Emergic: Rajesh Jain's Blog

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Microsoft’s Monopoly Profits

October 18th, 2002 · No Comments

Microsoft Piggy Bank Tops $40 Billion, says Dan Gillmor. “The monopoly continues, unabated, and could even grow stronger. Innovation is almost dead in desktop software, where Microsoft has sucked the financial oxygen out of the system. The company’s behavior doesn’t improve.”

Suggests John Robb:

What if Microsoft took $300 m and provided a $3 m grant to 100 small independent companies doing the most innovative software on Windows? What if they promoted their products to customers? There are still lots of things that Microsoft doesn’t do. Could this restart the PC upgrade cycle? I think it could. The great part about this is that Microsoft would make back that money in less than three years through upgrades. The PR bonanza would be huge.

However, this won’t happen. Microsoft has now yielded to NIH (Not Invented Here) disease. They think that the $5 b a year that they squander on R&D will actually yield a real innovation — it won’t. Hey Ballmer: most of the smart people in the world of technology don’t work at Microsoft. Real innovation is going on right now in the trenches, as it always has. However, it is growing slower than it should because the air supply has been turned off.

Even as others in the tech industry feel the pain, Microsoft gets stronger and stronger. [Vinod Khosla: 8,000 out of the 10,000 tech cos. in the US need to die.] We can all talk about what Microsoft needs to do. It is a waste of time. But remember that every monopolist has only a limited time at the top.

The way to counter Microsoft is in the world’s next markets. These are markets which cannot afford to pay for Microsoft’s products, and Microsoft cannot afford to reduce their prices for these “negligible” markets. This is where the opportunities of tomorrow lie for innovative software companies. There is very little legacy, so one can re-think all the components for the desktop and the enterprise. Use the newest ideas (blogs, web services) and create low-cost software solutions which consumers and enterprises in the emerging markets can use.

The good think about targeting the bottom of the pyramid is that (a) there is zero competition (b) there is huge opportunity – in terms of users, at least as big as the existing computer markets of today – in excess of 500 million (c) at some point, the products will become good enough for the mainstream also in case one feels playing the Monopolist.

Tags: Microsoft

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