Strategic CIO // Digital Business
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7/18/2014
09:35 AM
Rob Preston
Rob Preston
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Microsoft Shows Tech 'Monopolies' Don't Last

As nature abhors a vacuum, innovators abhor a monopoly, especially in the fast-paced IT industry.

(Source: Crispin Semmens)
(Source: Crispin Semmens)

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RobPreston
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RobPreston,
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7/25/2014 | 1:41:01 PM
Re: I see Microsoft's evolution
Andrew, let me clarify: I'm not saying that Microsoft's desktop monopoloy came apart because of competition; I'm saying that other companies have innovated around it. Tablets and smartphones and hybrid devices make Microsoft's Windows dominance much less relevant. Taking the argument to an extreme just for argument's sake, no one quite broke Western Union's telegraph monopoly, but innovations elsewhere made it increasingly irrelevant over time. 
Andrew Binstock
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Andrew Binstock,
User Rank: Author
7/23/2014 | 3:23:35 PM
I see Microsoft's evolution
Rob:

While I concur in part with your analysis, I view your main point rather differently. Microsoft had a monopoly on the desktop. It still does. The numbers you quote add in phones and tablets where the company never had market share. So analyzing their desktop monopoly as falling apart b/c of non desktop devices doesn't work for me.

My larger take is this: Microsoft maintains a strong monopoly on the desktop. But the company correctly viewed the desktop as a shrinking market several years ago and began three key initiatives to offset the anticipated decline: cloud, tablets, and reinvestment in its phone business. It's clear the first initiative, Windows Azure, is paying off well. 

It's too early to tell whether the Surface will ultimately be an important player or not. And the Nokia acq, having only just been completed, is another long-term unknown.

So, unlike the usual story of a company with a monopoly that was unable to adapt to the new world, I see Microsoft as doing that adaptation uniquely well. Far better than other IT vendors, such as IBM, Dell, etc. have been able to do. I think the company's excellent financial results over the last two years strongly support this view. 

Cheers!
jries921
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jries921,
User Rank: Ninja
7/23/2014 | 10:49:51 AM
Re: Yes and no
Perhaps dominant vendors like MS are no longer in a position to hold on to their dominance long term, but I don't think your claim that MS' dominance was undermined by market forces alone is supported by the history of the past 16 years.  Rather, I have to believe that the antitrust cases and the 2001 settlement with the US Justice Department greatly impaired MS' ability to maintain its dominant position and that the DC Circuit's quashing of the breakup order was a Phyrric victory for MS.  Indeed, I have in recent years come to the conclusion that it would have been better for MS' stockholders, employees and customers if the breakup had gone forward, as the case would have been over, and the two successor companies could have gone about their business without further restrictions.

 
RobPreston
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RobPreston,
User Rank: Author
7/23/2014 | 10:39:34 AM
Re: Yes and no
I just don't see dominant tech providers able to hold onto their dominance like they used to--the "natural" monopolies with their huge barriers to entry excepted. Pundits worried about iPhone and iPad dominance--there were even calls for government intervention. Then came Android. And Microsoft didn't go away either. There's just too much vibrant innovation, out of startups and established players alike, to let any single big tech provider sit fat and happy and control a market for long anymore. Certainly not for as long as they used to.
stevew928
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stevew928,
User Rank: Ninja
7/22/2014 | 6:33:28 PM
Re: Absolutely nothing?
I somewhat agree. Certainly one company isn't going to master every conceivable area, but you either have to master (or do pretty well) at one, and continue to innovate in that area, or you have to do well in catching some emerging category, or creating one.

Apple, for example, has done pretty well at both aspects. They are still quite good and pretty innovative where they started in traditional 'PCs' but also have done well in other areas like mobile, and at least tying their stuff to the cloud. That isn't to say they are perfect. They've blown attempts in a number of areas as well.

Microsoft, on the other hand, hasn't done so well in their cores (especially in the last couple of years), nor in innovations to catch the various waves, or create them. If they don't get that straightened out soon (which they might), they will eventually be just part of tech history. Remember Novell? That's (their technology) where I started my IT career. My CNE (and almost ECNE) is pretty worthless now.

