Market Structure

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Marina Eleftheriou

The Market Structure of Microsoft| |
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Microsoft is the undisputed leader in the market for operating systems (Sheremata 1997). The Microsoft Corporation has produced the vast majority of operating systems for all personal computers (PCs); moreover, operating systems that Microsoft has created are Windows95, Windows 3.1, and DOS. They also have produced the leading spreadsheet and word processors for both Windows and Macintosh operating systems. They own 85% of the market share with their office software Word, Excel, Powerpoint, Microsoft Exchange, and Microsoft Access. Not surprisingly, most of us have used some if not all of these products and/ or services provided by the Microsoft Corporation.

How did the Microsoft Corporation develop into a software monopoly? For the most part, one or several combinations of the following forge monopolies: an amalgamation of smart business decisions, mistakes by competitors, and at times some shady tactics that a company might employ to become a market leader and monopoly of today. Microsoft had its beginning during the 1970s when IBM was the computer hardware giant of the industry. In 1975 Microsoft was the producer of programming languages for MIPS Altair 7500 (Conigliaro1996). In 1981, Microsoft purchased an operating system for an Intel based 8086 chip from a small company named Seattle Computer Products and redesigned its product to sell it to license it to IBM for its new personal computer (PC) (Conigliaro1996). The redesigned product was released under the name MS DOS 1.0. IBM being a monopoly at that time in the hardware department, by allowing Microsoft to provide the operating system to its PCs, then an outside source, relinquished control of the software industry to this up-and-coming powerhouse. Microsoft retained the right to license their operating system to other manufacturers and helped spur the massive IBM clone industry.

Microsoft became one of the leaders in the...
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