The Social Impact of Microsoft Once Again

Here's a comment http://delong.typepad.com/pdf/20070626-thoma-barro-microsoft.pdf on Robert Barro's claim that the social value contributed by Bill Gates is roughly equal to Microsoft's total revenue:

Bill Gates's Charitable Vistas - WSJ.com: In 2006, [Microsoft's] revenue was $44 billion, with earnings of $13 billion. This money was generated by creating something consumers value. Only Microsoft's competitors could believe that this much market value, revenue and earnings would have been created by delivering products that have little value to society. Suppose that a copy of a new version of Windows sells for $50 (and is typically charged as part of the price of a personal computer). Microsoft's revenue from Windows would then equal $50 multiplied by the number of copies consumers snap up. Microsoft's earnings are the revenue less production and development expenses. But that's not the social value. That comes from the increase in productivity created when businesses and households use the software. The social benefit equals the value of the extra product, less the total paid for the software. Almost by definition, the benefit has to be positive. Otherwise, why would consumers willingly pay for Windows? A conservative estimate, in a model where software serves as a new variety of productive input, is that the social benefit of Microsoft's software is at least the $44 billion Microsoft pulls in each year.... Mr. Gates is free to do what he wishes with his $90 billion. But I think he is kidding himself if he believes that the efforts of the Gates Foundation are likely to provide society anything like the past and future accomplishments of Microsoft. And, frankly, I would have preferred to get the $300 per person "Gates Grants."

Barro's defense of this claim is at http://economistsview.typepad.com/economistsview/2007/06/robert-barro-sk.html#comment-73987582.

I don't buy it. Barro's model doesn't address the major issues that have to be dealt with in assessing the social utility of Microsoft:

http://delong.typepad.com/sdj/2007/06/mark_thoma_is_i.html: Whether the net social value of Bill Gates is positive or negative depends on his impact in creating and shaping Microsoft: relative to its competitors and to its alternative paths of development, did he make it more of a lockin-breaking innovator or a death zone-creating predator? Did he do more to make Microsoft a company that takes advantage of economies of scale or more to make Microsoft a company that raises profit margins? I'm on the side that thinks that Microsoft has been a considerable net plus. But others I respect see it is a net minus...

And I don't think Barro uses his own model correctly. He gets to the conclusions that the ratio of the social value of Microsoft to its total revenue is (a) roughly one, (b) does not depend on how substitutable Microsoft's products are with those of other intellectual-property holders, and (c) depends primarily on the share of "idea factors" relative to "standard factors" in the economy's production function. These seem to be wrong: artifacts of an extra term Barro adds to the production function in order to get a balanced-growth path out of the model.

Proper use of Barro's model leads, I think, to the conclusions that:

• The ratio of the social value of Microsoft to its revenue could be very big--much more than one--or very small--much less than one--and there is certainly no reason to think that it is about one.
• The ratio will be large to the extent that Microsoft's goods are radically different from those of others, and small to the extent that Microsoft's goods have close substitutes made by others.
• As long as Microsoft's goods are not radically different from those of its competitors, the share of "ideas" in the economy's overall production function has relatively little to do with this ratio.

But, as I said, the big issues with Microsoft have to do with its effect on the pace of innovation. Was it a lockin-breaking innovator that provided a platform--shoulders on which others can stand? Or was it a death zone-creating predator that discouraged innovation and experimentation in broad market segments? My reading is that it was more of the first. But I am happy to be educated.

Comments

[Cranky Observer]

There were also about two dozen people involved in the earliest days of Microsoft, of whom Bill Gates was not necessarily the leader. But you never hear about them. Also note that Steve Ballmer has been running the company for the last 10 years during which the greatest cash horde has been accumulated.

Cranky

[Hal]

Because Microsoft was/is a monopoly its Windows software was written by people who thought they knew what consumers wanted and were in a position to force that on them. The version was changed somewhat every three to four years to make the existing version obsolete, thus allowing MS to charge for software all over again. This was justified by putting in ever more bells and whistles that Gates always claimed was "adding value". The problem was that what the MS nerds thought was cool was not necessarily what customers wanted, but customers could not vote by switching to a different software (Apple was no real competition) because of the monopoly. So the market didn't dictate the evolution of PS software; Gates did. And the result today is still, in my view, software overloaded with gimmicks and not simple and easy enough to use.

