Microsoft flexes more open-source muscle

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Standard Oil is a good comparison, to a point.

You wrote:
Now, I don't see a lot of benefit that can come from a monopoly. Prices go up and innovation goes down.

The Standard Oil Co. worked because John D. Rockefeller saw that the kerosene business was going to be big. He also saw that prices for oil and kerosene were so variable that no one could make money consistently. He also saw that anyone who wanted could get into the business cheaply, and so undercut everyone else's chance to make a profit.
He rationalized the business. He became the one main buyer, refiner, and transporter of oil, partly by controlling pipelines and partly by merging refineries into Standard Oil. He bought or started companies that supplied what he needed. He watched pennies carefully, because a few cents make a lot of difference in a high volume market.
He also sanctioned, even encouraged behavior by his agents which was literally criminal.

Microsoft has also created an industry (and used piratical tactics). They produced standard products which could be an essential resource for others because they were dependable and consistent and relatively cheap. (The dependability: there will always be Windows, and it will be backwards compatible. Sorry No_Ax.)

So part of the reason IT exists and employs so many people is because Microsoft provided reassurance to those who knew nothing about computers and didn't really want to know. That's not innovation, though Microsoft (like Standard Oil) has made significant refinements in its products and methods. (Pun intended, for Ida Tarbell and "Titan" fans.)

Standard Oil's model eventually became unnecessary. Maybe Microsoft will, too. But so far, they're doing a good job of making Windows more valuable than the competition.

Posted by: Anton Philidor   Posted on: 09/28/04 You are currently: a Guest | Members login | Terms of Use

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