Well, it has been a while. I'm really about done for the day, but thought before I call it a night, I'd jot a few things down.
How to restore competition in the world of software. Today there are a couple of impediments to competition. The first is the Microsoft monopoly. It's really not the fact that windows runs on 90+% of the pc's that's the problem, the problem is with 1) compatibility concerns, and 2) excessive monopoloy profits.
Let's take these one at a time.
With an established monopoly, people get used to the idea that you can send a document to anyone and they can open it. They don't think twice about "Can Mable open a word document". They just fire it off. They also don't think about the fact that there's only one company in the world that can create a document in that format. This is true in both the business and consumer realm. People are reluctant to change because they would have to battle incompatible file formats. Now, if you take a look at Microsoft's financials, you would see an incredible profit level (as a percent of revenue). See anyone else around with that kind of performance? About 50% of that profit comes from the MS Office suite. Ahhhh. No one wants to risk compatibility issues, so they consistently fork over $400 bucks to upgrade the office products (can't stay with old versions because then you would be incompatible).
But let me ask you a question. What feature or group of features have been added to any of the office products since Office 97 that could even possible come close to justifying $250 (let alone $250 for office 2000, $250 for office xp and soon $250 for office 2003)? Let alone $400 to purchase it new. But the question remains, what features could possibly be worth that kind of money? People are paying out of fear of being incompatible, not because they are becoming so much more productive. So MS has this incredible cash generator that is a result of their monopoly on the office suite - not really for any value being delivered to the market place. Or said differently, they aren't really earning it.
This leads directly into the second issue. Excessive profits leads to distorted investments and unfair competition. So, Microsoft is now sitting on all this cash and they have to do something with it (this year, investors finally insisted that they start returning some of that in the form of dividends - why do companies pay dividents, well generally speaking it is because they don't have any investment options for the money that are better than what the shareholders can do with it by investing in some other company).
With the cash they keep, MS invests in things like MSN to take on AOL. Nevermind that MSN can't seem to make money, but they are putting a squeeze on AOL. But wait Isn't that good? Isn't that competition? Nope. It sure isn't. One company (AOL) has to make money to stay in the game, the other company doesn't. MS can keep at it until they force AOL out. Then what happens? MS moves on to something else they can tackle and MSN becomes a very poor service (like IE is a very poor browser) and we all lose. And it's not just MSN. It's Windows Media Player, taking on Real Networks. It's MS developing a competing file format to mp3.... WMA. What in the world do we need with another compressed music file format for? Well, if MS owns that format then they have a greater ability to lock you into their applications and platform, thus perpetuating the monopoly.
So, how do we get out of this mess. The answer as I said last time is more straightforward than you might think. It could easily start with the US Government. Now before you get too excited, let me say that I'm a bit of a libertarian when it comes to politics, but this is a place where Government intervention could be extremely useful. If the US Government required that all electronic documents exchanged with them were in a publicly documented or open format (with some control on the rate of change) this would start off a powerful series of events. Either MS would have to open it's format - allowing other vendors to produce products that could faithfully read / write to the same format - giving you and me a wonderful range of choice for features, usability and price combinations; or MS would have to adopt a public standard, meaning their products would need to read / write to this open format, with the same results. With a little competition, I think you would see the price of MS Office fall to well below $100. And it would get better, just as new competing products being introduced to the market would be better. Do I mean they would have more features? Certainly not. What percent of the features do you really think you use in Word? Or Excel? But you might find a very nice product with a feature set closer to what you use, that is more productive, simply because it's less complex. Oh, and it probably costs less than $50.
With this chink in the armor of the monopoly, and a choking off of excessive monopoly profits, MS would have to compete more evenly on other fronts. They wouldn't have the same resources to go after things like MSN, WMA, or even trying to attack the server market like they are. And with an appetite whetted for choice, people may very well branch out and try different operating systems. Because, afterall, those operating systems would be able to produce documents (and by documents, I mean, word processor, spreadsheet, presentation formats primarily) in the same open formats that can be done on a windows computer. And you know what, with a broader variety of Operating Systems in the world, things like viruses become much less interesting (or problematic). Let's say there are 3 dominant OS's, each with roughly 1/3 of the market. In that situation, a virus can't bring the world to it's knees. Only a third of it. And don't forget, OS's like linux are not susceptible in the same way as Windows is. I think we'd see a lot less of that type of activity. It just wouldn't have the same thrill any more.
Well, I think that's enough for tonight. If you are wondering what Christmas is all about, let me suggest you watch A Charlie Brown Christmas. It will do your heart some good. And that Linus kid is pretty sharp. Pay attention to him.