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Microsoft has been pouring money onto everything until they monopolize it. It worked really well and annihilated a lot of competitors by the way. I remember th

Microsoft has been pouring money onto everything until they monopolize it. It worked really well and annihilated a lot of competitors by the way. I remember the times Microsoft will literally buy you to develop for the xBox or DirectX. I was there and then I saw the people that got bought to say that they felt "trapped" and could not get out from MS tech. But as new companies with big pockets got into the game, first Google, then the new Apple and then Facebook, the last one with so much money and not really knowing what to do with it, the game did not worked as well as before. The Microsoft Zune did not work out, Life, Bing and now Lumia are not working out as expected, even after pouring billions from their desktop and Office monopoly.

javert 14y ago
A nice concrete example of the principle that companies cannot manipulate the market in the long run.
- commandar 14y ago
  Well, two points here. First, Microsoft has had to play pretty carefully in the past decade to make sure that they don't draw any more antitrust ire. The other thing would be that they don't have to manipulate the market forever, just long enough to lock out competition. A perfect example of this in the tech world would be Intel. They did everything they could to keep AMD locked out of vendors like Dell for years, even when AMD had a superior product. Fast forward a few years, and not only is Intel still the dominate player in the market, but their lead in process technology makes it extremely difficult if not impossible for anyone else to compete. For example, Ivy Bridge has a slightly higher transistor count than AMD's Bulldozer, but has a die roughly half the size of the AMD part.[1] That means that even if AMD was producing a part that performs competitively with Intel, they're going to have difficulty competing with them on price since Intel can crank out more dies per wafer. Obviously it's entirely speculative whether AMD would have been able to capitalize on increased market share and keep up with Intel long term but Intel doesn't really need to manipulate the market like they used to anymore since they've managed to put themselves in such a comfortably entrenched position. [1] - http://www.anandtech.com/show/5771/the-intel-ivy-bridge-core-i7-3770k-review/3 http://www.anandtech.com/show/5771/the-intel-ivy-bridge-core...
  - javert 14y ago
    I feel like your example of this is actaully a perfect counterexample. If Intel really could manipulate the market successfully, AMD would not exist at all, instead of just having slightly lower profit margins but otherwise similar products, as you describe. And also, there wouldn't be ARM, which seems to be taking more and more marketshare from Intel. Intel couldn't "lock them out." And by the way, I think the antitrust action against Microsoft accidentally helped them maintain marketshare. If they had been allowed to continue integrating IE into Windows at the expense of much better browsers, that would have been a boon to Apple and Linux. IE isn't such a huge kludge/security problem now, but it used to be a serious competitive disadvantage. (This is just a hokey theory only tangentially related to the discussion, though.)
    - commandar 14y ago
      >If Intel really could manipulate the market successfully, AMD would not exist at all, instead of just having slightly lower profit margins but otherwise similar products, as you describe. AMD has been less than financially healthy for years. They've spun off Spansion and GlobalFoundries in the past few years trying to keep head above water. The point is that Intel was successful in keeping AMD from being able to expand its market share when AMD had a better product and the two were much closer to parity in terms of manufacturing process than they are today. As a result, AMD couldn't afford to reinvest in manufacturing and design, and Intel was able to widen the gap between them. AMD is still afloat, but they're nowhere near the threat to Intel that they were circa 2000-2005. >And also, there wouldn't be ARM, which seems to be taking more and more marketshare from Intel. Intel couldn't "lock them out." ARM was in a completely different market segment that Intel didn't really view as a competitor. As things shift toward mobile, Intel is starting to address that segment, and I think that the process advantage they hold could end up being an even bigger deal there since overall package size and power consumption is such a major factor in mobile. Even if your design is equivalent or slightly better than Intel's from a performance per transistor standpoint, Intel can still win out by being able to churn out more chips than you can at the same cost. >IE isn't such a huge kludge/security problem now, but it used to be a serious competitive disadvantage. (This is just a hokey theory only tangentially related to the discussion, though.) Microsoft's bread and butter is the enterprise and IE is still a huge competitive advantage for them there. We're tied hugely to Windows at my workplace almost entirely because of IE.
