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Winners, Losers, & Microsoft: Competition and Antitrust in High Technology
Liebowitz (economics, U. of Texas-Dallas) and Margolis (economics, North Carolina State U.) investigate whether the build-a-better-mousetrap style of competition has been replaced with path-dependence, which can lock in inferior products and lock out innovative newcomers. They argue that competitive advantage in high technology is short-lived, and that the best way to promote competition and innovation is to trust free-market entrepreneurs rather than take antitrust action. Annotation c. Book News, Inc., Portland, OR (booknews.com)
- GenresEconomics
Hardcover
First published September 1, 1999
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Displaying 1 - 3 of 3 reviews
October 2, 2017
Good defence of markets and competition
This book is a very good academic defence of market efficiency and an apologia of Microsoft's 90s success. I like the former a lot (4 stars), but I didn't care much for the Microsoft part (3 stars). It's a bit sycophantic, but I can see why some people felt the need to defend Microsoft from unfair and ignorant allegations.
First, Liebowitz & Margolis focus on supposed "market failures" in high tech, like lock-in, tipping or network effects, which, according to popular myth allowed inferior tech products to win over superior products. L&M discuss QWERTY-keyboards beating Dvorak-keyboards and VHS video recorders beating BetaMax video recorders as case studies. L&M show convincingly that VHS & QWERTY won on merit. L&M remind us that high tech needs to be not just good, but also cheap, user friendly, easy, and reliable. For example, image quality matters to customers watching videos, but not as much as tape length does. Customers want to tape movies and betamax videos were at a disadvantage here to VHS.
I felt a bit annoyed reading about L&M’s VHS/Beta discussion, because my MBA my profs kept telling me how VHS won because of low prices and/or allowing porn. Literally, half of my business courses used the VHS story to illustrate their models and theories, while *none* of these courses ever checked if their explanations jived with customer reviews… If they had done, they would have said something quite different: good products outcompete their competition.
Second, L&M also show very convincingly that Microsoft succeeded because DOS, Windows, Excel, Word and Explorer were simply much, much better products than whatever the competition managed to put on the market, whether it was Lotus 1-2-3, WordPerfect or Netscape. Both computer magazines and customer reviews rated Microsoft products higher than the alternatives. Strikingly, whenever Microsoft entered a market consumer product prices went down sharply!
It’s pretty weird to accuse Microsoft of abusing their monopoly power while increasing customer experiences AND lowering prices. Monopolists tend to do the opposite: high prices for low value since they have little incentive to do better... The book seems a bit dated today, stuff like VHS is a quaint memory of yesteryear like cassette decks. And with the rise of Facebook, Amazon, Google and tech unicorns, Microsoft doesn't seem like the giant it once was. Recent history actually proves L&M’s point that Microsoft never was a market manipulating monopolist to begin with, and, like all market dominant powers, Microsoft turned out to be much weaker than anticipated. Microsoft turned out to be very vulnerable during the rise of the internet and open source development (Linux, Android, etc.)
Finally, I’d love to read more from L&M, but then focused on more recent high-tech developments. For example, what’s their take on Google & Facebook’s privacy policies; will they need a new business model? And I’d love to know whether they think bitcoin will outcompete all of its competitors, be it gold, dollars, ethereum, bitcoin cash or banks. L&M offer meat for a very underserved segment of economic analysis: economics of computing age. I recommend this book for those with similar appetite.
This book is a very good academic defence of market efficiency and an apologia of Microsoft's 90s success. I like the former a lot (4 stars), but I didn't care much for the Microsoft part (3 stars). It's a bit sycophantic, but I can see why some people felt the need to defend Microsoft from unfair and ignorant allegations.
First, Liebowitz & Margolis focus on supposed "market failures" in high tech, like lock-in, tipping or network effects, which, according to popular myth allowed inferior tech products to win over superior products. L&M discuss QWERTY-keyboards beating Dvorak-keyboards and VHS video recorders beating BetaMax video recorders as case studies. L&M show convincingly that VHS & QWERTY won on merit. L&M remind us that high tech needs to be not just good, but also cheap, user friendly, easy, and reliable. For example, image quality matters to customers watching videos, but not as much as tape length does. Customers want to tape movies and betamax videos were at a disadvantage here to VHS.
I felt a bit annoyed reading about L&M’s VHS/Beta discussion, because my MBA my profs kept telling me how VHS won because of low prices and/or allowing porn. Literally, half of my business courses used the VHS story to illustrate their models and theories, while *none* of these courses ever checked if their explanations jived with customer reviews… If they had done, they would have said something quite different: good products outcompete their competition.
Second, L&M also show very convincingly that Microsoft succeeded because DOS, Windows, Excel, Word and Explorer were simply much, much better products than whatever the competition managed to put on the market, whether it was Lotus 1-2-3, WordPerfect or Netscape. Both computer magazines and customer reviews rated Microsoft products higher than the alternatives. Strikingly, whenever Microsoft entered a market consumer product prices went down sharply!
It’s pretty weird to accuse Microsoft of abusing their monopoly power while increasing customer experiences AND lowering prices. Monopolists tend to do the opposite: high prices for low value since they have little incentive to do better... The book seems a bit dated today, stuff like VHS is a quaint memory of yesteryear like cassette decks. And with the rise of Facebook, Amazon, Google and tech unicorns, Microsoft doesn't seem like the giant it once was. Recent history actually proves L&M’s point that Microsoft never was a market manipulating monopolist to begin with, and, like all market dominant powers, Microsoft turned out to be much weaker than anticipated. Microsoft turned out to be very vulnerable during the rise of the internet and open source development (Linux, Android, etc.)
Finally, I’d love to read more from L&M, but then focused on more recent high-tech developments. For example, what’s their take on Google & Facebook’s privacy policies; will they need a new business model? And I’d love to know whether they think bitcoin will outcompete all of its competitors, be it gold, dollars, ethereum, bitcoin cash or banks. L&M offer meat for a very underserved segment of economic analysis: economics of computing age. I recommend this book for those with similar appetite.
February 19, 2012
This is a pretty darn interesting read, written in a time where people were convinced Microsoft was going to take over the world. Guess not. Worked very well in my senior seminar.
June 13, 2012
Good examples and illustrations for understanding the importance networks in organisational economics. Otherwise, a bit dry.
Displaying 1 - 3 of 3 reviews