Software "Open Monopoly"

garoush writes "The following article is at C|Net.news Software "open monopoly". In it "Sun developers Petr Hrebejk and Tim Boudreau say the economics of open-source software will break Microsoft's operating system hammerlock and replace it with a what they describe as an 'open monopoly.'" I Personally have issues with such claims. With .NET, MS is positioning the company at "services" -- in effect MS is now gearing up to take on a new monopoly: "services" at the "consumer" level. If you agree, I don't see how "open monopoly" can break MS. After all, your average "Joe the consumer" doesn't know a thing about open source. " The submittor has an interesting point - but I think that even if John Q Public knows nothing about open source, if the services he uses are running open source, it doesn't matter.

Petr Hrebejk isn't an economist.

[symplegades]

Correct me if I'm wrong, but it's not clear at all that M$ is a natural monopoly. The term natural monopoly [investorwords.com] designates a market in which a single vendor leads to the most efficient outcome (which is precisely defined within the context of any given economic model... within the traditional "Marshallian cross" micro model the most efficient outcome might be the one which maximizes the sum of consumer and producer surplus).

IIRC, in the case of, say, a TelCo considered to be a natural monopoly, the old-school supporting arguments centered around the idea that it's inefficient to have a redundant network of phone lines. The same notion was applied to utility companies. It's not clear at all to me that M$'s product development (and software development in general) is an analogous process (in terms of high infrastructure costs) to connecting phone lines or distributing electric power. To me, M$ is more of an old-school monopoly a la Standard Oil, that uses its market power to drive out competitors, even when they have arguably superior products.

If, by "open monopoly," Hrebejk means "everyone around the globe using open-source software for most of their computing" then I hope he's right, although that situation wouldn't be a true monopoly unless one company (Sun? Red Hat?) ends up controlling most of the software market.

-Rene