Every government prefers a free market for trading and distributing goods which means that the supply and demand of goods are monitored by the government. Although, monopolistic situation is difficult to create but Microsoft with its 90% market share is so massive that in certain cases it can act like a monopolistic organization (Lenard & Eisenach, 1999). We cannot say that Microsoft is a monopoly but its market share and very few competitors in the software industry depicts that Microsoft is the giant of this sector. A structure-conduct-performance model can be applied to evaluate certain factors of Microsoft which are discussed below:
Structure Microsoft holds a hefty amount of share in the market and Linux and Macintosh are their competitors. These two organizations are considered to be a viable replacement of Microsoft’s operating systems (Lenard & Eisenach, 1999). The market contains few players and to a certain extent Microsoft holds its monopoly in the market. The market share would decline in the near future because competitors of Microsoft are coming up with new and innovative products. The barriers to entry in this industry are high R&D cost and the need of innovative applications. Conduct
Bundling the web browser with the operating system, hostile take-over of yahoo, giving exclusive deals to manufactures to sell windows only can be treated as some of the ant-competitive policies of Microsoft. These policies of Microsoft are criticized by many governments but still Microsoft carries on to practice these policies. Performance Microsoft’s prices vary from segment to segment and its charges low prices to more elastic markets and high prices to more elastic markets (Lenard & Eisenach, 1999). Since the industry is not that competitive that is the reason why Microsoft engages in less R&D activities.
Conclusion The operating systems and the applications of the computer industry can be monopolized and the nature of technology plays an important role in framing up the prices. Government intervention is necessary in this industry because major players like Microsoft can monopolize the market. However, innovative methodologies can change the current practices that are the reason why government has to intervene in this issue.
References Lenard, T. & Eisenach, J. (1999). Competition, Innovation and the Microsoft Monopoly: Antitrust. Massachusetts: Springer. .