Microsoft has been pouring money onto everything until they monopolize it. It worked really well and annihilated a lot of competitors by the way.
I remember the times Microsoft will literally buy you to develop for the xBox or DirectX. I was there and then I saw the people that got bought to say that they felt "trapped" and could not get out from MS tech.
But as new companies with big pockets got into the game, first Google, then the new Apple and then Facebook, the last one with so much money and not really knowing what to do with it, the game did not worked as well as before.
The Microsoft Zune did not work out, Life, Bing and now Lumia are not working out as expected, even after pouring billions from their desktop and Office monopoly.
First, Microsoft has had to play pretty carefully in the past decade to make sure that they don't draw any more antitrust ire.
The other thing would be that they don't have to manipulate the market forever, just long enough to lock out competition.
A perfect example of this in the tech world would be Intel.
They did everything they could to keep AMD locked out of vendors like Dell for years, even when AMD had a superior product. Fast forward a few years, and not only is Intel still the dominate player in the market, but their lead in process technology makes it extremely difficult if not impossible for anyone else to compete. For example, Ivy Bridge has a slightly higher transistor count than AMD's Bulldozer, but has a die roughly half the size of the AMD part.[1] That means that even if AMD was producing a part that performs competitively with Intel, they're going to have difficulty competing with them on price since Intel can crank out more dies per wafer.
Obviously it's entirely speculative whether AMD would have been able to capitalize on increased market share and keep up with Intel long term but Intel doesn't really need to manipulate the market like they used to anymore since they've managed to put themselves in such a comfortably entrenched position.
I feel like your example of this is actaully a perfect counterexample.
If Intel really could manipulate the market successfully, AMD would not exist at all, instead of just having slightly lower profit margins but otherwise similar products, as you describe.
And also, there wouldn't be ARM, which seems to be taking more and more marketshare from Intel. Intel couldn't "lock them out."
And by the way, I think the antitrust action against Microsoft accidentally helped them maintain marketshare. If they had been allowed to continue integrating IE into Windows at the expense of much better browsers, that would have been a boon to Apple and Linux. IE isn't such a huge kludge/security problem now, but it used to be a serious competitive disadvantage. (This is just a hokey theory only tangentially related to the discussion, though.)
>If Intel really could manipulate the market successfully, AMD would not exist at all, instead of just having slightly lower profit margins but otherwise similar products, as you describe.
AMD has been less than financially healthy for years. They've spun off Spansion and GlobalFoundries in the past few years trying to keep head above water.
The point is that Intel was successful in keeping AMD from being able to expand its market share when AMD had a better product and the two were much closer to parity in terms of manufacturing process than they are today. As a result, AMD couldn't afford to reinvest in manufacturing and design, and Intel was able to widen the gap between them.
AMD is still afloat, but they're nowhere near the threat to Intel that they were circa 2000-2005.
>And also, there wouldn't be ARM, which seems to be taking more and more marketshare from Intel. Intel couldn't "lock them out."
ARM was in a completely different market segment that Intel didn't really view as a competitor. As things shift toward mobile, Intel is starting to address that segment, and I think that the process advantage they hold could end up being an even bigger deal there since overall package size and power consumption is such a major factor in mobile. Even if your design is equivalent or slightly better than Intel's from a performance per transistor standpoint, Intel can still win out by being able to churn out more chips than you can at the same cost.
>IE isn't such a huge kludge/security problem now, but it used to be a serious competitive disadvantage. (This is just a hokey theory only tangentially related to the discussion, though.)
Microsoft's bread and butter is the enterprise and IE is still a huge competitive advantage for them there. We're tied hugely to Windows at my workplace almost entirely because of IE.
Well, you're just moving the goalposts there. Intel and NVidia still quite dominate AMD in the desktop/laptop.
By the way, ARM couldn't touch Intel if they wanted. ARM's market is not just another league, it's not even the same game. Even so, where low-power x86 vs. ARM can be viable, Intel will win, by default.
At this point, I think Google should have more worries about antitrust. Google is very aggressive about bundling G+ with everything. I didn't want to get on it, but I was on gmail, Youtube, and a few of their other products, and they stopped working well without it. Once I was on it, there is huge social pressure to use it.
