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The dynamics of monopoly

Momentum favors Microsoft. Are you ready for its future? The dynamics of monopoly Momentum favors Microsoft. Are you ready for its future?

A June 4 BusinessWeek cover story (which you can’t access online without getting username and login) perhaps best describes how Microsoft has dealt with its antitrust woes. In short, aside from throwing as many lawyers at the problem as it can afford and taking a Big Tobacco admit-nothing approach, it has ignored antitrust concerns. Its development has gone on unabated, and it is repeating the same tactics it used to gain and use its monopoly to leverage other markets. And then some. Combined with .NET, Windows XP is the next example of how Microsoft will turn its desktop and office monopoly into an Internet monopoly. If what the industry and its users went through culminating in the antitrust suits levied in 1998 was Iwo Jima, the coming onslaught from Microsoft is Hiroshima.

As frightening as the expected outcome is, the chance of another antitrust action is dimmed by the eminent failure of the States’ case, which is expected to be overturned on appeal. The fact is, the case was too narrow from the start, focusing on one aspect of the monopoly–bundling. Even if the outcome is somewhat successful from the States’ perspective, Microsoft can use the narrowness of the case to continue all of the other monopolistic tactics the case overlooks. The European Union might have better luck. But it can’t inflict too much pain on Microsoft at this point.

This is not another Microsoft-bashing column, however. It’s a reality check. The reality is, computers of many shapes and sizes and computing models will be dominated by Microsoft for the indefinite future. Yes, Linux will have a growing presence. But momentum favors Microsoft, and the snowball is growing. So, my whole point here is to give you a hint of what to expect from the monopoly. How does monopoly affect its users? While I don’t have enough space to go into much detail, I can make a few points here and defer you to my August Insights column for more depth on the subject. (I will try to integrate your feedback into that column.)

Conventional wisdom says that a monopolist can refuse to innovate and charge whatever it likes. What we are seeing from the Microsoft monopoly right now makes conventional wisdom only half right. In fact, Microsoft is innovating like Edison on steroids, rolling out new versions of its software and rolling into new markets more aggressively than ever. Why does it pour $4 billion per year into development? Precisely because it has a monopoly. Monopolists can develop tons of stuff with far less risk than their wannabe competitors, because they can leverage their monopoly to ensure that customers buy their products. And they can guarantee a return on their development investments by charging whatever they want. Office XP is the perfect example. It comes on the heels of the last Office release and costs double what any “competitive” product would cost. And Microsoft will soon make upgrading mandatory, with a subscription model that it has already rolled out Down Under. MCSE is another example. NT administrators will soon be required to upgrade their skills to Windows 2000. When Whistler comes out, they’ll need to pony up again. The faster the stream of product development, the more training admins will need. For every Microsoft developer, there are a million admins who will pay for the developer one hundred fold.

This is what we’re in for with the Microsoft monopoly: an endless stream of expensive new products that taxes companies and their users to the breaking point. Are you ready for it?

James Mathewson is editorial director of ComputerUser magazine and

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