MICROSOFT - THE DOOM OF COMPUTER INDUSTRY

This paper is the private opinion of the author and does not reflect the stand of any particular organization.

MICROSOFT MARKET

Computer market is generally divided into three sections:

• desktop computer market; this market segment is where Microsoft dominates.
• minicomputer market; roughly if you buy your computer for more then say $15,000 and less then $700,000 then you belong to this market.
• mainframes computer market; computers from say plus $700,000.

This paper is the short story about the consequences of Microsoft business policy and its monopoly in market. Some economy experts define monopoly as every industry field where less then 5 big companies keep more then 40% of market while at least one of these companies keeps more then 12%. How about 1 (one) big company keeping 95% of market?

SO MICROSOFT DOMINATES ON DESKTOP MARKET. ISN'T THAT OK?

Judge for yourself after reading next paragraphs.

FIRST EFFECT OF MONOPOLY: HIGH PRICES

Is Microsoft monopoly expensive for the world? It is very obvious if you are the only producer in an industry you can leverage your prices up to some point when your profit starts to drop. When there is no competition (like in Microsoft case) the prices are substantially higher then with healthy competition with sufficient number of competitors. Serious economy estimations in US shows monopoly raises prices by 30% at average or $700 billion dollars annually.

What these figures mean to small countries like Yugoslavia? In July 1998 when this article is written the Microsoft Office 97 Serbian software package costs $347. If supposed 200,000 computer users in Yugoslavia buy this relatively essential software package with 30% discount Yugoslavia will save $20.8 million only on this product. From this example it can be understood how much Microsoft monopoly costs the world's community.

WHAT HAPPENED TO PREVIOUS COMPANIES ON DESKTOP MARKET

Actually there are no other companies but Microsoft on that market. Previous companies was either destroyed, get bought by Microsoft, or withdrew from the market trying some other business. The last happened to company Borland Inc; well known reputation of user-friendly software packages and undoubtable quality of this company's products couldn't help the company to survive in desktop market under Microsoft monopoly.

It is uncertain how many people lost their jobs because of this situation, but the number of lost jobs is certainly very high. At the same time the new-created jobs originated from Microsoft "new" products or "new" Microsoft "technologies" is negligible.

WHAT IS THE BIGGEST THREAT FROM MICROSOFT?

According to economy experts, monopoly on one market field leads to higher prices for consumers, lack of innovations and higher wealth/income inequalities with all the consequences. But most of all monopoly leads to expelling other competitors from market and loss of jobs for perhaps millions of people worldwide.

People usually forget this is the new age of technology. The information era has begun and the world is much more connected then before. So the economic problem of Microsoft monopoly is the concern of all of us because we are all directly or indirectly hit by it.

Prolonging the Microsoft monopoly means that about 40,000 employees of Microsoft plus the 100 acquired american companies and Microsoft dealer network can live and produce the desktop software, while the rest of about 20 million USA firms and all other countries in the world with all world companies cannot find jobs in that industry because of total Microsoft monopoly.

WHY NOBODY ENTERS MICROSOFT MARKET?

Simply because Microsoft has been using the arsenal of monopoly techniques to enforce its domination:

use of Windows operating system to enslave all desktop hardware dealers.

Market survey of desktop dealers in USA (David Chun, [email protected]) showed that the vast majority of main desktop computer suppliers in that country had to accept the contract with Microsoft that obliges them to exclusively sell only Microsoft products for their computers and no other competitor product. That means neither computer manufacturer nor consumer have a free choice of any other operating system (even IBM sells its OS/2 as an option to must-built-in Microsoft Windows).

use of Windows operating system for direct selling of other Microsoft software.

Some of the biggest desktop hardware manufacturers (Compaq, Micron computers, Gateway) tried to replace Microsoft Internet Explorer on their computers, but Microsoft threatened them not to do that or otherwise it will cancel their license for Windows which is practically the only operating system on the desktop computer market.

attack the competitors with proprietary standards.

When Microsoft offers its Internet Explorer to Internet service providers they are supposed to agree on the following clause:

Deploy [and promote where appropriate] at least one advanced feature of Internet Explorer 4 (e.g., Channel webcast optimization via a CDF file, Dynamic HTML, or NetShow content) on Company's Internet Product page.

This means Microsoft is trying to advocate the special standards to Internet community so the other competitors' products can't read information and force in that way all users in the world to implement Microsoft product. Obviously Microsoft doesn't care at all about the users needs and importance of converging standards.

presents false information about its products and standards.

