Microsoft Hatred FAQ 5172

On Tue, 25 Oct 2005 14:22:53 +0000, Not Bill Gates

That is not true. The market was quite happy to buy competing products such as DR DOS. What the market was not happy to do was buy DR DOS, but pay for *both* DR DOS and MS DOS even though they only received DR DOS.

And that, in a nutshell, is why Microsoft's actions were illegal. They were stealing from computer buyers: if you wished to buy an IBM-compatible PC, you had to pay for MS DOS even if you didn't want it, and having paid for it, there was no guarantee that you would receive it.

Most users didn't know that they were paying for MS DOS -- all they knew was that MS DOS either came bundled with the PC automatically, or that if they requested some other operating system, they ended up paying more rather than less -- even when that other OS was cheaper than MS DOS.

Imagine that your corner store charged $1 for a Coke, $0.90 for a Pepsi, and $5 for burger and Coke. If you asked for a burger on its own, the price would still be $5. If you asked them for a burger and Pepsi, the price would go up to $5.90 -- and the Coca-Cola company would still get their dollar for the Coke you didn't get, plus another dollar for the same Coke when the next customer bought it.

If only one or two stores did this, then the market would correct itself: people who wanted Pepsi, or a burger without Coke, would go elsewhere, and save a dollar.

But in the case of Microsoft, there was no practical "elsewhere" to go to. All the resellers did the same thing. Virtually the only alternative, buying an Apple Macintosh, was more or less the equivalent of driving to the next state to buy a $10 steak when what you wanted was a $5 burger.

The situation was, pay Microsoft for MS DOS or go without a PC. Since users were either unaware of the situation, or unable to change it, they did the rational thing: why pay for a Coke and then pay again for a Pepsi if you just want any old drink? A few die-hard DR DOS supporters paid double for the product they wanted, and helped enrich Microsoft. The rest simply took the path of least resistance: if you're going to pay for a Coke no matter what, you might as well drink it.

The thing with markets is that they only lead to efficient outcomes when there is sufficient compebreastion. That's why anti-compebreastive behaviour is a bad thing, and is illegal in just about every country in the world. (Whether the laws are enforced is another story.) A few people, blinded by ideology, deny the evidence of their own experiences by insisting that monopolies do no harm.

See, for instance, the contrasting situation in hardware and software.

As compilers and other tools have evolved, it has become easier to develop software. Distributing it has also become easier: in 1985, Word came on five or six floppies worth perhaps a dollar each, with two or three kilograms of paper manuals. Today, you get a single CD worth maybe twenty five cents. In the case of Windows, often all you will get is a licence number, not even the media. The cost of distributing Windows is essentially zero. And yet over that same twenty year period, the cost of the operating system has more or less doubled in price.

Hardware, on the other hand, has fallen in price by perhaps 90%, while simultaneously becoming far more capable. The PC I bought in 1986 for $4000 probably had less computing power than the DVD drive I paid $40 for this year.

There is one desktop operating system vendor with monopoly power. There are hundreds of hardware vendors competing on price and features. Only those blinded by ideology fail to see the connection.

-- Steven.