A Losing Proposition

Joe Gregorio

Microsoft, trying to squeeze more revenue from operating system sales, looks to leverage it's monopoly in the browser market to force people to upgrade to the latest version of Windows.

Dealing with groups that refuse to upgrade to the latest and greatest OS from Redmond are a perennial source of irritation for Microsoft. They even have a name for them: Implementation Blockers. Now that was back when Windows 2000 was being rolled out, so I don't know if the nomenclature has changed since then.

Here, straight from Microsoft, is some great insight into their browser/os strategy:

Host: Brian (Microsoft)
when / will there be the next version of IE?

A: As part of the OS, IE will continue to evolve, but there will be no future standalone installations. IE6 SP1 is the final standalone installation.

Host: Brian (Microsoft)
Why is this? the anti-trust? (no further standalone)

A: Although this is off topic, I will answer briefly: Legacy OSes have reached their zenith with the addition of IE 6 SP1. Further improvements to IE will require enhancements to the underlying OS.

Microsoft aimed to dominate the browser market, and using it's monopoly of the desktop PC, has come pretty close. Now that it has that large market share it's going to try to use it to some advantage, and from this interchange it looks like they're trying to coerce their customers into upgrading their operating systems. Now if you are a long time customer of Microsoft, like I am, then this is just laughable. There's a reason that I'm still running Windows 98 on my primary desktop at home, upgrading a Microsoft operating system is a royal pain, and it costs money. Please, I used to run the IS department at my last job and we once 'upgraded' 80 PCs from Windows 95 to Windows 98. We had a 50% success rate. The other 50% of the machines ended up failing miserably in the middle of the upgrade and had to have their harddrives wiped and Windows 98 installed from scratch.

And let's not forget that upgrading the operating system costs money, versus downloading a new free browser off the web. If Microsoft thinks customers, given the choice of upgrading their operating system or changing to a different browser, are going to choose to pay money to upgrade their operating system, then someone needs to check what they're drinking in Redmond.

The impact also stretches to beyond Microsoft. If you are one of those banks that has an "IE only" web presence, you have to ask yourself how many people are going to upgrade their operating systems versus moving their money to a new bank. I know people that have switched banks for much less.

The fundamental problem here is that Microsoft does have a monopoly in the browser market, but it is not the same type of monopoly that they have with the PC. When you control the operating system you control the interoperability at the executable level. That is, if you wanted to compete with Microsofts monopoly on the desktop operating system, the only effective way to do that would be to ship your own operating system that was binary compatible, that is, programs made for Windows could run on your operating system, and programs written for your operating system could run on Windows. Executable compatibility is a high hurdle and there are plenty of ways to use IP to erect more hurdles. The internet doesn't require executable interoperability, it only requires document interoperability. The document you produce on your machine can be read on my machine, even if we are using different operating systems, different connections to the internet, different browsers, etc. The only thing that matters is the document. And as long as that document is in a royalty-free open standard, no one can get a leveragable monopoly.

This does make me wonder if there is an economics term for this, a monopoly that can't be leveraged. Or is it not a monopoly if it can't be exploited?

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