[james]

I have been an IT consultant for over thirty years (long before Microsoft). I read this and other econ blogs to learn more about economics. I am amazed at the crappy input and output from economic models and theories.

Microsoft has provided no special societal value. There were better, more stable and easier to use products on the market that the Microsoft monoply killed and is still smothering.

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eComStation - http://www.ecomstation.com
eComStation preloaded computers are available. I bought mine here:
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OpenOffice.org is preloaded too - You do not need to spend hundreds on MS Office)
For reliability, every business computer should be using ECC memory.

http://www.robweir.com/blog/2007/04/math-markup-marked-down.html
Microsoft has never had a single file standard. Some computer users are waking up.
Some Science Journals Rejecting Microsoft Office 2007 Format

[james]

Wouldn't there be a lot more technology innovation and economic flows from 50,000 millionaires than from ONE 50 billionaire. Bill Gates and the Microsoft monopoly suck a lot of oxygen out of the economy that would be feeding a lot of other people.

[Slocum]

"As long as Microsoft's goods are not radically different from those of its competitors, the share of "ideas" in the economy's overall production function has relatively little to do with this ratio."

Depends on what is meant by 'radically different'. It strikes me that great value that Microsoft provided was precisely in being aggressive enough to establish itself as the hegemonic platform.

It is certainly possible to clone the look, feel, and general functionality of Microsoft's software (see Ubuntu Linux or Open Office for example), so from that perspective Microsoft's offerings will never be 'radically different'.

But it is a great boon that the computer operating system market is not like the auto market with ten different companies having roughly 10% of the market (Imagine Windows, Linux, OS/2, Amiga OS, NextStep, GEM, Mac OS, BeOS, etc) all having survived and commanding roughly equal shares of the market. What a nightmare that would be for software developers and users alike.

[Gordon]

Been in IT over 25 years, used and programmed for dozens of OSes. MS had one genuine technical innovation (COM) which the largely blew when the VisualBasic people and the C++ people went in opposite directions with it. Otherwise every "new" thing in Windows was stolen, copied, bought or hired away. They allow tiny innovators at the fringes. If your idea looks good, they will try to buy it for almost nothing. If that doesn't work, they'll crush you with lawyers. That's the inside IT story.

Outside IT, perhaps their willingness to just go with an idea even if it is half-baked (most programmers will argue and apple polish for years) has led to more popularization. Also their willingness to throw programmers at problems (early in the Java fight, they actually had the better engine). But I'm not sure that has much to do with social contribution - more with selling boxes to people to play games on.

I go with death-zone.

[bigTom]

Another vote for death zone.

Not all people who are forced to pay for windows actually use it. My home DELL desktop came preloaded, but I have Suse Linux installed. DELL didn't give me a discount because I didn't want to use windows(;<

My kids run a machine with windows, because all they care about is games. Windows platforms take a very long time to bootup, and turn off -and you gotta babysit the turnoff proceedure, since you will probably get some stupid dialogue box about some broken process it won't kill for you. For this reason few windows users shut off their machines when they are not in use. We could probably shut down a dozen powerplants, if people didn't use M$, and were willing to actually turn off their machines.

[low-tech cyclist (formerly RT)]

Let's take a look at Microsoft's added value in 2007.

MS has a new OS, the damnable Vista, replacing XP, which was the first stable MS operating system.

Last year, you could get a low-end PC, pre-loaded with XP, for about $300. PC makers had to actually make a whole new souped-up PC, with dual-core processors, to be able to run the resource hog known as Vista. I haven't heard anyone go 'wow' over what Vista can do that XP couldn't, but that low-end computer pre-loaded with Vista costs $500.

If I could buy last year's computer with XP, I would, and save the $200. But that's not an option anymore unless I buy used, which I might do.

So Microsoft is making a bundle of money this year, by selling Vista to the PC manufacturers, or retailers, or whoever loads the OS onto the machine. But the value added to the end-user appears to be negative: slightly improved functionality at a substantially higher cost.

[Slocum]

"Been in IT over 25 years, used and programmed for dozens of OSes. MS had one genuine technical innovation."

I think you have to give them credit for Word & Excel as well. They really were the first with usable graphical Office apps (and the first with a set of such apps having a consistent interface).

