Why Mac Users Should Love Microsoft

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Why Mac Users Should Love Microsoft

By: John A. Baden, Ph.D.
Posted on January 12, 2000 FREE Insights Topics:

My wife and I got new computers for Christmas, hers a tangerine, mine a blueberry iMac. Our only real decisions involved color. Thanks to Microsoft, we are sure to buy Macs-even though we're not fond of their maker, Apple Computer, Inc. What explains this irony?

First, unlike tractors, trucks, and chainsaws, I really don't like computers. They are simply wonderfully powerful, ever more necessary tools. (I would prefer them to be diesel powered; if so, I might better understand them.)

However, we are academics types who must write and communicate. And we live on a ranch where TV reception is horrid. PBS isn't even available. The web is one substitute link to the outside world.

Seeking the most friendly, technically forgiving option, we've used Macs since 1984. I'm a big fan of their products. However, I dislike Apple Computer. Here's why.

Apple is an arrogant, narcissistic company. Fortunately for those who prefer Macs, Microsoft generated competitive forces and Apple changed its monopolistic behavior.

The term monopoly comes from Greek words meaning "only seller". There are two important reasons why nearly every company would like to be a monopolist. First, as the sole seller, the company can charge a higher price. Second, a monopolist can enjoy a quiet life, one without the threat and push of competition.

A monopolist anticipates wealth and leisure. In Apple's case that meant 50% profit margins and developing only products they considered fun and cool. However, as history shows, monopolies don't last unless they enjoy governmental protection.

In the real world substitutes undercut monopoly positions. For much communication, e-mail, phone calls, Fed Ex, UPS, and the US Postal Service are close substitutes. The word "monopoly" is extremely ambiguous, depending on how tightly or loosely we define the item being sold.

This bring us back to our new iMacs and why Microsoft, a software developer, not a computer manufacturer, caused them to be far better and less costly.

Microsoft charges low prices and sells huge amounts of software. It has always been an aggressive, scrambling competitor who makes its operating system available to many computer manufacturers. This benefits both the company and the public. Once software is written, the cost of an additional unit is minimal. Anything over this trivial cost is profit.

There is another advantage to a common operating system (OS). As the number of customers using an OS increases, file exchange among OS users becomes easier. And when developers of software or web designers share a common standard, they are far more productive.

Apple took the opposite approach. Back in the mid 1980s, our Mac SEs cost nearly $4,000. Apple had a monopoly on Macs, but there were substitutes. The IBM clones running the Microsoft DOS system made the Macs a horribly expensive choice.

Technophobic users such as I choked at the price but paid for the simplicity and elegance of the Mac OS. Corporate users were price sensitive. In the business world, only graphic intensive work remained with Macs. Apple intended the Lisa, the predecessor to the Mac, for the business market. At $10,000 per machine, thousands ended up in landfills. Apple's pricing policy handed the business market to those machines running Microsoft's DOS and later Windows.

To avoid competition, Apple refused to license its operating system to other computer makers. When it finally did, the Mac clones cut into Apple's revenue by making less expensive, faster machines. Apple soon pulled the licenses.

Apple in its arrogance acted as though it was a monopolist. It was so self infatuated that it issued a de facto ultimatum: buy our machine, buy our operating system. Microsoft, in contrast was far more resilient and open to change. Unlike Apple, Microsoft cultivated thousands of others who manufactured, distributed, and designed computers and applications.

The result is a continued downward cascade of prices while quality and features improve dramatically. Competition effected not only computers running Microsoft OS but also Apple's products. Thanks to Microsoft, we have the advantages of the Mac, but now the low prices of the IBM clones. The market process worked to our advantage.

Federal judge Richard Posner is a leader in the movement to bring economic analysis into the legal arena. Since he has been assigned mediator in the conflict between the Department of Justice and Microsoft, a misguided assault on Microsoft seems unlikely. Given Apple's history, Mac users should be the first to cheer.

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