Google Chat, I didn't want, but it was integrated into gmail. Suddenly, I'd have chats from friends pop up as I was working. I presume there's some way to unbundle, but at this point, it's too late.
List keeps going. Google is crushing competitors not by building better products, but by using search to steer them there, and the rest of their chain to force users into them.
Google's motto seems to have changed from indexing and organizing the world's information to hoarding, organizing, and locking down the world's information.
Like Microsoft, they're also getting less and less competent. 6 years ago, their software was phenomenal. Today, it's kind of below average -- they've had a huge brain drain to startups, Facebook, and other places (except for Google X, which seems to be poaching quite well).
It's not as bad as Microsoft in it's prime, but it's getting there. I think in a year or two, they'll actually be worse.
This is kind of a silly comment. Google is only crushing competitors where their services are actually superior. Dropbox still exists and I assume has many more users than Drive. Facebook still exists and is still by far the most successful social network. And even in an area where they were pretty much the first in the field, Maps, there is new competition from Open Street Map. These are just some examples.
People who really don't like Plus and its integration into everything seem to keep using it as some kind of example of Google using monopoly power to force it and its other services to market domination. This just doesn't seem to me to be how it's working. And it completely ignores the fact that all it's actually quite useful to the majority of users, the ones who don't for whatever reason have a problem with it.
> Google Chat, I didn't want, but it was integrated into gmail. Suddenly, I'd have chats from friends pop up as I was working. I presume there's some way to unbundle, but at this point, it's too late.
What does this even mean? Just set yourself to invisible or sign out, and don't go back.
Your "locking down the world's information" comment doesn't seem to make much sense either considering Google is one of the few (if only?) companies to have a data liberation teem, with the explicit goal of making all of your information exportable from Google.
And finally, to call Google's software in general "below average" is just weird. Think about it. Really. It's a weird statement. Their software is better and does more than it did 6 years ago, but has somehow gone from amazing to below average.
IMO Google still isn't anywhere near what Microsoft is. It has quite a long way to fall, if it does.
They may not be guilty of any of these accusations but they are probably better off taking measures to be as transparent as possible rather than continuously defending themselves...
Microsoft still has an effective desktop OS monopoly. Last I bought a computer, I still had to pay a Windows tax. So their long-run market manipulation seems to be alive and well.
It's true that they haven't been able to dominate new markets effectively. But that says more about the volatility of technology and Microsoft's fear of another Department of Justice beat-down than it does about any principle of economics.
The Internet was a once-a-century disruption. (One that could well have been throttled in its cradle had AT&T not been broken up by government intervention.) Counting on lightning strikes like that, rather than robust regulatory support of competition, strikes me more as a religious outlook than a practical one.
> Last I bought a computer, I still had to pay a Windows tax.
Chances are you actually got a discount thanks to MS. And I don't mean a discount on the OS.
Places like Dell make money mostly on the more expensive hardware, upgrades, and support.
Below this (at the sub-1k level), you're getting a PC at marginal cost (and sometimes a loss), that gets monetized by Dell via desktop real-estate (all the crapware).
I loved it when Microsoft tried to buy Academia. We were in Cambridge and in the evening the bar keeper in one of the student buildings where we slept used to say: "Drink the most expensive stuff, Microsoft is paying for everything."
Didn't help though, I didn't work on MS technologies.
Why would it be sad to say goodbye to Nokia? Companies come and go and all of Nokia's problems today are of their own making. Sure they made some nice phones 6+ years ago but they could have easily of competed with Apple, hell Google managed to do it without even having a damn phone they just made the Android platform and worked with other companies to make the devices. Nokia should have embraced Android from day zero, if they had they would most likely be the number one Android phone supplier instead of Samsung.
Well, Google was better prepared to do it since their main source of income is not product sales but advertising. They can give Android away in order to lure eyeballs to the ads they serve.
To do the same Nokia should have changed their whole strategy, focus and expertise in less than 5 years, simply impossible for a company that size. Also worth noting, Google bought Android. It was not "complete" at time of acquisition but it wasn't a "lets begin from scratch" kind of project.
