Operating system Essay Example for Free

Operating system Essay As an American multinational corporation, Microsoft is regarded as the largest software maker measured by revenue in the software market. However, because Microsoft play an apparently dominate role in the market, more and more people argue that Microsoft have made damage on consumers’ profit through some marketing methods. As we know, Microsoft has been accused of being a monopolist by the antitrust department in US and Europe for almost over ten years. â€Å"Microsoft possesses (and for several years has possessed) monopoly power in the market for personal computer operating systems† the Justice Department declared blatantly in 1988. This paper will examine and analysis the reason why Microsoft is a monopoly, welfare implications as a monopoly and whether the government regulations is successful. Microsoft Corporation products a wide range of products relate to computing. If Microsoft products are divided into five parts, they are Windows, Office, Business solutions, Developers IT pros and some other products like Windows phones, Internet explorer. From now, Microsoft plays a dominate role both in PC operating system and office suite system. According to the annual report of Microsoft in 2012, â€Å"over 50% of enterprise desktops PCs run Windows 7 and Office is now installed on over 1 billion PCs† is reported. This large company own approximately 94,000 employees and the revenue in 2012 by June 30 is 73,723 million. Why the Microsoft cooperation is a monopoly? â€Å"Microsoft monopoly is self evident if Justice Department’s lawyers are to be believed†, as demonstrated by McKenzie Richard B and Shughart II William F (1998). As the largest software company, produces products which is popular with people, there is no doubt that Microsoft is a significant enemy to other companies who produce the similar products. Even though there are more and more companies can become strong competitor like Apple Mac and Linux which are superior to Windows system in some areas ,the percentage they make up can not be compared with Microsoft, Microsoft still play a dominate role in the market. A monopolist is defined as a monopoly occurs when the output of an entire industry is produced and sold by a single firm. (Microeconomics, Christopher T. S. Regan Richard G. Lipsey p218). As we know, Bill Gates has made his Windows operating system become almost the only access to Internet. Moreover, Microsoft was being accused of three specific charges about Microsoft’s illegal behaviors by Justice Department on May 5. The first one is the agreements contract draw up by Microsoft. For example, Microsoft force consumers use their other products when they are using windows systems like when users use windows system; they are required to install Internet Explorer. The second one is the exclusionary contracts which mean that Microsoft try to prevent other products from competitors and potential competitors used and developed by other companies. The last one is that those exclusionary contracts attribute to curbing the competitor’s right of supporting their products and services. Those accuses of Microsoft reflect Microsoft is using its ubiquitous marketing power to squash their competitors and break the market balance. As a monopolist, it controls price of products. Sales can increased only if price is reduced, and price can be increased only if sales are reduced. For quantity of outputs, it is determined by marginal cost and marginal revenue. When marginal cost equals marginal revenue and the price is larger than marginal cost, the profit of Microsoft is maximizing. (Regan Christopher, 1982, Microeconomics-12th edition) If the good and service were delivered in a perfectly competitive market, consumer surplus will increase and producer surplus will decrease. A perfectly competitive industry produces a level of output that the price equals marginal cost; while a monopolist produces a lower level of output and price exceed marginal cost. What’s more, each firm in perfectly competitive market has a horizontal demand curve and the supply curve is the horizontal sum of many marginal cost revenues. the price in a competitive is smaller than in a monopoly because the demand curve is below the marginal revenue curve. Consequently, consumer surplus increase and producer surplus decrease. If the government regulates Microsoft effetely, the prices of Microsoft products will decrease. As we can see from the graph, when prices decrease, quantities increase, consumer surplus increase, producer surplus decrease, deadweight loss decrease. Thus, economic welfare increases. Since the government makes some measures to curb the development of monopolists, monopolists’ marketing power may more or less is influenced. For instance, after the most famous monopoly company-John D. Rockefeller’s standard Oil Trust, the company was broken up in the 19th. Similarily, the Justice Department continually sue monopolists or near monopolists like ATT and IBM, including Microsoft. After Microsoft was accused by European antitrust institution in 2004, the normal Microsoft market was being disturbed. Microsoft had to separate windows media player from windows system when sell their products. Even though the antitrust accuse has influences on the marketing of Microsoft, the revenue of Microsoft is not influenced by the charges after 2011. According to the annual report of 2004 and 2005, the revenue change from $759 in 2004 to $803 in 2005. The statistic prove that the power of Microsoft can never be ignored in computer market. However, the antitrust can not be said it does not influence Microsoft. After being accused, Microsoft regards the possible break up of the company as a serious threat. At the same time, Apple becomes more and more popular in computer marketing as a tremendous competitor. â€Å"Bring an antitrust suit against Microsoft. A government suit would have an immediate, positive effect on other software companies by causing Microsoft to become more cautious and self-controlling just as IBM did in the 1970s† ,suggested by Goetz, Martin A in Jun 19,1995. The government should continue exerting pressure on Microsoft and let Microsoft adjust itself. Furthermore, the government should also require Microsoft operating its market with separate sections to decrease its marketing power. For example, Microsoft should operate its Network Service Division as a separate section rather operating with other products and continue monitoring weather Microsoft force consumers install other products like media player and Internet Explore when they use Microsoft system. Lastly, the software market is changeable compared with other markets. The technique is changing every day; it is difficult for a company dominating the whole market for a long term. Microsoft can not guarantee their products can always be popular with consumers. The government should strengthen the force on Microsoft market and let Microsoft self-regulating. References Microsoft annual report of 2012: http://view. officeapps. live. com/op/view. aspx? src=http://www. microsoft. com/investor/reports/ar12/docs/2012_Annual_Report. docx McKenzie Richard B Shughart II William F (1998), Is Microsoft a monopolist? http://web. ebscohost. com/ehost/detail?vid=13hid=13sid=cb822f92-5712-487e-91af-94eea12c3fb3%40sessionmgr11bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=aphAN=1190614 Regan Christopher (1982), Microeconomics-12th edition. HarperCollins Publishers P218, P222 Microsoft annual report of 2004 and 2005 http://www. microsoft. com/investor/reports/ar05/staticversion/10k_dl_dow. html http://www. microsoft. com/investor/reports/ar04/nonflash/10k_dl_main. html Goetz, Martin A (Jun 19, 1995), Is Microsoft out of control? The government has to stop Microsoft now http://search. proquest. com/docview/216031454? accountid=13908.