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Post of the Day
November 11, 1999

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Rule Breaker - Strategies

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Subject:  Say It Ain't So, Dave!!
Author:  dewyn

Yikes!! I'm about to disagree publicly with A Gardner!! (Not that I think they'll strike me down or anything--they encourage this sort of thing--but I'm surprised to find such a wide gap in belief here.)

Obviously I'm referring to David's Rule Breaker portfolio report today, particularly in regards to Microsoft. I think David is dead wrong. I think that flows from his pre-existing criteria of what certain things mean and what is acceptable rather than an analysis of what's happened to Microsoft.

First, as per his definition of "monopoly," I'm not sure anything would ever be a monopoly under that scenario (other than some governmental functions, perhaps.) But David offers his definition and challenges to think about which definition is more useful. It seems to me that a company with 90% market share acts much like (if not identical to) a company with 100% market share. In that case, I don't see where the advantage comes from in his definition; it's a distinction without a difference.

"...competitors have not been able to break Microsoft's lock on market share, nor is it the judge's opinion that such an event will occur..."

As for the current competitors and possible competitors, the key element in that case is that in the relevant market for the past several years, the competitors have not been able to break Microsoft's lock on market share, nor is it the judge's opinion that such an event will occur in the foreseeable future. Keep in mind that at that stage in the finding, that only establishes that MS has monopoly power, not whether it deserves it or obtained it illegally. (That comes later and concludes that the lock wasn't broken because of at least illicit actions by Microsoft.)

The "serving your customers perfectly" is, I submit, a bit of eloquent nonsense. I find the implication that Microsoft has done so highly questionable at best, and I suggest an alternative is that one can be the subtlest, biggest bully around. As for the inherent badness or goodness of monopolies, I think David is making that decision independent of this case and then bringing that perspective to bear on the current proceedings.

He says why he does so--he believes in free markets and the power of the people. Noble sentiments, and I mostly agree--except let's not pretend that free markets and the power of the people have some terribly embarrassing sides to them. Advocates of a pure free market (or a purer one) have to admit that they can't punish someone for cheating who's good enough to get away with it in sheer market terms. In other words, in an ends-driven free market, any means are justified so long as they are effective. Oh, you might have some moral qualms, but you have no power to stop them (defining as effective anti-boycott tactics.) As for the power of the people, the prototypical democracy is the Athenian one that condemned to death their wisest man in Socrates. The caveats about the dangers of the will of the people have been around in writing for twenty-five hundred years.

"...the Gardners laud the very business practices and approach to software design and marketing that bug me so much."

Finally, it is not surprising that a co-author of a Rule Maker/Breaker stratagem should not find Microsoft's tactics problematic. "To the victor go the spoils," or "If you're going to make an omelet...." From what I've read, the Gardners laud the very business practices and approach to software design and marketing that bug me so much. Difference in opinion there. But while I appreciate David's defense of the consumer, too many people simply don't know enough about computers to appreciate when they're getting the short end of the stick. That's because nobody taught about computers until recently, and plenty of people are scared of them or simply don't have enough background to appreciate them properly.

That will change as time goes by, but it's still touching and somewhat scary to see what childlike joy and comprehension incredibly intelligent people have towards the silly machines. I'll never forget how thrilled my philosophy professor (who's one of the smartest people and best teachers I've ever known) was when I designed a simple web page for him. It bugs me when that kind of newly awakened experience is exploited by those who claim no "harm" has been done. Microsoft has never been the best at creating that kind of magical experience; they have been the best at making money from it, which is why I think they're so rigorously defended here at the Fool.