There was also another big thing they got right -- something you need to be a techie to appreciate -- they designed Windows 2.0 for non protected mode machines but designed it well enough that it was possible to make the transition to protected mode with minimal changes to application software (Apple, by contrast, took forever to manage that -- developers had to muck around with memory handles until OSX came out). That is what made it possible for Microsoft to kiss off IBM and OS/2 and turn Windows 3.0 into a phenomenon. This gets you the flavor of what IBM screwed up and what MS got right:

http://www.wincustomize.com/articles.aspx?aid=81265&c=1

IBM tried to do things the 'right' way -- they rewrote the interface (and all the underlying programming APIs) -- regardless of how much extra time it took and how much extra hardware it took to run their more 'elegant' software. But Microsoft got Windows 3.0 out quickly and running on computers 'the rest of us' could afford. And for IBM, it was too late.

And the thing is, it is exactly the pragmatic rather than elegant approach that people hate Microsoft for -- but it's what made the PC industry.

[Dan Karreman]

Windows was always death zone. Office applications are more complex - word and excel were more accomplished than the competition around 1990, but they have been death zone for the last ten years (has anyone seen anything really helpful emerge since Office 1998?). The hardware has always been good but unexceptional, except for the xbox, which added nothing to PS2 except from bulk, noise and heat. Browsers, well, they bought Spyglass, threw money on it and gave it away for free. Predatory, no?

Microsoft were truly innovative in setting up business arrangements - in managing the death zone. It's still hard to buy a non-apple pc without paying the windows tax, and for a long time it was impossible.

[Barry]

Slocum:

"But it is a great boon that the computer operating system market is not like the auto market with ten different companies having roughly 10% of the market (Imagine Windows, Linux, OS/2, Amiga OS, NextStep, GEM, Mac OS, BeOS, etc) all having survived and commanding roughly equal shares of the market. What a nightmare that would be for software developers and users alike."

This would have probably led to something called 'standards', where many features could understand a common interface.

It is funny, though, to see a right-winger denouncing competition :)

[James Killus]

The reasoning that suggests that Microsoft had a "beneficial hegemony" effect on the market applies more forcefully to IBM, which could have easily crushed Microsoft except for various factors like the Consent Decree, which IBM followed, while Microsoft has always dealt with antitrust in bad faith. Had the philosophical, ideological, and legal climate not changed in the 1980s, Gates and company would have done jail time.

But IBM was hamstrung, so Microsoft had an opening. Add in such sharp business practices as directing Windows 3.1 customer service questions to Word Perfect, (thereby destroying customer service in the software industry), and targeting key members of competitor's development teams with "predatory hiring" (hiring competitor's engineers and managers soley to hinder of cripple their development efforts), and you have a perfect example of the why it is bad to create monopolies (via copyright and software patents) and then not regulate them in any way.

[Slocum]

"Barry: This would have probably led to something called 'standards', where many features could understand a common interface."

Before the PC revolution, there were many proprietary mainframe and mini computer vendors -- there were no standards or interoperability. Even early in the PC revolution, many vendors (TI, Heath/Zenith) sold PCs that were only quasi-IBM compatible. And none of the various marginal OS vendors I listed managed (or even attempted) to achieve interoperability between their systems -- each was on a mission to 'revolutionize' the operating system themselves. Even Linux distributions have problems mutual incompatibilities.

"Barry: It is funny, though, to see a right-winger denouncing competition :)"

Right winger? No. Denouncing competition? No. Merely pointing out that in rare cases consumers can benefit from the existence of a dominant player.

"Dan Karreman: Microsoft were truly innovative in setting up business arrangements - in managing the death zone. It's still hard to buy a non-apple pc without paying the windows tax, and for a long time it was impossible."

It's long been easy to build your own or buy one from a local shop. And Microsoft's innovation in setting up business arrangements is the same as the situation with Google. "Page Rank" was a nice idea and marginal improvement over the technology in the Altavista search engine, but not exactly revolutionary or worthy of a Nobel prize. But Google knew how to run the business while Altavista (who were first with a clean fast search engine) failed miserably.

"James Killus: But IBM was hamstrung, so Microsoft had an opening."

IBM was a big, size-bound corporation that didn't really believe in PCs for a long time (the PC division was prevented by other bigger, more established divisions from encroaching on their turf). Microsoft had no such compunctions about keeping PCs in their proper place and not harming IBMs profitable cash cows.

