Here’s a guest post by an Open Source Programmer Con Zymaris
You may not be aware of this, but you’re probably reading this editorial using a product sourced from perhaps the world’s largest monopoly market. A monopoly more profound and more ingrained than any run by a former government telco or a gilded-age robber-baron. The market? Personal computer platforms. The product? Microsoft’s Windows.
The monopoly market arose out of the forced bundling of Windows with almost every PC shipped and the continuing lack of an open and unencumbered market for competitors to Windows. This enforced bundling, achieved through a series of behind-the-scenes deals, later shown to be illegal by the US Federal Trade Commission, ensured that PC hardware makers could only viably ship Microsoft operating systems.
The resultant market regime we presently inhabit, is one where over 50% of the price many consumers pay for a new laptop or desktop computer, is for software bundled with that computer – software which the consumer has no options but to pay. And because of Microsoft’s market dominance and well documented scare tactics towards ‘partners’, consumers have no alternative computer hardware brands to turn to if one wont unbundle Windows from their PC range; not Compaq/HP, not Dell or Lenovo/IBM, not Toshiba, Fujitsu, NEC or Sony, not Acer or ASUS. All of them force you to acquire a bundled copy of Microsoft’s operating system platform.
If nothing else seems to convince you that the personal computer market needs a competition boost, then all you need to consider is that Microsoft has had a 90-95% market share position for perhaps 20 years. What other large, hugely lucrative and business-critical markets do you know where one incumbent has that size of market share for that length of time? It is the surest indication that the free market for desktop platforms has been waylaid and needs assistance. It’s time to set the wheels in motion to stop this egregious aberration.
Numerous industry observers have long-called for the adoption of policies by competition regulators which will spur competition in the personal computer platform market. Now aligned with this group is an influential free-market think-tank, which has called on the European Union (EU) to make good on its promise to foster greater competition in personal computer platforms, in the aftermath of the recent court ruling which yet again found Microsoft abusing its monopoly power to diminish market forces. The think-tank, the Globalisation Institute, has called upon the EU to demand that PC vendors stop the practice of automatically bundling Microsoft operating systems with personal computers.
In doing so, the Globalisation Institute draws a distinction between open, free markets, which exist for computer hardware and demonstrate phenomenal innovation and price performance, and laissez-faire markets, dominated by the corporate equivalent of Somali warlords – specifically, operating system platforms.
A few years ago, I ran through a couple of scenarios which showed that the reduced competition in the PC platform software space cost consumers worldwide over $10 billion per year. More recently, a court-case in Europe showed that an incredible 52% of the price of a new Acer laptop was constituted by the forced-bundling of Microsoft and other Windows platform software. Like it or not, consumers must pay this hidden price whenever they buy a new PC.
Market regulators and national competition agencies must now act to ensure this market is opened to real competition. It is in fact possible to provide for both consumers who demand Windows and also ensure a fair and open marketplace for competing platforms. This can be done by requiring that all hardware manufacturers ship personal computers with no pre-installed operating system.
Instead, PC makers should include within the packaging of the computer, a media copy of the then current Microsoft Windows recovery (or installation-imaging) CD/DVD. They should also include a copy of one of the main consumer-oriented Linux distributions, commensurate with their target market for the PC in question. Linux distributions are generally freely-redistributable, carrying no associated costs.
Upon unpacking the computer, the consumer must then make a choice of either loading Windows from the supplied recovery media, then using the brochure included with the recovery media to contact Microsoft and through some form of financial transaction, acquire a licence to use Windows, or elect to load the Linux operating system from the CD/DVD included, and use it as their computer operating system.
Both the Windows recovery and the Linux installation media must be shipped with the new personal computer with a minimum of additional expense to the consumer. Specifically, it is of critical importance that the consumer receives the cost reduction advantages which flow from the unbundling of the Windows licence fee.
Under such a distribution mechanism, it is obviously in Microsoft’s absolute best interest to ensure that the loading of Windows onto the new PC is as fast and painless as possible. It otherwise risks more users defecting to Linux.
As the Windows recovery media will also need a legitimate Windows licence obtained from Microsoft in order to actually function, along with the now-standard Microsoft Product Activation codes, there should be no additional piracy risks for Microsoft in allowing free re-distribution of the Windows recover media.
Introducing a Windows unbundling process and ensuring an open and free market for PC operating systems, will result in far reaching benefits for Windows users as well as the obvious benefits for the Linux industry. A cursory review of the history of the computer industry shows that consumers benefit most when there is strong competition in each market segment. Windows users will benefit because:
Microsoft will become less complacent, due to increased Linux competition.
Microsoft will become more responsive to customer needs, due to increased Linux competition.
Microsoft will build better software, to compete with Linux.
Microsoft will build more secure software, to compete with Linux.
Microsoft will have to price its software to compete with Linux, meaning lower prices for Windows users.
It should be an obvious truism to anyone, that the only way to keep any vendor honest is for there to be another vendor breathing down their necks, vying for their customers. To Microsoft, Linux is that other vendor, and by letting it compete on a fair and level playing field, Windows users will benefit substantially.
There are, I’m sure, numerous arguments that opponents to this proposal will raise. I prepared a response to each of these arguments in an earlier form of this essay, available here. If there are any objections I may have missed, then I’m happy to consider them.
Regardless of the final mechanism used, regulators worldwide must now take steps to increase the real competition within the consumer PC platform market. Microsoft has not become the biggest monopoly in history through competing on a level playing field, and only governments and national competition regulators now have the power to redress this gross imbalance.
Microsoft’s immense wealth, growing political influence and its willingness to use underhand (and illegal) tactics to achieve its aims should be of concern to anyone who believes in open societies and open markets. If governments don’t act now, then perhaps even they wont have the means to act later.