Originally Published: Tuesday, 15 February 2000 Author: Jon-Pal Mouzakis Gagnum
Published to: featured_articles/Featured Articles Page: 1/1 - [Printable]

Linux vs. Microsoft: A Competitive Edge?

Microsoft continues to enjoy supremacy in the operating system market. One would expect that Linux, being free, would by now have gained a vast majority of the market share that Microsoft has so carefully compiled. And yet this is not the case.

   Page 1 of 1  

Microsoft continues to enjoy supremacy in the operating system market. One would expect that Linux, being free, would by now have gained a vast majority of the market share that Microsoft has so carefully compiled. And yet this is not the case. Large firms and corporations continue to use Microsoft products, as does a large percentage of people not involved in "big business." Why is this happening? How can Microsoft retain its competitive edge when its products cost in the upward regions of $300 and Linux is free?

The answer itself is rather simple. People pay for a good according to the marginal utility they glean from the last unit of that good. In other words, when the marginal utility they derive from a certain product drops below a certain point, they will refuse to consume an extra unit of that good, and hence will not pay for it. Taking the converse of this statement, it is simple enough to see that when a consumer's marginal utility is zero (or as close as can get), that consumer does not pay for the good or product.

What this means is that consumers automatically consider goods that are "free" to be either useless or cheap in quality. The natural instinct is to shy away from these products and rely more heavily on expensive products. It is assumed that a product will be more expensive if it costs more to produce (i.e. if more care has been taken into its production) and hence if it is of a better quality. This is the first natural deterrent that keeps Linux from overpowering the market.

Secondly, we say that Linux is free, but this is not to say that the software that is run on Linux and is needed to take full advantage of the operating system, is as well. That is, although we don't pay for Linux, we pay for the applications that we use on it in the same way that someone using Windows would have to pay to buy any application. Indeed, when you get right down to it, is Linux really that much of a "better deal" than what Microsoft offers?

Technically a corporation needs to buy a different Windows OS for every computer its employers and executives will use. More often than not, this does not happen. Instead, the company buys one Windows CD, and then proceeds to install the OS using the same CD on all its other workstations. The cost of the original CD becomes meaningless in comparison to the cost the corporation would have paid had it actually bought a thousand units of the product (Windows) as opposed to the one. In this day and age, where CD burners are just around the corner with your nearest friend, even the $300 cost becomes nonexistent. Pay $1.50 for a blank CD and have your friend across the street copy his own Windows CD. For all intents and purposes, Windows is free.

So the question is then raised: how does Bill Gates make his money? How indeed, does Microsoft support itself? Once again the answer is simple. Cheap upgrades every so often for the actual operating system encourage consumers to spend more money on a supposedly "new and improved" OS. But still, this is not enough to support the huge corporation. Since most people will buy copies and make copies of the copies, where does Microsoft get its revenue from? By making most commonly used programs solely Windows compatible, Microsoft makes sure it will sell its new Windows applications. Since these are the most "user friendly" in the vast majority of cases, computer users will opt for these programs in this OS environment. Invariably, Microsoft will keep coming back.

Always on the lookout in Silicon Valley for small, upstart -- albeit ingenious -- firms, Microsoft needs only buy whichever small firm comes up with the newest innovation. It certainly is big enough to do this, and indeed, why not accept huge money grants from large corporations in return for a brilliant new program/application?

Ultimately, Microsoft comes out with more and more applications that people will invariably purchase. Windows is so firmly entrenched in most people's lives that they are unwilling to change. At a time when the computer was reserved for the elite who bothered to understand the myriad of commands for DOS, Microsoft made the computer accessible to all.

And therein lies the main reason for Microsoft's continued success. For the individual user, it is a simple matter -- especially if the user is computer literate -- to change from Windows to Linux if he or she so pleases. However, this is far from the truth when dealing with large corporations. To alter the OS, a large firm would have to not only change the OS in thousands of machines, but in addition would have to expend huge amounts of funds to train and re-train employees and executives. In order to avoid structural unemployment brought on by this innovation (used to describe Linux for simplicity's sake), each and every firm would have to re-structure, and the change would not be welcome.

Employees would go from the widely known "user friendly" Windows environment to the complex yet more versatile Linux OS. The opportunity cost of transferring to Linux would be foregoing using Windows and the myriad of applications that Microsoft has provided. For the consumer, is this cost worth paying?

Jon-Pal currently works for Linux.com in the multimedia section as Senior Editor. He can mostly be found either delving deep into a fantasy book, working on his own upcoming novel or editing articles. He is Co-Editor-in-Chief of his school's newspaper (Blue & Gold) where he hones his editing skills, though creative writing holds stronger interest for him. He is 17 years old and hopefully next year he'll be continuing his voluntary work for Linux.com at Harvard University (side by side with Marius at MIT!).

   Page 1 of 1