But IBM's major screwup was OS/2. I was working on software that ran on both Windows and OS/2 Presentation Manager at the time. It should have been a simple exercise, size OS/2 was supposed to be just the protected-mode version of Windows -- that was the promise. But the IBM engineers in charge of the joint program were arrogant (they were IBM after all) and couldn't help 'improving' everything to the point where it was a big, expensive pain in the butt to support both. Most companies that came out with OS/2 versions of their commercial Windows applications only did it once and then gave up.

[Robert Waldmann]

The comments in this thread are unusually excellent which is saying a lot. Brad has a relatively favorable view of microsoft. I suspect that is because he only uses macs.

I, being an economist have little to add to support my guess that Microsoft makes money almost exclusively by creating a death zone.

There is an economic critique of Brad's argument, which is clearly invalid, but should be addressed. If microsoftware and competing software are close substitutes, how can microsoft earn such immense profits ? Everyone but an economist acting as an economist knows the answer -- users know windows so competing OSs have to immitate the look and feel and applications are developed for windows so competitors have to imitate application interface. Thus the Linux movement has to constantly play catch up. That is, Windows is worth more because most people use it.

In other words, someone who had a currently valid patent on QWERTY would be very rich, even though it is a deliberately inefficient keyboard layout. (Qwerty hel wat about inglish spellling ?).

I go through this, because it is related to a serious critique of some comments above and much analysis of the social benefits or harm of microsoft which is based on a strange assumption that without microsoft there would be no hegemon. I think it is likely that one dominant OS was inevitable and that the owner of the rights to that OS would exploit them to create a death zone as microsoft has.

If something similar would have existed without windows (as it did already) it is also very likely that there would be a proprietary standard and socially costly efforts to exploit it to increase monopoly rents.

Before Windows 1 shipped (I'm old) there was a debate as to who would win Windows or OS/2. The position that both would survive was taken by no one. It doesn't make sense. I think a hegemon was inevitable and Microsoft's contribution is almost certainly close to zero (slightly negative I would guess but only slightly).

[rev]

bigTom makes a good point about Windows machines taking a long time to boot up and to shut down, and the connection to electricity consumption. I myself am guilty of leaving my Windows machine on overnight for precisely the reason he mentions.

[Thomas]

Has anyone seriously studied, almost as a kind of military analysis, how MSFT destroyed the competition?

Innovation is kind of a soft skill and tough to quantify. At the end of the day it is the company that "knife's the baby" that holds the triumphal procession.

Gates is a kind of Ceasar. The greeks will always complain.

[James Killus]

"Before the PC revolution, there were many proprietary mainframe and mini computer vendors -- there were no standards or interoperability."

Look up ASCII sometime. Or pull out any set of ANSI standards documents circa the 1970s.

"IBM was a big, size-bound corporation that didn't really believe in PCs for a long time (the PC division was prevented by other bigger, more established divisions from encroaching on their turf)."

You either hadn't been born yet or you weren't paying attention, were you? The PC killed the IBM Selectric division and IBM let it happen. More to the point, they tried like hell to control the PC market through the PC BIOS, but the Phoenix "clean room" killed that plan.

They could have squashed Microsoft like a bug if they could have used tactics that Microsoft has routinely used. That they did not was not because they "weren't paying attention." It was because they were legally constrained to refrain from doing so. There was also a Federal rule about having "multiple vendors" that created MS-DOS (as opposed to an IBM owned PC-DOS) in the first place. That federal rule has gone away since then.

[Anurag]

Even ignoring the social value of Microsoft, why should we believe that Bill Gates won't be able to make a comparable or greater impact through the Gates Foundation?

What would be the value of getting a malaria vaccine?

And why should we assume that Gates Foundation would be equally (not less or more) effective than other funding in these areas?

His whole argument is nonsense.

[Slocum]

"Before Windows 1 shipped (I'm old) there was a debate as to who would win Windows or OS/2. The position that both would survive was taken by no one. It doesn't make sense. I think a hegemon was inevitable and Microsoft's contribution is almost certainly close to zero (slightly negative I would guess but only slightly)."

Just to get the history right -- both Windows 1 and 2 shipped before OS/2 did, and the original expectation was that OS/2 (a MS/IBM joint project) would be the successor to Windows 2, not a competitor to it.

