It’s very fashionable within the computer industry to profess to hate—really despise—Bill Gates and Microsoft. Whether or not there’s a cogent case to be made for the government stepping in and splintering the software leviathan is beside the point. Any convincing argument to contain the giant tends to get overwhelmed by a thick fog of hyperbole and corporate envy.
In January 1998, the U.S. Justice Department opened hearings to decide, presumably once and for all, whether Microsoft is just exceptionally successful or engaged in anti-competitive tactics to establish a monopoly over the software industry. Microsoft’s rise to the top of the software pile is as simple as it was uncertain. The company was able to establish its operating systems as industry standards by extracting a royalty on every PC sold. No small feat. Microsoft then was able to leverage its operating system dominance to create and subsequently assure market share for the company’s office productivity software programs.
Microsoft detractors, like a chorus, point out in unison and on cue that Microsoft receives royalties on all PC systems, regardless of whether or not a Microsoft operating system is installed on that computer system. They also allege that Microsoft’s programmers are granted access to secret information that makes its business software work better than competing products. Except—the most outspoken critics argue—Microsoft products are inferior to similar products from other operating system and application software vendors. When this contradiction is pointed out, the unblinking critics cite the philosopher’s proposition that the sign of sure genius is the ability to hold two opposing thoughts in one’s mind simultaneously.
Microsoft critics are also quick to point out that the company is a master at marketing vaporware (software that doesn’t yet exist). When Microsoft realizes that competitors have an edge, so the theory goes, the software giant issues a press release to instill fear, uncertainty, and doubt in consumers and competitors alike. Fear that if a competitor’s product is chosen, the consumer will miss out on great—but nonexistent—features to come from the promised Microsoft product. Microsoft bets that the consumer will adopt a wait and see attitude. Sometimes Microsoft ships a product and sometimes it doesn’t, but its gambles almost always pay off. Either way, the competition is quashed or at least dealt a severe blow.
Even when Microsoft releases a catch-up product—and the vast majority of all of its products are catch-up products—it usually takes the company several years to refine the product to a competitive level.
In a truly free market, competitors would be able to withstand the Microsoft onslaught. Critics argue that when Microsoft encounters a competitor that it can’t handily beat in the market, it simply buys it. “Exit strategy through acquisition” is a catch-phrase heard time and again. Microsoft calls the tactic “embrace and extend.” Consider these four enormous forays Microsoft has conducted outside the computer software industry since the mid-1980s:
- Photography archive: Bettman
- Cable television: MSNBC and Comcast
- Satellite communication: Teledesic
- Leonardo DaVinci’s notebook
Bill Gates claims there’s no way to really monopolize the computer industry because it moves too fast, with breakthrough products created on an almost daily basis. His argument is as abominable as it is disingenuous, of course, but it tends to deflect attention away from his remarkable personal wealth. At the beginning of 1998, Bill Gates’ personal fortune was estimated to total US$40 billion, at which time mathematically-inclined observers noted that Gates makes about US$500,000 per hour or close to US$150 per second. At that rate, the more cynical observers noted, if Bill Gates were to drop a US$500 bill, it wouldn’t be worth the four seconds of his time it would take him to pick it up. (As of this writing, Bill Gates’ personal wealth is estimated to be more than US$50 billion.)
0 responses. Comments closed for this article.