Microsoft Monopoly

Essay by zhalexUniversity, Bachelor'sA+, February 2004

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Despite the fact that almost all of us use at least one piece of Microsoft software nearly every day, criticism and complaints about Microsoft are commonly expressed. We are here to argue that Microsoft has achieved this status by using unfair business tactics and creating a monopoly.

According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market". It is important to realize that even though Microsoft does not technically fit the definition of a monopoly, it still possesses tremendous power. Along with this power comes the ability to make extremely influential decisions.

How well Microsoft fits the definition of Monopoly?

A pure monopoly means "there is only one supplier of a product for which there are no close substitutes, and in which it is very hard for another firm to coexist"

It might seem impossible for there to be "only one supplier" of any product in the software industry, since there are so many software companies.

However, if you consider the market for a particular software product, such as an operating system, the idea seems much more plausible.

The barriers to entry for software companies in general are quite low. Also, once one company has achieved a loyal user base, it makes it easy to maintain control of the market. In the case of Microsoft. once Microsoft had built up such a large sales volume, their development costs were spread out over these sales. It is hard for IBM's OS/2, with an installed base of 12 million, to compete with Windows, with an installed base of 130 million. It is thus that much easier for Microsoft to recoup their development costs and make a profit.

Microsoft's high sales volumes have resulted in almost pure profit, allowing them to grow...