But the relationship soured and Microsoft figured out how to create Windows 3 -- which offered many of the advantages of OS/2 with minimal changes to the Windows APIs, much lighter hardware requirements, and an earlier release date. After than Microsoft launched the NT project as a replacement for the OS/2 technology (that it was still using in its network operating system called Lan Manager) -- and NT then became Windows 2000, then XP, and now Vista. But, unlike IBM, Microsoft made sure that it was easy to write software that ran under both its consumer line (Windows 3, Windows 95, 98 and Me) and its professional line (NT, 2000).

Microsoft's value in all of that was in being much nimbler than IBM, it got a product to market sooner, that cost consumers much less (computer hardware was still very expensive in 1990), and provided a consistent platform for developers that didn't require massive rewriting of existing Windows code (computer programmers were also very expensive in 1990 -- particularly the rare ones who understood how to write applications for graphical interfaces).

The other viable alternative to Microsoft was Apple. Apple was seeking not only to control the software but the hardware also (like the 1960s and 1970s mainframe vendors). But Apple's Mac and Lisa products were *very* much more expensive than PC boxes, so the great value Microsoft provided there was, ironically, to provide 'a computer for the rest of us'. About the only people I knew using Macs in the 80s and early 90s were people not spending their own money -- academics, for example. (And this has not changed very much -- the least expensive PC laptops sell for around $500 while the least expensive Mac laptops sell for about $1000, and lots of academics still spend department funds on expensive Macs).

By making its operating system run on standard hardware, Microsoft enabled the competition between vendors (HP, Dell, IBM, Compaq, Toshiba, Gateway, etc -- as well as all the component vendors) that has continually brought computer prices down (while keeping profit margins razor thin). It's quite true that the price of the operating system has not dropped similarly, but the Windows operating system is a relatively portion of the cost of a computer (about $50 for an OEM). And this 'Wintel' platform is the basis for both Linux computers and the Macintosh (which is now basically a standard PC to which that Apple adds a few proprietary bits a fancy case -- and their software, of course).

[jay]

I'd tend to vote for "death zone". But, if I'm wrong, and a natural monopoly in OSs does give huge social benefits, shouldn't it be regulated like other natural monopolies? We don't just let the electric company change voltages to sell us new appliances every three years (and do you doubt that they would if they could?).

[Anon]

IT person here. Vote for death zone.

There have been numerous books written noting how Microsoft has wiped out entire market segments - how there are any number of pieces of software which simply cannot be developed because it's clear they will threaten Microsoft. I am not aware of any books written which defend Microsoft's innovation (except for their "Freedom to Innovate" campaign, which was funded solely by Microsoft to combat anti-trust problems).

The open source browser Firefox is in fact a reaction to Microsoft's destruction of Netscape. Surely it's obvious that, however innovative Firefox has ended up being (very), it would have been better if Microsoft had not, in fact set the web browser world back five years by destroying Netscape and then halting development on IE?

Everything that you read about Web 2.0 right now would have happened five years sooner if not for Microsoft's actions. This area, which I'll describe as "interesting things you can do with the internet", had its development HALTED for five years by Microsoft. That's a big, big negative.

[Sam Penrose]

The previous comment WRT Microsoft's successful stifling of Web innovation has to be kept in context: Netscape explicitly wanted to dethrone MS and become the next hegemon. See Andreesen in Wired c. 1995.

I'm suprised no one has mentioned the truism that Linux was only possible b/c MS had created a de facto hardware standard to code to.

My personal belief is that the history of the personal computer is overdetermined/chaotic: many changes much less drastic than the absence of an MS hegemony would have led to things playing out very differently. To pick just one, in the late 1980's Apple had huge profit margins, amazing local networking software, and plenty of room to take risks. If a few execs had decided to build cheap LAN-centric Macs c. 1989, there is no way the OS/2 vs Windows 3 or early history of the web would have played out the same way -- if only because MS would have answered Apple.

(Also, the person who says PageRank is no big deal is mistaken. From 1995-1999 you basically couldn't find things unless you knew or could guess a domain name. Since PageRank, you basically can find things. PageRank stands just behind HTTP/HTML (and both behind TCP/IP, of course) as pivotal inventions making today's Internet possible.)

[Dobedo]

One way to get a sense of the cost of Microsoft's monopoly is to compute the difference between the cost of providing Mac support and training and the cost of providing Windows support and training.

