Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance

By David I. Rosenbaum | Go to book overview

9
MICROSOFT

Rochelle Ruffer and Don E. Waldman


INTRODUCTION

In July 1975, Bill Gates and Paul Allen started a company, known as Micro-Soft (the hyphen was later removed). The market for personal computers was in its infancy but Gates and Allen believed personal computers would play a great role in the future. This ability to forecast the future has been a continuing theme in Microsoft's growth. There were many key moments in Microsoft's history when Bill Gates anticipated the future and took the path towards innovation and success. Only time will tell whether Microsoft will remain a dominant firm, but certainly if the first twenty years are any indication, Microsoft will be a dominant player in the operating systems and software markets and many newly emerging markets for some time to come.

This chapter begins with a brief introduction to Bill Gates's life and how his early experience with computers helped to make him a successful entrepreneur. We then examine the issues behind Microsoft's rise to power, and in particular the emergence of the MS-DOS and Windows operating systems. We will see that a vision for the future, luck, hard work, the use of various marketing and business strategies, and network externalities all played a role in Microsoft's rise to power. Microsoft's maintenance of power is then analyzed. Microsoft's continued success can be attributed to its aggressive management style and various strategic behaviors in the announcement, licensing, and pricing of products. Finally, the outcome of the government antitrust action against Microsoft is considered and assessed.

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Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Illustrations vii
  • 1 - Introduction 1
  • Notes 9
  • 2 - Dominance in the Oil Industry: Standard Oil from 1865 to 1911 11
  • Notes 33
  • 3 - Tobacco: Predation and Persistent Market Power 39
  • Notes 51
  • 4 - Alcoa and the U.S. Aluminum Industry 55
  • Notes 66
  • 5 - Dow Chemical and the Magnesium Industry 69
  • Notes 86
  • 6 - Eastman Kodak in the Photographic Film Industry: Picture Imperfect? 89
  • Notes 107
  • 7 - The Rise and Fall of Ford and General Motors in the U.S. Automobile Industry: A Tale Twice Told 109
  • Notes 126
  • 8 - The Rise and Fall of IBM 131
  • Notes 150
  • 9 - Microsoft 153
  • Notes 172
  • 10 - Blue Cross: Health Insurance 175
  • Notes 190
  • 11 - AT&T's Grand Design for Dominance in the Global Information Age 195
  • Notes 224
  • 12 - Conclusion 227
  • Notes 254
  • Bibliography 257
  • Index 267
  • About the Author 273
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