Subject: Re: CNET: The coming open monopoly in software
From: Zimran Ahmed <>
Date: Thu, 25 Oct 2001 09:35:12 -0700 (PDT)

--- "Stephen J. Turnbull" <> wrote:

fair enough. you make many good pts.

> Au contraire.  AIX wouldn't exist if IBM, at least
> at some earlier
> point in its history, didn't think that proprietary
> software bolstered
> its hardware.  They also got their butts burned bad

true. but once upon a time even before that IBM was
giving away a free OS just to sell its hardware.

> And now _you_'ve got it dead wrong.  In economics,
> "natural monopoly"

yes, I am dead wrong here. humblest apologies.

> One thing is
> certain: entry and exit are determined by average
> cost, not marginal cost.

also agreed. but the switch from windows to linux is
driven (and will be increasingly driven) by
compatibility, not cost (average, marginal, or
otherwise). I'm not saying anything new here.

> I don't really disagree about untrue.  However,
> Fisher et al thought
> the notion of installed base as barrier to entry
> sufficiently
> important to devote dozens of pages to debunking it.

I haven't read this (maybe I should) but Microsoft
certainly sees their old, installed software base as
their biggest competitor. getting people to upgrade is
job #1 now that XP is out.

> And of course the heavy duty network externalities
> we see today in
> office apps etc may change that equation
> dramatically.

I think they *do* change the equation dramatically. in
particular, it completely blurs the line between
what's an application and what's an operating system.
One way MSFT has given people a reason to upgrade is
to bundle (and tie) more and more applications in as
OS features. This began with office, went through I.E.
and continues through media player. It also blurs the
line between what's a feature, and what's an
anti-competitive move to decrease the value of a
market to zero and preserve (extend) a monopoly.
Again, this is well trod ground.

> So?  This is still not a threat if the _normal_
> price for OSS is

true. i was just pointing out that MSFT plays at the
"set cost at zero" game quite happily when it suits
them. And once something costs zero the only thing
left to compete on is convenience. That's why a
bundled (free) I.E. beat an unbundled (free)
Navigator. Also note that for most PC buyers, Windows
(and Office) comes bundled "free" when they buy their
PC. It's not something they make a concious purchase
decision about.

>     Zimran> no, it's because they don't use the OS
> platform to
>     Zimran> maintain lock-in and control standards.
> Same thing in different words.

yes and no. If MSFT moves from an software platform
infrastructure to an authentication platform
infrastructure (Hailstorm), then they set standards
and maintain lock-in and control no matter what the
underlying OS is. a tax on hailstorm mediated
transactions works just as well on GPL'd code as
anything else.

thanks for your good comments.


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