My guess is that the difference is at least $50 a year. Multiply that $50 times the number of Windows copies sold and you have a really big number. Assume that most people keep their copy of Windows at least three years and you get an even bigger number.

[Slocum]

"James Killus: Look up ASCII sometime. Or pull out any set of ANSI standards documents circa the 1970s."

That's a trivial example -- and even then it wasn't standard. CDC (Control Data) mainframes (I programmed one in college) used a 60 bit 'word' and 6-bit 'byte') -- it couldn't use ASCII encoding because there weren't enough bits. But what mattered was that software was not interoperable across different vendors hardware or software, and there was no trend toward interoperability before the PC revolution.

"You either hadn't been born yet or you weren't paying attention, were you? The PC killed the IBM Selectric division and IBM let it happen."

With typewriters, they had no choice. But they definitely worried about the effect of the PC division on sales of their 'big iron' and tried to keep the PC from encroaching.

"More to the point, they tried like hell to control the PC market through the PC BIOS, but the Phoenix "clean room" killed that plan."

Yes, good point, the Phoenix BIOS was an important step in creating the common open platform. Compaq did it first, but they used it only in their own machines. Phoenix made it possible for other computer makers to offer clones without reverse-engineering the BIOS themselves (a very expensive proposition).

"Sam Penrose: Also, the person who says PageRank is no big deal is mistaken. From 1995-1999 you basically couldn't find things unless you knew or could guess a domain name."

No -- Google was definitely not the first search engine. In the years before Google, I mostly used AltaVista (and sometimes Excite). AltaVista was very good, but its parent company (DEC) had no clue what an enormous diamond mine they were sitting on and failed to take advantage. Google was actually a relative latecomer to the search market. 'Page Rank' was an improved way of ranking search results (based on links from other pages) -- but even that was probably less important to Google's success than having a simple, uncluttered page without images (or, initially, advertising).

"Hal: The version was changed somewhat every three to four years to make the existing version obsolete, thus allowing MS to charge for software all over again."

This is the oddest claim people make about Microsoft. Like any software company they release new versions (otherwise they'd die). But Microsoft spends an enormous amount of money and effort on backward compatibility, so that your old software will run on the new versions of Windows (I have a couple of 10-year-old applications originally written for Windows 95 that I still use often -- they work fine under XP and Vista).

Microsoft doesn't worry about compatibility out of a sense of charity, but out of a fear that if you had to buy all new software, you would refuse to upgrade. And even so, many people and businesses don't bother to upgrade -- at least not for many years, skipping versions in the process. Many businesses still run Windows 2000 PCs and servers and aren't in a hurry to upgrade to XP, let alone Vista.

[Barry]

Slocum: "Right winger? No. "

Do you really think that we're that stupid? That's what you do.

"Denouncing competition? No. Merely pointing out that in rare cases consumers can benefit from the existence of a dominant player. "

You are in fact denouncing competition here. Do you think that we can't read your writing?

[baileyman]

How about looking at this backwards?

Sure, Gates had one super good idea for sure, to get first to market with an OS and capture the network effects and copyright benefits.

Where is the next great idea? What else has he done other than milk the first one? Sure, brilliantly exploiting it by tying and extending into new areas. But any other positive new idea?

Buffett, on the other hand, Gate's buddy, continues to develop a string of new large investment ideas. None proprietary. i would think the "social benefit" Brad talks about should be attached to a string of such success, rather than riding the wave of one.

[Slocum]

Slocum: "Right winger? No. "

Do you really think that we're that stupid? That's what you do.
---

How many 'right wingers' favor gay marriage? Drug legalization? Strict church-state separation? How many are non-believers who think intelligent design is absurd? I could go on. I'd say 'Libertarian' except that an awful lot of card carrying Libertarians are nuts. So 'classical liberal' would be better.

-----
"Denouncing competition? No. Merely pointing out that in rare cases consumers can benefit from the existence of a dominant player. "
-----
In no way am I saying that competition is a bad thing in general or even in this specific case. Rather I am saying that there are rare cases where it is beneficial to consumers if competition *results* in a dominant player. But even in this case, continued competition is beneficial (it is a good that Apple OSX and various flavors of Linux exist and are still competing with Windows).

-----
You are in fact denouncing competition here. Do you think that we can't read your writing?
-----

Oh, I think you can *read* it, it just seems you can't understand it.