- wpietri 14y ago
  Or an example of seeing what you want to see. Microsoft still has an effective desktop OS monopoly. Last I bought a computer, I still had to pay a Windows tax. So their long-run market manipulation seems to be alive and well. It's true that they haven't been able to dominate new markets effectively. But that says more about the volatility of technology and Microsoft's fear of another Department of Justice beat-down than it does about any principle of economics. The Internet was a once-a-century disruption. (One that could well have been throttled in its cradle had AT&T not been broken up by government intervention.) Counting on lightning strikes like that, rather than robust regulatory support of competition, strikes me more as a religious outlook than a practical one.
  - powertower 14y ago
    > Last I bought a computer, I still had to pay a Windows tax. Chances are you actually got a discount thanks to MS. And I don't mean a discount on the OS. Places like Dell make money mostly on the more expensive hardware, upgrades, and support. Below this (at the sub-1k level), you're getting a PC at marginal cost (and sometimes a loss), that gets monetized by Dell via desktop real-estate (all the crapware). The Windows OS costs Dell about $40.
caycep 14y ago
i'm just getting to that chapter about Standard Oil and its competitors in The Prize...
pm90 14y ago
>The Microsoft Zune did not work out, Life, Bing and now Lumia are not working out as expected I wonder if this spells the end of Nokia as well? That would be really very sad!
- ditoa 14y ago
  Why would it be sad to say goodbye to Nokia? Companies come and go and all of Nokia's problems today are of their own making. Sure they made some nice phones 6+ years ago but they could have easily of competed with Apple, hell Google managed to do it without even having a damn phone they just made the Android platform and worked with other companies to make the devices. Nokia should have embraced Android from day zero, if they had they would most likely be the number one Android phone supplier instead of Samsung.
  - rryan 14y ago
    Well, I'll miss Qt. Or at least the corporate muscle that used to fund it.
    - duaneb 14y ago
      Did nokia absorb troll tech outright or are they an owning company?
    - chris_wot 14y ago
      Qt will remain. Nokia don't want much to do with it now. That project might be better off without Nokia!
  - wkaluss 14y ago
    Well, Google was better prepared to do it since their main source of income is not product sales but advertising. They can give Android away in order to lure eyeballs to the ads they serve. To do the same Nokia should have changed their whole strategy, focus and expertise in less than 5 years, simply impossible for a company that size. Also worth noting, Google bought Android. It was not "complete" at time of acquisition but it wasn't a "lets begin from scratch" kind of project. The problem with Nokia and Android is that Samsung will always, in every single case, have cheaper and more powerful devices. Maybe Nokia could've keep themselves in the game with a lot of marketing and a bit of luck, but eventually, down the road, Samsung would take over. On top of that add that Google is getting in the hardware game and arguably the best Android devices will come from them. Even for Samsung the Android strategy might prove to be a bad idea in a couple of years.
ChrisNorstrom 14y ago
Your post just reminded me that a strategy will not work forever. Competitors and the market adjust around it to restore balance. I guess the same goes with companies as it does with nature, evolve or die.
- politician 14y ago
  Counter-examples aplenty.. Ma Bell begets today's AT&T/Verizon duopoly. Standard Oil begets 7 of the world's largest companies after Apple.
  - ChrisNorstrom 14y ago
    Give it time. This too shall pass.
    - vtry 14y ago
      Yup, Standard Oil is coming back and so is Mother Bell.
      - saryant 14y ago
        Nah, Standard Oil isn't coming back. There are so many logistical nightmares and legal problems with merging two major oil firms that they won't want to repeat the process they went through ten years ago, nor will smaller firms be willing to buy the parts the DoJ forces the big guys to spin off. Just look at how Valero screwed itself by purchasing a good chunk of Exxon's California assets. I don't think we'll see the domestic players merging but rather an increase in international joint ventures that effectively constitute a merger. Petrobras and Shell, TNK-BP and so forth.
      - ChrisNorstrom 14y ago
        So you think 300 years from now Ma Bell is still going to be around? Had I said my statement "This too shall pass" & "No strategy works forever" back in the 90s you guys would have said "Look at Microsoft, it's growing and growing". Again, no strategy works forever, they work for varying lengths of time.
Uchikoma 14y ago
I loved it when Microsoft tried to buy Academia. We were in Cambridge and in the evening the bar keeper in one of the student buildings where we slept used to say: "Drink the most expensive stuff, Microsoft is paying for everything." Didn't help though, I didn't work on MS technologies.

