Monopoly and Microsoft
Monopoly and MicrosoftMonopoly and Microsoft
Webster�s dictionary defines monopoly as �exclusive ownership through legal privilege, command of supply, or concerted action; exclusive possession or control; a commodity controlled by one party.� In other words, through a variety of means, a producer may obtain sole or near sole control of a market. Through the control of the market, a monopoly restricts production, raises prices above fair market value, and prevents markets from efficient use of resources. This is accomplished towards the goal of maximizing profits (Parkin 120).
Certain characteristics identify a monopoly. First, no close substitutes in the goods market, such as electricity or local phone access. Secondly, barriers to entry prohibit potential competitors from entering the market, for example, legal barriers, natural barriers, and resources. Thirdly, a monopoly is able to economically manipulate the market with respect to its products, to the intent of prohibiting competition. This will be the yardstick by which the company Microsoft will be measured.
Since the 1980�s, Microsoft has held a virtual stronghold on the operating system market. Beginning with MS-DOS (disk operating system), and culminating with Windows 95/98, Microsoft has become an integral part of society. Its software not only includes the Windows operating systems, but spreadsheets, word-processing programs, databases, and reference works. Microsoft programs run on a great percentage of all the computers in the world. We rely upon them to sort, send, and receive information in school, business, and even our personal lives. The Microsoft Network provides online content, and it�s Internet Explorer browser battled Netscape's for market share. It also provides free e-mail and other services. The fact is inevitable; our lives have come to rely upon the computers that we use every day.
Microsoft�s dominion in the market began with quality and accessibility. The company produced a good product and provided the product and support to developers and PC manufactures. Because of the ease of accessibility and quality of software and support, developers were soon creating applications solely for use with Microsoft products. In essence, Microsoft set the standard for all PC (personal computer) based applications. This contributed to the position in the market Microsoft now holds. Now, Microsoft holds approximately 90% of the OS market with no close substitute.
Barriers to entry prevent possible competitors from entering the market. Barriers fall into distinct categories. Control of all or most resources, legal barriers, and natural barriers form obstacles to competition in the market.
Microsoft controls a major portion of the software market due to the standardization of it�s products across the PC market. Furthermore, because Microsoft controls the operating system of the PC, its competitors must render their applications and software compatible with the parameters contrived by Microsoft. As stated earlier, most applications are written for Windows 95/98. Consequently, these competitors must always at the mercy of changes made by Microsoft. Other OS developers, such as Linux, Unix, and OS2, lack much of the support provided by Microsoft. Today�s PC market is geared solely toward...
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