Wednesday, April 20, 2011
Chapter 25: 354-357
When Microsoft executives discovered people were tinkering with the internet, they immediately set out to incorporate internet capability into their systems. The Netscape browser was compatible with any operating system, so one didn’t have to own an expensive Microsoft computer to surf the web. Then a new programming language, Java, was created which was also compatible with any operating system. These new innovations were a problem for Microsoft because it would mean anyone could write applications and that anyone could access the internet, thus breaking up Microsoft’s monopoly. Bill Gates, Microsoft’s founder, decided to make sure this didn’t happen. When Gates declared war on Netscape, Netscape’s stock dropped drastically. Gates then threatened Netscape’s customers as well as created his own internet browser, Internet Explorer. This “browser war,” the feud between Microsoft and Netscape, lasted two years. Microsoft then did the same thing with Java when it licensed the company then created a language that worked only on Microsoft software. “Embrace the application, extend its functionality, and extinguish the rival” became Microsoft’s new business plan.
Subscribe to:
Post Comments (Atom)
A for Jane.
ReplyDeleteSo, what does all this have to do with endogenous growth? Microsoft doesn't fit neatly into that framework, because it is a creator of ideas (with monopoly power) that doesn't make most of its money be embodying those ideas in technology, but by making them excludable.
Microsoft "licensed the company" is incorrect. Java is a language, not a company. Microsoft licensed a right to develop applications in Java that went beyond the standard publicly available version. It's not terribly different from any other group creating their own jargon or slang. Microsoft just made that jargon and slang profitable.