The Microsoft Dominance - Essay Example

?The Microsoft Dominance Microsoft contains the dominant market share in the Operating System Market, outshining Apple’s Macintosh when it comes to retaining a stake in the market. Microsoft has been phenomenal with holding a major share in the market for two decades, which can be attributed to the fact that they sell their OS to each and every hardware company. The paper tries to analyse the economic position of Microsoft and understand why they have been able to retain themselves as a monopoly in the market. Let us start with the definition of monopoly and then analyse the same definition with respect to the share controlled by Microsoft in the market. “A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products.” Monopoly Definition." Investopedia.com - Your Source For Investing Education Inferring from the above definition, a monopoly is a state of market where one company controls the market with a tight management in place and holding a dominant share where it can dictate the prices and the supply of the product to the market and therefore would exercise a position of power in the respective market. Microsoft enjoyed such dominance in the OS market for computers for two decades and still holds that position due to the free availability of its products in the market. “Microsoft accounts for 90-95% of microcomputer operating systems, and it is the de facto standard for computer applications. It is obvious that it is dominating the market. However, one could argue that its market power is gained from the consumer choices…its legitimacy rests upon consumers who willingly, and in a market with alternative resources and options, chose to buy Microsoft products.” InfoTech & Public Policy » Blog Archive » Is Microsoft a “monopoly” Based on Standard Economic Theory?" The economic theory behind the dominance of Microsoft has been monopolizing the market and creating products which the competitors failed to innovate in. Microsoft was able to take the Windows to a level where there was no competition at all from the rest of the players in the market. Let is have a look at the OS market to understand why Microsoft was so successful in monopolizing the market for such a long time. At the time when Windows was launched, there were only two players in the market for OS. One was the Macintosh designed by Apple, and the other was windows designed by Microsoft. The precarious thing about Apple was that they only created their OS for their own machines and did not outsource the product to other manufacturers waiting in line to produce the Macintosh. Since Apple did not sell their Macintosh OS to third parties, the manufacturers were left with only one option, and that was to buy the OS from Microsoft, the Windows based application. Since Macintosh was more expensive than Windows and did not give an opportunity to oither manufacturers in the market to use their OS, the Windows grew in popularity. The OS was much more cheaper to use and to apply on machines, and since was an open software there were more applications designed for it than they were for the Macintosh. “economists maintain that a monopoly does not exist simply because there is only one provider of a good or service. For example, in the Microsoft case, the Windows operating system is enormously popular, but the potential for a competing firm to provide a similar product exists. In fact, Macintosh is a small but important competitor in the computer and operating system market. Linux has also emerged in recent months as a viable alternative to Microsoft Windows” South-Western: Is Microsoft A Monopoly?" Web. 27 Nov. 2011. Whether the Monopoly is in the Public Interest: There are two sides to the argument whether the monopoly has been in the public interest or not. The paper address both the points of contention and then understand why one arguments works over the other. The argument in favour of Microsoft retaining a monopoly over the competition explains that the market was never facing any threats or negative impact as such from the OS giants. Microsoft has never abused its monopoly to increase the prices or sell sub-standard products to the people in the world. It has to be said that theirs is the only product which is available in mass quantities as opposed to the Macintosh or the Linux. Microsoft has always been able to develop new products and come up with innovations to make their existing products better. The company has been extremely good at rolling out new technology and pricing it at a fair rate so that it was affordable for the people to purchase the product. Even though the company had a dominant position in the market anti-trust was never proved against them as they were always on their toes with regard to the development of the OS. The counter argument for the same argues that Microsoft has been living on a relaxed basis since there was not competition at all in the Operating System Market. Macintosh was very expensive and enjoyed a small share in the department, however, as a product it was miles ahead of the Windows. Consumer satisfaction and the ratings stated that Mac was n overall a better package than the Windows, but since Windows was available in most circumstances and easily available, the consumers most of the time were using Windows and not Mac. The anti- trust law suit which was filed against Windows alleged that due to retaining a monopoly in the market, Microsoft was not giving a good enough product to the people for the price they were charging, and when compared to Mac, the story was true in quite a lot of ways where the fact remained that despite oif having a good market share they were very relaxed about rolling out new products. Work Cited South-Western: Is Microsoft A Monopoly?" Web. 27 Nov. 2011. http://www.swlearning.com/economics/policy_debates/microsoft.html InfoTech & Public Policy » Blog Archive » Is Microsoft a “monopoly” Based on Standard Economic Theory?" Princeton CS Course Blogs. Web. 27 Nov. 2011. Read More