And, Microsoft DID venture into a number of areas. So, taking a risk wasn't the problem. They just didn't have the vision to actually apply the talent they obviously had in a meaningful way. For example, how many anticipated hits did they attempt in the tablet sector? I remember at least two efforts, which I predicted would fail (it was quite obvious). And, even their current one, while much better than the others, is questionable IMO.

Hopefully Nadella can turn things around and properly put some of their tallent to use. I'm always a fan of any company or competition which drives the market forward. I've been a critic of Microsoft because they did the opposite, and didn't get where they are by being excellent.
Brian.Dean
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Brian.Dean,
User Rank: Ninja
7/22/2014 | 6:18:51 PM
Re: Monopolies incur "protected," not competitive, thinking inside
@Micheal, agreed, at least one of Microsoft's product or service will have to be a success in order for Microsoft to gain some good PR. It would be better if the product or service is consumer facing, this could be from any line, even the ones that are already established, for instance, Xbox. However, in terms of sales, Microsoft is losing to Sony in the console world. 
Brian.Dean
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Brian.Dean,
User Rank: Ninja
7/22/2014 | 5:48:06 PM
Re: Absolutely nothing?
The IT industry has grown to include many types of new services and products and this growth is also reflected in the current financial size of the IT industry. Microsoft or any one company could not possibly deliver this diversity and range. The Cloud was ignored by Microsoft -- resulting in Saleforce. Social was ignored -- resulting in Facebook and Google, and so forth. The IoT is being ignored currently by Microsoft, but there is a trade-off, if any company tries to enter a new area, it is accompanied by a risk factor and capital can be lost.
Michael Endler
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Michael Endler,
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7/22/2014 | 2:43:17 PM
Re: Monopolies incur "protected," not competitive, thinking inside
Well put, Charlie. Nadella's trying to break down some reinforced cultural walls right now, in an attempt to make Microsoft move more like the Silicon Valley start-ups who've begun to encroach on Redmond's turf. I think Nadella is saying all the right things, at least in the abstract, but there's still a lot of work to be done. I run into a lot of people around the Bay Area who reflexively dismiss Microsoft. "I haven't paid much attention to Azure because I assumed it sucks," a guy running IT at for a non-profit website told me. "Does anyone write apps for Windows anymore?" asked the web-inclined CTO of a promising start-up when I asked if he'd ever used Visual Studio. You can criticize these people I'm anonymously quoting for failing to pay attention to Microsoft's recent momentum, of course. But it still shows that Microsoft has a cultural and PR challenges, in addition to tech ones.

I think all the viewpoints here touch on the reasons why Microsoft is now, as Nadella puts it, an "underdog"; as a protectionist market leader, Microsoft succumbed to market forces, but as Tom cogently explained, those market forces were better-positioned thanks to the courts.
Michael Endler
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Michael Endler,
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7/22/2014 | 2:31:03 PM
Re: staying ahead
Good point about VCs, which shouldn't be neglected from the conversation. At least during the current tech renaissance, they've certainly forced the issue.
David1960
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David1960,
User Rank: Apprentice
7/21/2014 | 12:57:14 AM
Re: Absolutely nothing?
The Government did hurt MS but a lot of it was well deserved with their monopolistic tactics including trying to destroy Netscape.  Lets start with CPM.


But on the other hand the article doesn't talk about the probably 80 - 85% of desktops that use Windows in one form or another maybe 5% for Apple and 7 for Unix/Linux...


So their monopoly has lasted but the Desktop/Laptop martket has become a smaller fraction of the total pool.

While I am not a big fan of MS their product does work, most of the time with a good degree of reliability for the average user.  I have always found Apple to be impractical for business and frankly a toy but I do hear more people using it each year so maybe will have to revise my opinion. 


Yet by the time I do, based on the premise of the Article, Apple's advantage in iPhone iPad will probably be gone too but what will replace it?  Android which is controlled by Google? Or will there be a new model?

 
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