A recent debate on another mailing list rehearsed the 'Windows v's Apple'
computer arguments as a technological issue. It occurred to me that there
are several other aspects to the debate which are not aired so frequently.
In particular I wondered whether any on this list have looked at the
computer industry as a case study of monopoly power, or even in the context
of 'ethical consumerism'?
My main reason for asking this is the surprising developments in the
anti-trust court case brought against Microsoft by the US federal
Government. From an initial position that saw most observers take little
notice of the case, industry analysts have commented that Microsoft have had
a very rough ride. In particular, evidence has been submitted by some that
Microsoft have used their position in an anti-competitive way. There has
been speculation that Microsoft will have to do a deal that will act as a
restraint on their ability to lever control of Operating Systems in their
role as software developers.
The evidence given provides a fascinating business studies case study on
monopoly power. Microsoft do not manufacture any computers, yet computer
manufacturers depend upon them for their Windows operating system. There
are many manufacturers of computers running Windows. Competition between
manufacturers of similarly specified computers is mostly on price with
little product differentiation. In fact so fierce is this competition that
whilst Microsoft's founder is worth more than many countries GNP's, many of
the manufacturers are experiencing problems (for instance, Compaq's recent
difficulties). Similarly Intel, who manufacture the Pentium chip on which
Windows runs, are highly profitable yet do not manufacture any computers.
Given this one can only speculate as to how manufacturers are managing to
achieve a £400 computer a price which includes the operating system, a
monitor, keyboard, VAT and the relatively high costs of a High Street retail
operation.
An exception to this is Apple, who produce both their own operating system
and hardware (though they rely on both IBM and Motorola for the Power PC
chip which their systems run on). They have also managed to produce a
computer which is looks very different, does not run Windows, at its
cheapest costs roughly twice as much as the cheapest Windows PC (though, in
fairness, similarly specified machines are not that much more expensive).
Ironically, so fragmented is the PC market, that despite being in the top
five selling computers since launch in August, Apple still has less than
10% of the market.
There used to be an adage that 'no-one ever got fired for buying IBM'....
this seems to have been replaced by 'no-one ever gets fired for buying
Microsoft'. Interestingly it was fear of the kind of anti-trust legislation
that Microsoft is now up against that some argue acted as a restraint on
their activity and allowed Microsoft to develop their dominant position.
Is anyone using or developing a case study around this for use in the
classroom?
Steve Lepper
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