Thoughts on Business

My essays on business, Industry, and commerce.

Features, Please read and enjoy

The Real Troubles of Microsoft
We have all heard about the legal problems Microsoft has gotten itself into, and about how the federal courts may break up Bill Gate’s empire. But, I think Microsoft’s problems go much deeper than simple arrogance. There are more basic problems facing Microsoft; that have to do with the way digital technology is moving. So, while it is very to write about Microsoft’s troubles as the consequences of arrogance, greed, and monopoly, it is not enough. We have to discus the real problems facing Microsoft. We have to discus technology, and how a technology grows, about economics, and about economic paradigms. In my other article, “Why is Microsoft a monopoly?” I wrote about how the hardware paradigm made Microsoft a monopoly. In this article, I will discus why the software paradigm is a threat to Microsoft. And, I will add some thoughts on the threat posed by the software that exists between the ears of Microsoft’s management. So, what are the real problems that face Microsoft? Lets get going.

Why is Microsoft a Monopoly?
I decided to write this while I was working on “The Real Troubles of Microsoft.” As I was working on it, I began writing about why Microsoft became a monopoly because I realized that an explanation was necessary. At first, I was going to include this in one big article about Microsoft. But then I realized that my conclusions in this article were diametrically opposed to the conclusions in the other article. Also, that the combined article would have been too long and complicated. Sometimes it is better to write about one idea at a time. Understand, the problem here is the economics of the computer business. Or rather, the three economies of the computer business; the hardware economy, the software economy, and the communications economy. There are three conflicting economic paradigms at work here, the hardware paradigm, the software paradigm, and the communications paradigm. This means that when I write about the computer business, I can easily come to conflicting conclusions. In this case, when I discus why Microsoft is a monopoly, I am writing about the hardware paradigm and the communications paradigm. Remember, when Microsoft created DOS and Windows; they created a hardware standard for the machines that could run the OS, and they created a communication standard for that allowed the machines to run a common pool of software. The communications paradigm is what made them a monopoly. When I discus the “Real Problems of Microsoft,” I am mostly writing about the Software Paradigm. With that in mind, I started writing. Finally, I wrote most of this before the prosecutors made their recommendations on how Microsoft should be broken up, so some of this may be a little dated. Please read.

Cloning at Apple Computer
As I was writing about the troubles facing Microsoft and the economic paradigms at work in the computer industry, I started thinking about practical examples of economic paradigms at work. And, the experiment Apple computer did with cloning came to mind. In the computer business, there are three economic paradigms at work; the hardware paradigm, the software paradigm, and the communications paradigm. Sometimes, these paradigms can conflict in fundamental ways. When you are in the business of making both the OS (software) and the machine (hardware), the conflict between paradigms can bite hard. But, many managers in the computer world are unaware of these conflicts (according to the business schools they cannot exist). So, a large computer firm can be caught up in expensive conflicts without management even being aware. A good example of this kind of conflict is the experience of Apple Computer and the cloners. Please read.
 

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Copyright © 1999 by George A. Fisher