The problem with Nokia and Android is that Samsung will always, in every single case, have cheaper and more powerful devices. Maybe Nokia could've keep themselves in the game with a lot of marketing and a bit of luck, but eventually, down the road, Samsung would take over.
On top of that add that Google is getting in the hardware game and arguably the best Android devices will come from them. Even for Samsung the Android strategy might prove to be a bad idea in a couple of years.
> changed their whole strategy, focus and expertise in less than 5 years, simply impossible for a company that size
Microsoft was bigger than Nokia when, between 1993-2000, they executed several changes of greater magnitude in less than 5 years each (Windows 3, the response to Netscape, Windows NT).
> The problem with Nokia and Android is that Samsung will always, in every single case, have cheaper and more powerful devices. Maybe Nokia could've keep themselves in the game with a lot of marketing and a bit of luck, but eventually, down the road, Samsung would take over
Why? Samsung has only this year started showing small signs of becoming something more than a "fast follower". Nokia used to know how to lead the market... if they still did, they would have no trouble innovating to stay on top of Samsung.
> Why would it be sad to say goodbye to Nokia? Companies come and go and all of Nokia's problems today are of their own making.
Well there are a lot of smart developers in Finland with a good design sense and the executive screwup at Nokia was no fault of theirs. It's not clear to me that there will be a big enough tech market to absorb them all. So there would probably be a net contraction of smart people doing cool stuff. To me, that's bad.
Also, more competition is always a good thing for the market.
Given how MS effectively osborned Nokia's flagship Lumia series by refusing to upgrade it to Windows 8, Nokia has no credibility left.
(Note: I don't own a Lumia, and I'd be wary now)
Phone contract runs for up to three years, and people who paid for the top-of-the-line phone are going to feel regret every time they make a call for the next three years. From a reputational standpoint, Elop has burned his platform another time.
Does this really matter? Hardly anyone bought the Lumia. For a device with practically zero traction, it makes sense for Microsoft to rapidly iterate the product until it's something consumers want (I don't think Windows Phone 8 will do that but "hang on to the paltry few Lumia customers we have now" should be priority #52495394 for Microsoft right now).
It isn't bad for Microsoft. It is bad for Nokia. The customers who are prepared to spend top money with a brand obviously has some affinity for it. These are the people a company needs when it goes through difficult times. The last thing a company should do is to alienate their best customers.
Your post just reminded me that a strategy will not work forever. Competitors and the market adjust around it to restore balance. I guess the same goes with companies as it does with nature, evolve or die.
So what? In the long run, we're all dead. Eventually, protons will decay.
"The market" doesn't do things. Saying that the market will take care of something is like saying the internet will take care of something; it requires a willful ignorance of the details.
Markets are human constructs designed to achieve particular ends. They have known failure modes and monopoly is one of them. There is no reason we need to sit around waiting for a monopoly to self-destruct, paying monopoly rents and having progress stifled in the meantime.
Nah, Standard Oil isn't coming back. There are so many logistical nightmares and legal problems with merging two major oil firms that they won't want to repeat the process they went through ten years ago, nor will smaller firms be willing to buy the parts the DoJ forces the big guys to spin off. Just look at how Valero screwed itself by purchasing a good chunk of Exxon's California assets.
I don't think we'll see the domestic players merging but rather an increase in international joint ventures that effectively constitute a merger. Petrobras and Shell, TNK-BP and so forth.
So you think 300 years from now Ma Bell is still going to be around? Had I said my statement "This too shall pass" & "No strategy works forever" back in the 90s you guys would have said "Look at Microsoft, it's growing and growing".
Again, no strategy works forever, they work for varying lengths of time.
I remember the times Microsoft will literally buy you to develop for the xBox or DirectX. I was there and then I saw the people that got bought to say that they felt "trapped" and could not get out from MS tech.
But as new companies with big pockets got into the game, first Google, then the new Apple and then Facebook, the last one with so much money and not really knowing what to do with it, the game did not worked as well as before.
The Microsoft Zune did not work out, Life, Bing and now Lumia are not working out as expected, even after pouring billions from their desktop and Office monopoly.