Microsoft and Opensource

Microsoft is a name that can spark varying reactions from people. For some, the name means monopoly, unfair trade practices, unethical business policies, or "market bully." For others, Microsoft means innovation, opportunist, success, and capitalism personified. For third group the name is simply seen as a large part of their life like a car, phone, or some other quasi-necessity. There is, however, a different view of Microsoft from a group of people called population ecologists. Population ecologists are being treated to a historical dynamic as a dominant company, Microsoft, is being challenged by a small "movement", Linux, which is not your typical competitor.

In order understand the viewpoint of the population ecologists; it is important to understand the framework by which this group views the life cycle of an organization or organism. Organizational population ecologists view an organization (or market's) life cycle as a continuum from an aggressively growing upstart known as an r-strategy organization to a k-strategy organization (or market) which dominates and defends their market and resources. Organizational population ecologists compare the business environment to that of a living organism in an ecosystem. Let's use the deer population of Tom Green County as an example. It is no secret that the deer population in this county is growing almost at an alarming rate. Despite the attempts to keep the population "thinned" by hunting seasons and the like, the population continues to grow. What will happen to the deer population as it grows disproportionately large? Eventually, with limited amounts of resources (food and water) the deer population will level out as the conditions of the ecosystem claims the weakest deer and other species through starvation and disease. In the view of organizational population ecologists, we can draw the same comparisons in the organizational environment.

Now let's look at Microsoft through a population ecologists eyes. Microsoft started out as what would be called an r-strategy firm. R-strategy firms gain their success by finding a need or a "niche" and providing a product or service to fill that need. Because they have found their unique spot, they are able to grow at an exponential rate as competitors in their market are few and resources are plentiful. Microsoft found itself in this position in 1981. While the name "Microsoft" had been around since 1978, its function was mainly the production of compilers and interpreters. In 1981, Microsoft's r-strategy boat came in. Approached by IBM to create an operating system for their new upstart desk computers, Bill Gates suggested Digital Research's Gary Kildall as a creator for IBM's new operating system. When snags between Gary Kildall and IBM surfaced, IBM went back to Gates. Bill Gates licensed a product created by Tim Paterson called QDOS. Eventually, Microsoft bought QDOS for $50,000 and renamed it what we now know today as MS-DOS. The key component of Microsoft's R-Strategy began at this point. Microsoft agreed to provide IBM with an operating system but refused to sell the rights, this left the door open for other companies to purchase licenses of MS-DOS. Thus, the inception of the IBM clone wars was soon to follow creating the beginnings of an economic force. The rest is history as Microsoft, through Windows and other products and services, became the giant in their market that they are today.

So how is Microsoft viewed today by population ecologists? Microsoft is viewed today by population ecologists as on the k-strategy side of the continuum. A k-strategy firm exists in a market where growth is limited as the market has reached a saturation (maturation) point and there is little or no room for other firms to gain a foothold with the limited resources available. Microsoft is today in the position of defending and surviving. So what methods does Microsoft employ to defend, survive, and grow in the k-strategy market that they dominate? One way in which they "grow" is the introduction of products within the company and upgrades of their already existing products. Examples of this are Windows and Microsoft Office, products which they continuously upgrade and "improve.' Microsoft uses these household names completely to their advantage. Microsoft, through the use of their office suite, literally made it impossible for competitors to market an office suite. You probably don't recall the software package called Borland Office Suite but you may have heard of Word Perfect. With Microsoft in charge of their own operating system and having their own office suite, any changes made to the operating system platform literally forced the competition into second place as they could not keep up with all the changes that Microsoft implemented.

Another survival/defense tactic Microsoft employs is called "bundling." Microsoft, in an effort to secure further product loyalty and to advance gains of their products will sometimes offer several of their products for "free" with a software package. Nowhere is this more obvious than in the Windows operating systems and upgrades. With the Windows operating system installs and upgrades you get various software including Internet Explorer which is integrated into the download. How does this affect the competition? Simple, because Microsoft Windows is the PC standard, inclusion of its Internet Explorer product is almost a seamless approach to marketing this product over the competitors. So when competitors such as Netscape attempt to sell their product, there is a huge disincentive for the consumer to purchase it because, after all, why should they purchase or use another web browser when they have one right in front of them to use right away, and because it came with the operating system, it must work well with it. How can Microsoft afford to offer these bundled packages for free? It is so important for the Microsoft name to be a household word that they will pull resources from their many money making operations just to make sure that they're market is secure.

Microsoft will also acquire companies outright in order to facilitate their growth and defend their market. An example of this is the business solutions division of Microsoft which wanted to market a business/financial management package for their consumers. The idea was to expand into other markets. Rather than develop the software to do this, Microsoft did an outright purchase of Great Plains and Navision software. The idea was to market Microsoft as a business solution company and the acquisition of these companies enabled Microsoft to expand this market in the U.S. and Europe. This kind of practice was nothing new to Microsoft; after all, Microsoft became a household