All MS products and standards are presented as "new technology" or "revolutionary". They have bombastic titles and fuzzy descriptions in order to make the impression of beeing completely new product. To most professionals in the field, the truth about Microsoft innovations is much down to earth: practically identical product is renamed several times, almost every product or standard that comes from Microsoft is actually developed by another/merged company and usually with minor, expected, or even worst changes to existing standards of which some exist for decades. The sole purpose of standards is to unite people who use them - not to separate them and bring the profit to only one producer.

Microsoft purchases other companies when they grow as dangerous competitors.

From monopoly prevention standpoint that is very bad because Microsoft empire kills competition and then leverage prices and lowers employment.

Microsoft supports weak competitors to ease the pressure of american anti-trust laws

Recently Microsoft finished investment of $150 million into Apple Computer, the very last competitor on desktop market. This investment is intended to give some longer life to the last survived competitor and ease the US law pressure on Microsoft for monopolizing market. Additionally this investment insures Microsoft the final control over stubborn competitor.

DOES MICROSOFT HAVE ITS OWN STANDARDS?

If you are using Microsoft Word version X and somebody send you a simple file with simple formatting made in newer version of Microsoft Word (X+1), you cannot read it. It is highly unlikely that one of the biggest companies in the world cannot predict the near future development of its own document format between any two editor versions. Microsoft invented it's own document format and it changes that format in every successive Word version. The reason for this behavior is to force all customers to buy every new version of Microsoft Word. Dear customer, how much money do you have?

WHO CAN MAKE PROFESSIONAL MICROSOFT WINDOWS PROGRAMS?

According to Microsoft, that depends what country you are from. Microsoft professional development software sold in America or Canada has the following label on it: "For distribution in USA and Canada only". The development software has nothing to do with national security of these two countries. So Microsoft is doing the segregation of its customers on the national basis and specifically forbids the most important development software to cross the border of North American continent. If we take into consideration that Microsoft is the only company covering basic desktop software we can understand the dimension of human segregation taken by this company.

HOW MUCH IS YOUR DATA SECURE WITH MICROSOFT - FROM MICROSOFT?

For about three years of previous Microsoft product Windows 95 there have been numerous reports on suspicious behaviour of that product. One among a very serious and well documented reports deals with registration of Windows 95 over Microsoft Network. Acording to that report, during Microsoft registration your computer is being thoroughly scanned also for various non-Microsoft software like Borland C++, Delphi, American On-line, CompuServe, Prodigy, Corel Draw, Clipper, Aldus Pagemaker, Harvard Graphics, Lotus Notes, and a lot of other competitor software. The data about competitor products and possibly some other data by Microsoft choice are collected from your computer and sent to the Microsoft center along with your register data.

MICROSOFT DOES NOT CARE MUCH ABOUT QUALITY OF ITS PRODUCTS

In most cases, Microsoft didn't even try to compete by the quality with the competitors, but tried to buy them, or dumped prices (so called predator technique of lowering prices and loosing money just to destroy the economically weaker competitor). We can hardly recall any case where Microsoft product dominated market by the pure virtue of its quality and nothing but the quality. All computer users are very well informed about the notorious "blue screen of death" in all existing and previous Microsoft Windows operating systems, after which you must often reformat your hard disk, install the whole operating system from the scratch, and reinstall all your software again! Just one comparison to the "real" operating systems: UNIX operating systems executing on simple 486 computers serving 50 (fifty) users have no crashes at all, and with the trained administrator usually work the same way for the whole technical working age period. This is the basic fact about the real operating systems and the "benefit" that Microsoft company had brought to all of us in about 17 years of software development for desktop computers.

CONCLUSION

The beast is among us - the Microsoft monopoly. For individual desktops we have no choice now but to use Microsoft Windows products. But beware of serious danger that Microsoft presents to us all. The first step of salvation is always knowledge and the purpose of this paper is exactly that - to convey the message of truth. If this is accomplished this paper has served its purpose.

References

ANTITRUST LAW & ECONOMICS REVIEW / ANTITRUST OVERVIEW- Charles E. Mueller
A NetAction White Paper [http://www.netaction.org]
Where do you want to go today? - Randy Kaphing
Required to buy Microsoft Windows - David Chun
Inside the Windows 95 Registration Wizard - Andrew Schulman Senior Editor, O'Reilly & Associates

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