Microsoft

The Microsoft Monopoly?

In 1975 a young man had a dream, "A computer on every desk and in every home, all running Microsoft software" (Gates). His dream is almost a reality. 11,464,835 Personal Computers (PC’s) are running Microsoft operating systems. Founded in 1975, Microsoft Corporation has been on a steady upswing. In 1977 Microsoft made its first major deal selling "BASIC" (a programming language) to Radio Shack and Apple Computer, Inc. In 1981 Microsoft released its first operating system, MS-DOS, Microsoft Disk Operating System. It is taken as the de facto standard for IBM PC’s. In 1985 Microsoft released its first version of Windows, a graphic based operating system, in difference to DOS which is a text only operating system. It was not as widely accepted as DOS because of its major need for more computing power. A year later Microsoft was listed on the New York Stock Exchange and moved to a four building corporate campus surrounding Lake Bill at One Microsoft Drive in Redmond, Washington. Microsoft introduced Windows 2.0 in 1987 and still was not accepted as widely in the market but did better than the previous version of Windows. In 1990 Microsoft Corporation had a major New York event release of Windows 3.0, which sold 100,000 copies in two weeks. A year later Windows 3.0 was in twenty-four countries and in twelve different languages. A new operating system called Windows NT was released in 1993 for networking PC’s. On its twentieth birthday Microsoft had a huge release for Windows 95, their newest operating system, with the largest ad campaign ever. (Microsoft Past and Present)²

As a result of Microsoft’s continuing success, it has been accused of having a monopoly in the operating system software industry since 1991. Microsoft’s operating systems became the de facto standard in 1981. Bill Gates put it best when he wrote, "A de facto standard emerges when, in a growing market, one way of doing something gets a slight advantage over competitive ways of doing that thing" (Gates 50). In 1981 IBM released the first personal computer similar to the computers we use today. IBM gave consumers the choice of three operating systems with their computer systems. Of the three systems, the system with Microsoft’s operating system was considerably cheaper. This created Microsoft’s de facto and a lead in the operating system software industry as consumers bought the cheaper computer. Since 1981 Microsoft has not lost the de facto standard of their operating systems; consequently, Microsoft has been accused of having a monopoly. Microsoft does not have a monopoly; however, they have the best operating system software.

In 1990 Windows became more or less ubiquitous just like VCRs. The Sony Betamax machines were technically superior but could not hold an entire movie on one tape. JVC developed the VHS format, which could hold two hours of video on a tape, and licensed the format to other companies for a small royalty. Eventually there were numerous VCR machines and the one Sony Betamax machine. Consumers bought VCR’s. Intern video rental stores stocked VHS tapes more than Beta tapes. Eventually the VHS machine became the de facto standard. The same applies to the Windows situation (Gates 51).

A computer is like a VCR. A VCR with the VHS format only reads VHS tapes, which is the most popular form of videotapes in the United States. In a computer an operating system, like Windows 95, is used to read software written only for Windows 95. A VCR cannot be loaded with a different format, where computers can. There are other operating systems available for a consumer to install on their computer, such as IBM’s OS/2 WARP and Unix. The problem that a consumer then has is finding the software to be run on that computer with that different operating system. A great example is the Macintosh computers’ software availability compared to IBM compatibles’ computer software availability. For example, if a consumer were to walk into any computer store they would find a wide assortment of software for Windows 95, but only a minuscule section in the back with software for the Macintosh. The same is true for OS/2 WARP and Unix.

Almost all computers are sold with Windows 95 as their operating system, those consumers wanting a different operating system can go out and buy it separately. Some computer makers will simply charge more for computers. If one were to call Gateway 2000, Inc. and ask if IBM’s OS/2 WARP operating system could be installed on a computer system from them, they responded by saying that the consumer would have to go out and buy IBM’s OS/2 WARP and install it themselves. They would continue on by saying that they would also not support the computer if it had a different operating system installed in it than what came with it. Another computer maker said they would install it for an extra $200 and would not support the software on the computer. When asked about these stipulations, both companies responded the same, no one wants anything but Windows 95 or Windows NT, so we do not carry it or support it.

If consumers bought other companies’ products, Microsoft would not have as strong of a hold as they currently do: "For every product Microsoft has on the market there are at least two competitors…. If [consumers] all quit buying [Microsoft software] tomorrow, Windows would be a faded memory" (Winn 1). Lotus Corporation was the largest seller of spreadsheet programs. Today they still sell their program Lotus 123, but it is not as well known or as reasonably priced as Microsoft Excel 97 and is most frequently bought in a Microsoft office suite. Office 97 Suite includes Word 97 (word processing), Excel 97 (spreadsheet), PowerPoint 97 (presentation software), and Outlook 97 (e-mail, address book). Lotus 123 is only available by itself, not packaged with anything like Excel. Most consumers buy the products that give them the most for the least expense. In the case of these programs, a consumer might buy Microsoft’s Office 97 suite and buy Lotus 123 because he/she needs more than what Excel offers. A consumer is most likely not to buy each kind of program (word processor, spreadsheet, database, etc.) separately due to the extra expense.

