Smart or Stupid Capitalism?

Dear Friends,

It seems to me that the way proprietary software is written is an example of stupid capitalism. This will be shown to be true if open source becomes the standard. (Which I think it will).

The main reason proprietary software is an example of stupid capitalism is that they only open certain file types. Usually only their own. Being unable to open files written by other software forces users to use more than one software package to open multiple file types. Word is an example.

While Word is a perfectly usable and user friendly program it only opens other Word formats. It cannot even open Works word processor files! As more people have the need to open different file types with their word processing software they will have to migrate from Word to another more adaptable software suite like Open Office.

By trying to force people to use Word exclusively Microsoft is driving people from it’s products. Some people will argue, ‘They are doing pretty well today.” to that I’ll just say this, “They said a very similar thing to Livy.”

No matter how big a corporation is… it can fall. If recent history teaches us nothing but this we will have learned something of value. Foolish practices will bring down a giant faster than any outside chipping away at market share. When a corporation collapses it is fast and sudden. (At least to outsiders). Leman Brothers for example.

So while I don’t see Microsoft or any other giant in the software industry collapsing soon they are spreading the seeds of their demise. They see this article as foolishness. They believe their business model is perfection. If only they can monopolize the market a little more… They will be the incarnation of Marx’s end of capitalism. Then will collapse, dragging down the world economies with them, just like the banking sector.

Too big to fail is something we should watch out for. Capitalism has at it’s heart that, the closer to perfect competition there is in markets, the more efficient the economies will be. The more monopolies the more the inefficiencies.

Because where a monopoly sometimes can produce a given product cheaper, due to scale of production, they always quickly become bloated. Paying too much to executives, lowering the quality of their products and charging too much for their products. (Vista). It is human nature. You or I are no different. Put in those circumstances we will act the same. The trick is to keep people from being in those circumstances.

But blunt hammered regulation isn’t the fix. Neither is trying to control every aspect of business through regulation. Government can be the biggest promoter of the eventuality by getting high speed internet to as many of the people as possible. (With tax incentives to companies, deregulation of that industry, etc…)This will allow the market to equalize. Free operating systems like Linux are not for everyone but deserve a larger market share. They will get it as more people are able to down load at high speed. Virus protection alone is reason enough.

If Microsoft starts using smart capitalism they will maybe have a less dominant role in the market but will stabilize their market share. Today they are dominant in every way except for safety, stability, privacy, and price. The quality issues are stupid. The price is a reflection of the monopoly status and is the equilibrium price. The virus issues are from Microsoft’s products being so widespread. A virus that infects a Windows machine will spread to more machines faster simply because of the lack of other operating systems out there. Like disease transmission in the human world. The less people that are immunized the faster the transmission rate. But as a greater percent of the population are immunized the slower the transmission rate and the easier it is to control an outbreak.

In the long term Microsoft cannot maintain it’s domination of the market. The question will be how will it come down? In a crash or easing down to a third or more of market share… Time will tell.

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