javert 14y ago

A nice concrete example of the principle that companies cannot manipulate the market in the long run.

commandar 14y ago
Well, two points here. First, Microsoft has had to play pretty carefully in the past decade to make sure that they don't draw any more antitrust ire. The other thing would be that they don't have to manipulate the market forever, just long enough to lock out competition. A perfect example of this in the tech world would be Intel. They did everything they could to keep AMD locked out of vendors like Dell for years, even when AMD had a superior product. Fast forward a few years, and not only is Intel still the dominate player in the market, but their lead in process technology makes it extremely difficult if not impossible for anyone else to compete. For example, Ivy Bridge has a slightly higher transistor count than AMD's Bulldozer, but has a die roughly half the size of the AMD part.[1] That means that even if AMD was producing a part that performs competitively with Intel, they're going to have difficulty competing with them on price since Intel can crank out more dies per wafer. Obviously it's entirely speculative whether AMD would have been able to capitalize on increased market share and keep up with Intel long term but Intel doesn't really need to manipulate the market like they used to anymore since they've managed to put themselves in such a comfortably entrenched position. [1] - http://www.anandtech.com/show/5771/the-intel-ivy-bridge-core-i7-3770k-review/3 http://www.anandtech.com/show/5771/the-intel-ivy-bridge-core...
- javert 14y ago
  I feel like your example of this is actaully a perfect counterexample. If Intel really could manipulate the market successfully, AMD would not exist at all, instead of just having slightly lower profit margins but otherwise similar products, as you describe. And also, there wouldn't be ARM, which seems to be taking more and more marketshare from Intel. Intel couldn't "lock them out." And by the way, I think the antitrust action against Microsoft accidentally helped them maintain marketshare. If they had been allowed to continue integrating IE into Windows at the expense of much better browsers, that would have been a boon to Apple and Linux. IE isn't such a huge kludge/security problem now, but it used to be a serious competitive disadvantage. (This is just a hokey theory only tangentially related to the discussion, though.)
  - commandar 14y ago
    >If Intel really could manipulate the market successfully, AMD would not exist at all, instead of just having slightly lower profit margins but otherwise similar products, as you describe. AMD has been less than financially healthy for years. They've spun off Spansion and GlobalFoundries in the past few years trying to keep head above water. The point is that Intel was successful in keeping AMD from being able to expand its market share when AMD had a better product and the two were much closer to parity in terms of manufacturing process than they are today. As a result, AMD couldn't afford to reinvest in manufacturing and design, and Intel was able to widen the gap between them. AMD is still afloat, but they're nowhere near the threat to Intel that they were circa 2000-2005. >And also, there wouldn't be ARM, which seems to be taking more and more marketshare from Intel. Intel couldn't "lock them out." ARM was in a completely different market segment that Intel didn't really view as a competitor. As things shift toward mobile, Intel is starting to address that segment, and I think that the process advantage they hold could end up being an even bigger deal there since overall package size and power consumption is such a major factor in mobile. Even if your design is equivalent or slightly better than Intel's from a performance per transistor standpoint, Intel can still win out by being able to churn out more chips than you can at the same cost. >IE isn't such a huge kludge/security problem now, but it used to be a serious competitive disadvantage. (This is just a hokey theory only tangentially related to the discussion, though.) Microsoft's bread and butter is the enterprise and IE is still a huge competitive advantage for them there. We're tied hugely to Windows at my workplace almost entirely because of IE.
wpietri 14y ago
Or an example of seeing what you want to see. Microsoft still has an effective desktop OS monopoly. Last I bought a computer, I still had to pay a Windows tax. So their long-run market manipulation seems to be alive and well. It's true that they haven't been able to dominate new markets effectively. But that says more about the volatility of technology and Microsoft's fear of another Department of Justice beat-down than it does about any principle of economics. The Internet was a once-a-century disruption. (One that could well have been throttled in its cradle had AT&T not been broken up by government intervention.) Counting on lightning strikes like that, rather than robust regulatory support of competition, strikes me more as a religious outlook than a practical one.
- powertower 14y ago
  > Last I bought a computer, I still had to pay a Windows tax. Chances are you actually got a discount thanks to MS. And I don't mean a discount on the OS. Places like Dell make money mostly on the more expensive hardware, upgrades, and support. Below this (at the sub-1k level), you're getting a PC at marginal cost (and sometimes a loss), that gets monetized by Dell via desktop real-estate (all the crapware). The Windows OS costs Dell about $40.