Currently Microsoft is being investigated for their integration of their Microsoft Internet Explorer and Windows 95. The Justice department is investigating whether Internet Explorer is an "integrated" feature of Windows 95 (Mossberg B1). If Internet Explorer is an integral part of Windows 95, then Microsoft can include it with the operating system and make computer makers pre-install it on their computers. If it is not, then Microsoft cannot include it with their operating system and would have to give computer makers the option of pre-installing Internet Explorer on their computers. Computer makers would also have the choice of installing a different browser, a choice they do not have now. The integration is present in Microsoft’s new version Windows 98, but Internet Explorer is just as much a program as the Office Suite. Netscape’s Communicator can be integrated just as Microsoft’s Internet Explorer can be.

The Justice Department is seeking to draw a line of distinction between what is considered "program" and what is considered "applet". The Wall Street Journal defines an applet as being "designed to provide simple functionality out of the box. These include a calculator applet and a word-processing applet" (Mossberg B1). The Internet Explorer is an application. It is sold separately. It serves a larger function. It is sold as the "Internet Explorer Starter Kit" for a price of about $25; applets are not available from Microsoft separately. Internet Explorer is designed to help you browse "the net" and be able to go back to a particular site. An applet is much simpler. Although Microsoft is wrong to include this program with Windows 95 and every computer, it does not come close to having a monopoly in the Internet browser market. WebTrends reported that 68% of the people visiting their site used a Netscape browser and 27% used the Microsoft Internet Explorer. Microsoft is nowhere near beating out Netscape’s Communicator. Communicator is just as integrated as the Microsoft Internet Explorer is and has more to it. Most of the Internet Explorer users are likely to be users of America On-line, the largest Internet service provider in the United States. The software for America On-line, which is bundled with every computer, modem, and network card, comes with Internet Explorer as its Internet browser. This is due to a major deal with Microsoft last year.

Microsoft is not a monopoly. They are a successful company taking advantage of their lead in the software industry. "Nearly half of the world’s total P.C. software revenue goes directly to Microsoft" (Gleick 2). What once was a vision formed in 1975, is now the leading Software Company with 20,561 employees, a net worth of $10 billion, and an all time high of $11 billion in last year’s sales. All of these accomplishments are due to this mans dream,

"A computer on every desk and in every home, all running Microsoft software"William H. Gates.

Home Top Works Cited

Notes

Webtrends is a computer software company that specializes in software to retrieve information about people that access a certain web page or web site. They offer statistics of who has accessed their web page. They tally the web browser a user is using and the operating system the user uses. These graphs are replicas of what is on their web pages.

A. Operating System Report

B. WebTrends Complete Summary Report

Microsoft Past and Present is an exhibit at the Microsoft Museum Online at http://www.microsoft.com/MSCorp/Museum/homesv.asp. This exhibit has important achievements of each year, including net worth and number of employees.

A. Past and Present 1986

B. Past and Present 1995

Care of IBM’s OS/2 Home Page
Care of Microsoft’s Office 97 Home Page

Home Top

Internet Explorer, Word 97, Excel 97, PowerPoint 97, Outlook, Office 97, MS-DOS, Windows, Windows 95, Windows NT, Windows 98, Microsoft logo, "Where do you want to go today?" and "A computer on every desk and in every home" are registered trademarks of the Microsoft Corporation. OS/2 WARP is a registered trademark of IBM Corporation. Betamax is a registered trademark of Sony Electronics, Inc. Lotus 123 is a registered trademark of Lotus Corporation. Comunicator is a trademark of Netscape Communications Corperation. Macintosh is a registered trademark of Apple Computers, Inc. RadioShack is copyrighted by Tandy Corporation.

Works Cited

Gates, William H. III. The Road Ahead. New York: Penguin Books, 1996.

Mossberg, Walter S. "Personal Technology: Knowing the ABCs of the Antitrust Case Against Microsoft." The Wall Street Journal. 30 October 1997: B1.

Winn, Phillip. "Monopolies – Are They For Real?" A Basic Citizen’s Definitive Electronic Freedom Guide. http://www.dakota.net/~pwinn/abcdefg/ag-u-005.shtml (7 October 1997).

"Operating System Report." WebTrends Real-Time. http://www.webtrends.com/products/webtrend/reports/industry/os/apr97/report.htm (2 November 1997)

"WebTrends Complete Summary Report." WebTrends Real-Time. http://www.webtrends.com/products/webtrend/reports/industry/browser/jun97/report.htm (7 October 1997)

Gleick, James. "Microsoft vs. the World." Making Microsoft Safe for Capitalism. http://www.around.com/microsoft.html (7 October 1997)

"OS/2 WARP." IBM. http://www.software.ibm.com/os/warp/warp-client/

"MS Office Personal Computing Information." Microsoft. http://www.microsoft.com/office/97tour/pcuser.htm

"Past and Present." Microsoft 1975-1996.

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