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MS breakup will cost $30 billion?
ibbey writes "According
to a study released today, breaking up MS will cost
consumers $30 Billion dollars due to development,
marketing and support costs required for third parties to
adapt their software to "new Windows descendants," and by
fracturing the market resulting in higher retail costs."
Those USD 30 billion would presumably be used for something.
It would mean more jobs, which translates into more money in taxes to the government, and less money spent on welfare, for instance. Of course, unless the baby Microsofts would magically manage to waste 30 billion without causing any new jobs to be created.
They also seem to fail to consider that Microsoft has one of the highest margins in the business.
I find it highly improbable that splitting up Microsoft would increase cost by so much that they'd have to raise prices... Remember, we're talking about a company that manage to get margins close to 50%, while most other hardware and software companies lie in the 10% - 15% range...
Sure, profits might go down in the short run, but with the treat from OS's like Linux, the baby Microsofts wouldn't be able to afford rising prices.
And if the profits would go down, it would be as a direct result of those companies spending more money on R&D and marketing that again create jobs and thus is another benefit of the breakup to the consumer.
As for creating added cost for other companies... Did they consider that if Microsoft is split up, the baby Microsofts might have to consider standarizing the Win32 API? If they don't, yes, it would cost other companies more to support.
But if they don't, then they have proven that the very corporate culture of Microsoft is too perverted to be allowed to live on - if they want to fracture the market while everyone else is working on standarization, they deserve to die.
So how does this really differ than trying to deal with the three main versions of Windows (95/98, NT, CE) now? By breaking up MS along these lines doesn't really change the problems:
By breaking MS into 3 OS companies along the existing different Windows platforms, they would still be able to do what they are doing now. MS got to where it is at by controlling the APIs and bundling. Third party developers are always playing catch up with the APIs and the threat that MS will bundle its competing product with the OS.
When I hear people talking about breaking MS up, they are talking about breaking it up along functional lines: an OS company, an user application company, a server app company, etc. That would still keep Windows as it is, but it would make them publish all the APIs, put their app developers on a level playing field with other software companies, and restrict bundling of these apps with the OS. If MS it to be broken up, that is how should be done, IMHO.
the good ground has been paved over by suicidal maniacs
One point that I greatly disagreed with was that software will cost more. At the moment, free software has moved into a position to be a clear competitor to MS products. If a MS breakup occurred, more software would be developed for these platforms, making platforms with inexpensive, well developed, effective software. Obviously this breakup would cost MS money, they would be forced to actually produce good products instead of well integrated, buggy software. If MS has to spend $30 billion, so be it. They have the money from all the years MS has exploited computer users.
One other point that was truly ludicrous was that by breaking up MS, the Justice Department would be punishing them for being too successful. Rather, this would be punishment for destroying competition and exploiting customers.
MS has hurt the computer industry for too long. The computer industry should have the opportunity to use the best product, instead of being forced to use software from one company because of that company's monopoly position. Breaking up MS and opening Windows source code is the necessary measure.
--
Gregory J. Barlow
fight bloat. use blackbox.
Gregory J. Barlow
fight bloat. use blackbox.
The Cato Institute makes Ronald Reagan look like a card carrying member of the ACLU. They actually critized Ronnie when he was President, because he did not strongly push the far right wing economic agenda that they supported. FYI, the other organization to be wary of is the Heritage Foundation.
The Cato Institute (CI) has been a bane for hard-working honest scientists in this country. Their modus operandi (operating procedure) is to enlist the aid of a handful of scientists/mercenaries who get paid to support the views of the CI. They are fully aware that the standard scientific method is one that is generally cautious. Scientific discourse is one of give and take accentuated by meaningful debate. The CI then uses this caution and debate as a sign of waffling and indecision. If 95 out of 100 scientists agree on a particular conclusion, the CI will merely point to the 5 dissenters as proof that there is not overall agreement. Unfortunately, many politicans who are trained as lawyers not scientists, would then agree that there is still doubt. After all, to be found guilty in a trial, *all* the jurors must agree.
I was at the "Which Remedies? Appraising Microsoft II" conference yesterday, at which Liebowitz first introduced the results of his paper.
Liebowitz made the assumption that Microsoft would be split into three entities, each of which developing their own competing version of Windows, without any interoperability standards or agreements. Therefore, when companies introduce new applications, they'd have to port it to three different operating systems. Liebowitz (and, presumably, research assistants) directly contacted executives at a number of large software firms (he didn't say how many firms). He specifically refused to talk to assistants, but rather only to executives. He asked them how much they expected their R&D, tech support, and sales budgets to increase, if they had to support three OSs rather than one.
Liebowitz then multiplied these numbers by overall industry revenue figures. He determined that R&D costs would increase by 78%, technical support costs would rise 46%, and sales and marketing costs would rise by 5-10%. He then decided that his overall projections were too high, so he divided the end result by three. (I'm not making this up!). He finally came to the conclusion that software costs would rise about 6-and-a-half percent, or $30 billion.
He also said that Microsoft was a "temporary natural monopoly," which got a small hoot from the economists in the crowd. He said that in the computer industry, there is "sequential replacement of a dominant firm." First VisiCalc, then Lotus 1-2-3, then Excel. First CP/M, then MS-DOS, then Windows, then 32-bit Windows. However, Mark Cooper (Research Director, Consumer Federation of America) rebutted this. Cooper said that there may be sequential replacement of dominant products, but that Microsoft has ended up producing the dominant product in every industry. (i.e. going from MS-DOS to Windows to Windows 95 may reduce the MS-DOS monopoly, but not the Microsoft monopoly as a whole.)
That's pretty much what's interesting about Liebowitz's speech. If anyone wants me to put up the rest of my notes from the conference, let me know.
Personally, I don't like the angle of the ZDnet article. They interviewed two of the three pro-Microsoft panelists at the conference, yet left out any commentary from the other twelve panelists!
Ryan
Liebowitz has authored other studies and papers defending Microsoft's position. "Dismal Science Fictions: Network Effects, Microsoft and Antitrust Speculation," co-authored by Stan Liebowitz and Stephen Margolis and published last year by the Cato Institute, examined lock-in, antitrust, and the link between quality and software market share, refuting arguments that Microsoft's lock-in position allows it to engage in exclusionary or predatory business practices. The Cato paper was a preview of a book, tentatively titled "Technology, Innovation and Market Competition," due out this year.
Anyone who watches C-SPAN with any kind of regularity knows that the CATO Institute is an incredibly right wing organization. I once saw them actually defending global warming - the reasoning was that winter costs our economy more than the greenhouse effect.
The real reason behind all of this is that they're rabidly against any kind of government intervention in the economy, be it to stop companies polluting the air or monopolizing software.
If you start off with this kind of an ideological assumption, you can prove virtually anything - pigs can fly, global warming is good, and Microsoft is not a monopoly. The only thing you have to do to write these surveys is fit the facts to what you and your friends at the CATO Institute have been believing all along - capitalism is best left unchecked.
Even if you agree with their ideology (and I obviously don't), is this a way to do independent research?