Windows Mobile, etc.)
- Business Software (Great Plains etc.)
- Home & Entertainment (Xbox, Media Center, etc)
- MSN
The only divisions that consistently turn a profit (a couple billion a quarter each) are Client and Information Worker. Server Platforms is usually brings in a profit of some hundred million each quarter, but sometimes (like the first quarter of fiscal 2004, if I recall) loses money. The other four combined lose something like $250 million every quarter.Microsoft gets something like 90% of its profits from selling Windows client OSes and Office. If Microsoft expects to survive (or you expect it to do so) in some emerging segment while the "PC OS Market" goes away, it's going to have to do a lot better in those other segments.
MS got to be market dominant (which is NOT a true monopoly) by making genuinely good programs
That's debatable. Some of it might have had to do with Word/Excel/VbDos and other MS programs being preferred by users, but I doubt that was the whole story - in the MS-DOS days there was still a lot of competition in these areas, some very strong and obviously preferred by users (eg, WordPerfect). I don't know if you are aware of the extent of Microsoft's underhanded tactics, which goes way back to the company's first days.
MS Basic was ripped off from Dec Labs (Gates worked as an intern there), Gates used his uncle's position on the IBM board of directors to wrangle a deal for MS DOS (originally Q-DOS, bought by Microsoft from another company, called Seattle Software Products), and from there they've tightened their grip on the desktop market ever since. There is abundant documentation of their illegal tactics used against the makers of DR-DOS (Digital Research DOS), their illegal tactics that basically force OEMs to accept only Microsoft, and their illegal tactics forcing against competing products such as Netscape, Java, etc. Capitalism is one thing, but what Microsoft have done is not right. The sad thing is, although these are all proven facts, even Governments seem to scared to punish Microsoft with anything more than a (relative to Microsoft) slap on the wrist, because Microsoft has become such a powerful entity.
Microsoft got its market share because (a) Bill Gates had better foresight than IBM about the potential of the PC market (b) Bill Gates and his mother wrote a contract (for MS-DOS, which of course at that time didn't exist) that outsmarted all of IBM's team of super-lawyers and allowed Gates to take advantage of point a.
A very very smart thing to do I will grant you. But nothing Microsoft produced was "better" than its competition until the 2nd or 3rd version of Excel for Windows, and not much since (compare Netware 4.11 to Microsoft's current F&P offerings for example). All of Microsoft's success has been based on that MS-DOS tax, leived with the assistance of IBM and now enforced by the network effect.
Microsoft has been found to be an abusive monopoly by a United States Federal Court, affirmed by the Court of Appeals and review denied by the Supreme Court. I therefore must disagee with this statementsPh