A few days ago I linked to a post by Mitchell Baker about the European Commission and Microsoft. Since then, there have been a lot of comments there as well as a few other blog posts and articles and their associated comments.
I've read a good number of silly suggestions, some personal insults, some obvious straw men, a bit of hand-wringing, and even a couple of good ideas, but I haven't seen a lot of serious discussion of the problem itself. I think that's a necessary pre-requisite to any discussion about possible remedies and I'm hoping this post will help start that discussion by asking you all to look at one specific piece of the problem.
How precisely has tying advantaged Microsoft.
(As I said above, I think it's only after answering this that we can reasonably discuss whether or not there is some way to level the playing field.)
To get at any kind of answer for this, I think one has to first understand something about the PC OEM channel.
The PC OEM channel (companies like HP, Dell, Lenovo, Toshiba, Sony, etc.) isn't very well understood by most people and that includes me. But it does seem like it's possible to make some progress discussing it even with a somewhat simplified frame.
OEMs build personal computers by assembling a lot of different pieces. PC have hard drives, motherboards, processors, memory, optical drives, etc. Today, there is relatively healthy competition in the market for each of those components. There's competition among manufacturers of memory, processors, drives, etc, and not just across the different OEMs, but often within a single OEM. HP, for example, will regularly ship computers containing processors from both major manufacturers, Intel and AMD. And when you look across the different PC OEMs, the combinations and permutations of those components increase even more dramatically.
The fierce competition between Intel and AMD processors, between Seagate and Western Digital hard drives, between Crucial, Corsair and PNY memory makers (just a few of many examples) is one of the reasons that we're all enjoying much more powerful computers at considerably less cost today than we were a decade ago.
There is one component of the PC computer, however, that doesn't face competition in the PC OEM channel and that's the operating system. Right now, Microsoft Windows is the overwhelming dominant OS for each of HP, Dell, Lenovo, Toshiba, Sony, etc. It is this overwhelming dominance of the PC operating system business that led both the United States and the European Commission to determine that Microsoft does indeed have a monopoly and so must abide by a special set of laws and regulations that apply to companies with monopolies.
One of those regulations, in really simple terms, is that they cannot use that monopoly to advantage themselves in other markets.
So how precisely does Microsoft's monopoly in PC operating systems advantage Internet Explorer?
To me, it looks rather simple. Because the PC OEMS are already distributing Windows (and paying Microsoft for that privilege) anything that Microsoft adds to Windows gets "free" distribution and placement through the OEMs. It's this free distribution and placement by the PC OEMs that other browser vendors just cannot compete with. There is no equivalent alternative channel to reach customers and there is no serious incentive, except perhaps cash, for the PC OEMs to offer an alternative to Microsoft's bundled programs.
(As an aside, the only other Web browser besides Firefox to gain significant share is Apple's Safari browser which enjoys a similar distribution and placement advantage on the Mac OS X operating system as I.E. does on Windows.)
Some PC OEMs are willing to ship additional software beyond what they get from the Microsoft Windows bundle. Unfortunately that's cost prohibitive for even the wealthiest browser vendors because the OEMs charge ridiculous amounts for that distribution and simply don't offer the kind of desktop placement that Microsoft gets with Internet Explorer.
So we've got a tilted, twisted, screwed up playing field where Microsoft, thanks to its operating system monopoly, gets free distribution and optimal placement while all of the other browser vendors have to pay exorbitantly for distribution and even then cannot get optimal placement.
This is a pretty serious problem. And it's a problem that doesn't seem to offer any obvious fixes.
There are of course many other factors that play a role in the Web browser market, but all other factors aside, the PC OEM channel is no doubt the biggest and most entrenched advantage for Microsoft and a very serious disadvantage for Mozilla, Opera, Google, or anyone else trying to compete with Microsoft's Internet Explorer.
So, if we just look at this specific piece of the system, Microsoft's PC OEM cost of distribution advantage, is there anything that can be done?
Are there any changes that could either remove Microsoft's advantage, or remediate other vendors' disadvantage, or some combination of the two?
What say you all?
For this post (there may be others later) I'm only interested in comments that address this question or offer further insight into the PC OEM channel. Please do not go off topic. Thanks.
