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What's the old Chinese proverb: “Be careful what
you wish for, it may come true.” Judging by
the muted reaction from Silicon Valley to the ruling
that Microsoft is a monopoly, Bill Gates's enemies
may have finally realized that they have formed
a circular firing squad.
What
exactly does this ruling mean to a business dominated
by start-up firms that hope to ride the next paradigm
shift to achieve wealth beyond measure? For venture
capitalist Tim Draper the message from Washington
was simple: “Become successful, but not too successful
or we'll ruin your life.”
I
have never been a fan of this particular antitrust
case. Too often these days we see lawyers and lobbyists
used to achieve for their clients what their clients
were unable toachieve for themselves. Laws are passed
that change the rules or that favor one particularinterest
over another. Court cases like the Microsoft cases
force parties to settle out of court, thereby guaranteeing
the plaintiff at least a partial victory. And in
the long run, we the people pay the price for keeping
losers in the game past their time.
Bill
Gates succeeded because he was right when it mattered
and because he ruthlessly capitalized on his opponents’
errors in judgement. Gates understood that it's
the operating system, stupid. Remember, Gates built
MS-DOS while he was in college. IBM bought him out.
Then IBM let MS-DOS slip through their fingers,
and once he got it back, Gates was not about to
make the same mistake twice.
The idea that Microsoft has never had any competition
is a canard. IBM is a pretty big outfit. They had
no compunction about bundling PC-DOS with IBM computers.
They also built a pretty good operating system of
their own, OS/2. But IBM never stood behind OS/2,
and eventually it just died from neglect.
Apple made a pretty good operating system too, so
good in fact that Microsoft ultimately emulated
it in Windows. But Apple made the same mistake that
IBM did and focussed on the hardware rather than
the software. Apple's refusal to permit clones took
its hardware AND its operating system out of play
in the business world. That allowed IBM clones to
dominate the market, and MS-DOS just rode right
along with it.
Windows
became a success because MS-DOS was a success. And
MS-DOS was a success because large organizations
like standardization and they like to save money.
Buying cheap clones and picking a single operating
system satisfied both needs. That’s it. Nothing
magical here. Just tough but shrewd business judgement
along with being at the right place at the right
time.
And
nobody understands better than Bill Gates how transient
his success is. He knows that Microsoft is just
one market shift away from losing everything. That
is why he is so predatory. In his business, there
are no second acts. If you miss the next paradigm
shift, you are done.
And
that is why Microsoft went so hard against Netscape.
Bill Gates was very slow to pick up on the Internet.
Does anyone remember that at one time Netscape had
a virtual monopoly over the browser market? Microsoft
had no presence at all for a long time. Bill Gates
was on the edge of making his first really big serious
mistake, because he underestimated the power of
the browser.
All
that changed when Netscape started concocting grandiose
schemes to leverage Java and Netscape into a rival
operating system. That awoke the sleeping giant.
And once Microsoft decided to tackle the Internet,
they went at it with everything they had, eventually
retooling their entire software product line to
become Internet compatible.
Yes,
Microsoft used its huge financial cushion to gain
a quick foothold in the browser market by making
Internet Explorer free. But Netscape hurt its own
cause through overconfidence and underachievement.
And, like others before them they underestimated
Microsoft's ability to react quickly and decisively.
Netscape compounded its problems by quirky non-compliant,
bloated browsers that gave Microsoft its window
of opportunity. And you know what? Microsoft eventually
built a better browser. That was the stake through
the heart of Netscape.
Is
Microsoft pretty to watch in action? No. Is it that
different from other big successful operations?
No. Do we need some controls over monopolies? Yes.
Has Microsoft used its huge size to drive out competition?
Yes. Has this hurt consumers? Maybe, maybe not.
Will a break up of Microsoft hurt consumers? Absolutely.
Like
I said up front, be careful what you wish for. It
may come true.
Do
you agree with the outcome thus far, in the Microsoft
antitrust case? Discuss Here
G.J.
Lau toils deep in the bowels of the Washington
bureaucracy. A long-time observer of American politics
and mores, he now edits his own e-zine Singleminded,
which can be found at : http://www.singmind.com/singleminded/.
Copyright
© 1999 G.J. Lau All Rights Reserved
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