Friday, November 01, 2002

(from Kenneth, again)

Remember Ellen Feiss? Of course you do! Well, now she's back -- in pumpkin form! This is actually really cool.

On a more serious note, Microsoft engages in sleazy business practices in Namibia (in other news, dog bites man). I'll resist the temptation to turn this into Generic Anti-Microsoft Rant (especially since the article does an admirable job of that to begin with), and instead, since I'm in an economic mood, muse about the economic issues involved.

(Why did I suddenly start talking about economics so much? Good question.)

Anyway, to state the obvious, whether we like it or not, we're in the age of multinational corporations. However, most corporations are limited in their ability to expand across the globe by the limitations on their ability to produce their product (diminishing marginal returns, and all that). To pick an often-picked-on company, I would be extraordinarily surprised if Nike's business plan was "sell shoes to all 6 billion people in the world"; there simply aren't enough Indonesian workers to support such a strategy. So Nike contents itself with selling its shoes to rich Americans, and the Chinese market is filled by Chinese companies producing lower-quality products at a lower cost. Everyone is happy, or at least has an available product within their means (hopefully).

But software is an entirely different beast. It's essentially a zero-marginal-cost industry (to a first approximation -- and remember, kids, it's okay when I make approximations!), so Microsoft has every incentive to market its products to as many people as possible. Thus, I wouldn't be in the least surprised if Microsoft's business plan did contain something to the effect of "Our goal is to put Windows on every computer in the world"; in fact, all things considered, I'd be more surprised if it didn't. The result is that Microsoft will naturally act aggressively to expand its market in developing countries (see, in addition to this, the recent clashes in Peru, and the oft-repeated line that the motivation behind Palladium is to get the Chinese to pay for their software). Of course, given that only a small fraction of the population in Third World countries can afford a computer in the first place, the actual market for Microsoft products is going to be quite small. If that were all there were to the story, then the situation would more or less resolve itself like I described above -- people who could afford Microsoft software would have it, those who couldn't would have something else, and that would be that.

The problem is, of course, is that when Microsoft is around, "something else" tends not to exist. If Microsoft establishes itself as the de facto standard, and/or if it eliminates local competition, then an even larger portion of the population will find themselves on the wrong side of the digital divide. Is this really the kind of society we want to be perpetuating?

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