caycep 14y ago

i'm just getting to that chapter about Standard Oil and its competitors in The Prize...

pm90 14y ago

>The Microsoft Zune did not work out, Life, Bing and now Lumia are not working out as expected I wonder if this spells the end of Nokia as well? That would be really very sad!

ditoa 14y ago
Why would it be sad to say goodbye to Nokia? Companies come and go and all of Nokia's problems today are of their own making. Sure they made some nice phones 6+ years ago but they could have easily of competed with Apple, hell Google managed to do it without even having a damn phone they just made the Android platform and worked with other companies to make the devices. Nokia should have embraced Android from day zero, if they had they would most likely be the number one Android phone supplier instead of Samsung.
- rryan 14y ago
  Well, I'll miss Qt. Or at least the corporate muscle that used to fund it.
  - duaneb 14y ago
    Did nokia absorb troll tech outright or are they an owning company?
  - chris_wot 14y ago
    Qt will remain. Nokia don't want much to do with it now. That project might be better off without Nokia!
- wkaluss 14y ago
  Well, Google was better prepared to do it since their main source of income is not product sales but advertising. They can give Android away in order to lure eyeballs to the ads they serve. To do the same Nokia should have changed their whole strategy, focus and expertise in less than 5 years, simply impossible for a company that size. Also worth noting, Google bought Android. It was not "complete" at time of acquisition but it wasn't a "lets begin from scratch" kind of project. The problem with Nokia and Android is that Samsung will always, in every single case, have cheaper and more powerful devices. Maybe Nokia could've keep themselves in the game with a lot of marketing and a bit of luck, but eventually, down the road, Samsung would take over. On top of that add that Google is getting in the hardware game and arguably the best Android devices will come from them. Even for Samsung the Android strategy might prove to be a bad idea in a couple of years.

ChrisNorstrom 14y ago

Your post just reminded me that a strategy will not work forever. Competitors and the market adjust around it to restore balance. I guess the same goes with companies as it does with nature, evolve or die.

politician 14y ago
Counter-examples aplenty.. Ma Bell begets today's AT&T/Verizon duopoly. Standard Oil begets 7 of the world's largest companies after Apple.
- ChrisNorstrom 14y ago
  Give it time. This too shall pass.
  - vtry 14y ago
    Yup, Standard Oil is coming back and so is Mother Bell.
    - saryant 14y ago
      Nah, Standard Oil isn't coming back. There are so many logistical nightmares and legal problems with merging two major oil firms that they won't want to repeat the process they went through ten years ago, nor will smaller firms be willing to buy the parts the DoJ forces the big guys to spin off. Just look at how Valero screwed itself by purchasing a good chunk of Exxon's California assets. I don't think we'll see the domestic players merging but rather an increase in international joint ventures that effectively constitute a merger. Petrobras and Shell, TNK-BP and so forth.
    - ChrisNorstrom 14y ago
      So you think 300 years from now Ma Bell is still going to be around? Had I said my statement "This too shall pass" & "No strategy works forever" back in the 90s you guys would have said "Look at Microsoft, it's growing and growing". Again, no strategy works forever, they work for varying lengths of time.

Uchikoma 14y ago

I loved it when Microsoft tried to buy Academia. We were in Cambridge and in the evening the bar keeper in one of the student buildings where we slept used to say: "Drink the most expensive stuff, Microsoft is paying for everything." Didn't help though, I didn't work on MS technologies.