[Dan Karreman]

It's instructive that Linux - MS only real head to head competitor in the OS market (Apple is still a boutique player, although that might change)- is available for free. That's tough to undercut even for a predator. Maybe in a couple of years it will be possible to buy dirt cheap laptops powered by Linux/firefox/google apps which will be a good thing. Does anyone think that MS's role here is going to be anything other than to stall, prevent, and ultimately try to cripple this development? In this sense, MS net present social value must be considered to be negative.

[Slocum]

"Does anyone think that MS's role here is going to be anything other than to stall, prevent, and ultimately try to cripple this development?"

I think Microsoft is trying to figure out how to sell Windows very cheaply to customers in the developing world in machines like this:

http://www.classmatepc.com/index.html

Do you really think it would be a bad thing if consumers in the developing world had a choice of very low cost Linux and Windows computers?

I suspect, though, that the very low cost PCs that most in the developing world will buy will be basic standard laptops (already some new ones sell for under $400 -- how long until some are in the $200 range?) rather than special designs like the OLPC or Intel classmate.

[Sam Penrose]

Slocum: I *used* Altavista in those years, a lot, and my general experience was that I couldn't find things. With Google, I'm surprised when I can't find something.

[rev]

I second Sam Penrose. Back in the late 90s, I used AltaVista and it was pretty useless - page after page of irrelevant links. I started using Google in 1999 and never looked back; most of the time, you find what you're looking for in the first page returned. Nobody is claiming that Google invented the search engine. But PageRank was revolutionary.

[Maynard Handley]

"Only Microsoft's competitors could believe that this much market value, revenue and earnings would have been created by delivering products that have little value to society."

The drug dealers of the world can sleep guilt-free in their beds tonight. Apparently all it takes to deliver products that have value to society is that people are willing to pay for them. That's a relief.

[Alex Tolley]

IT person: Death Zone. Let me count the ways:

1. Licensing. Already mentioned by others but MS made deals to force manufacturers to pay for a Windows license on every machine, whether it had Windows or not. Hence the problems of getting the ~$40/machine rebates for other OS's like Linux.

2. Stealing. Especially by the mid 90s the spate of lawsuits from companies that were suing MS for outright theft should be indicative, It was well known inb the industry that MS would encourage companies to show their prducts for possible licensing, then make their own version of outright steal the technology. Stac and MS DoubleSpace for example.

3. Killing spaces. In the 90s MS just had to whisper that they were going to do something and competitors died. Pen centric computing for example just died when MS said they were going to add this to Windows.

4. Tricky APIs. MS would publish libraries but make the actuall APIs worse than the others that were secret for internal use. This made their own offerings integrate better and faster than competitors.

5. The current hinted at patent lawsuit against Linux. Plus it is widely believed that MS was behind SCOs stupid attempt to extract royalties on Linux. MS wanted to kill Linux and still is trying to do so.

Having said that, Apple an the Unix folks just shot their feet off. Apple was extremely restrictive about who could write software that would work on Macs, dictating Look and Feel and requiring payments to get access to APIs. Unix vendors were completely incompatible requiring all sorts of software switches and code patches to allow S/W to be compiled to each target machine. Then AT&T tried to make themselves the sole Unix vendor ( 1985?).

For software developers, worrying about what MS might do was a very real threat - they could destroy your business in the blink of an eye and use their corporate resources to make it next to impossible to do anything about it, even theft. Their "embrace and extend" policy has caused all sorts of mischief in standards, which even today in teh so-called web browser standards like CSS are implemented differently, usually the non-standard implementation is by MS (see the hoops web designers have to jump through to get close compatibility).

Once upon a time MS was a good company, much as Google is today (IMO). However, their take no prisoners, extremely ruthless tactics have truly made them a bad company, using the momentum of their high market share to determine how the business will evolve, often to the detriment of users. Does anyone not recall how MS changed the format of Word documents so frequently that the user was forced to upgrade, even unwillingly everytime they received a document in the latest, non-backwardly compatible format? Today, MS is still trying to use the same techniques, refusing to accept open standards in favor or their own "standards" to try to control the platform. The sooner web software undermines their near monopoly, the better AFAIC.

[Douglas Knight]

Here's evidence for the claim that Google's important innovation was quality, not quick load time: Yahoo replaced their existing search with Google. Eventually they recreated a comparable search.