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Homepage Microsoft is not dominant due to superior quality products. Microsoft inherited its power from IBM. IBM's power in the mainframe computing industry is the origin of Microsoft's power in the microcomputer industry. IBM was in a hurry to catch up with Apple in the microcomputer industry. They were in such a hurry that they cobbled together a PC out of pre-existing hardware. The only original component was the BIOS chip IBM created to tie the third-party components together. Then IBM hastily grabbed the first operating system available for the PC, Q-DOS (renamed MS-DOS). Microsoft happened to be in the right place at the right time. Their operating system wasn't all that great but neither was the hardware. IBM entered the personal computer industry late and was desperate to compete with Apple. We could just as easily have gotten a different operating system called CP/M for the IBM PC. Fortunately for Bill Gates, the author of CP/M, named Gary Killdall, happened to be out of town the day IBM officials came by to express interest in Killdall's OS.
IBM realized MS-DOS needed improvement. Microsoft was a pretty shoddy, rag-tag operation in the early 80s. They weren't equipped for a major software engineering project like MS-DOS 2.0. To help the development of DOS, IBM provided money and equipment for Microsoft. IBM gave Microsoft the project and equipment that really got Microsoft off the ground.
Although Apple probably had superior hardware in the early days of microcomputers, the IBM PC sold much better. This was because many businesses had depended on IBM for mainframe computing systems for decades. Regardless of the quality of the PC hardware and operating system, the IBM *brand name* insured acceptance by businesses. No one got fired for buying IBM.
IBM lent credibility to MS-DOS. Microsoft was allowed to license their DOS to clone makers. Of course, IBM accepted this because they didn't expect any companies to MAKE clones. Unfortunately for IBM (and fortunately for MSFT), Compaq's engineers found a way to LEGALLY "reverse engineer" IBM's BIOS chip. Compaq could just buy all the other components from the third party manufacturers. Other companies followed Compaq's lead. And so a clone industry was born. The clone machines were fully compatible with IBM PC applications -- as long as the clones ran MS-DOS. MSFT was perfectly willing to license DOS to Compaq and IBM could not stop them.
IBM and the clone explosion established the IBM PC running DOS as the market leader. Once this happened, computer makers *HAD* to license DOS. There was no major alternative operating system for IBM compatibles.
The strongest competing operating system was for a totally different machine, the Apple. And the only company who could make Apple compatibles was, of course, Apple. Unlike IBM, Apple owned many of the components for their computers. Apple used "proprietary" technology. Other companies either had to make IBM compatibles or go out of business.
It would have been very difficult to sell a computer with no operating system. It's just a doorstop. Since Compaq, IBM, et cetera needed to pre-install an operating system on their computers they would want to install the most popular one on at least some of their computers. Microsoft's DOS license forced manufacturers to pay for EVERY COMPUTER MADE even if MS-DOS was not installed on it. The manufacturers could NOT say, "No," because then they'd have no operating system (or an unpopular one). It was either MS-DOS on every (for example) Compaq computer or Compaq couldn't use DOS at all.
A clone maker such as Compaq or Dell *could* have paid the "CPU tax" for MS-DOS and then installed a different OS on a few of their computers. They didn't because that approach didn't make sense. They had already paid for DOS. Why pay another company for another operating system too? Why pay for two operating systems for the same computer?
So Microsoft in the mid-eighties already had a monopoly on PC operating systems. This monopoly brought in a lot of money. With this money, Microsoft expanded into the applications market.
So MSFT had much more money for development of applications plus could alter DOS to suit the applications. If another company's application competed to strongly against MSFT, modifications could be added during the next upgrade to cripple the competitor's program. There was (allegedly) a saying among the MSFT programmer's during the writing of MS-DOS 2.0: "DOS ain't done til Lotus won't run." Lotus 1-2-3 was a very popular spreadsheet program for DOS which competed with MSFT's own spreadsheet.
Also, MS-DOS game MSFT strong leverage to use against IBM in any disagreement. IBM eventually realized the potential of the GUI. They planned their own graphical interface to run on top of Microsoft's DOS. It was codenamed 'Mermaid'. Bill Gates was none too pleased. Gates wanted to create MS-WINDOWS. To protect Windows, Gates used DOS to blackmail IBM. If IBM released a GUI, Microsoft would never release the source code for MS-DOS. This would prevent IBM from upgrading MS-DOS. They could do anything they wanted to their GUI but it would always be hindered by its dependence on an outdated version of DOS. IBM gave in. Mermaid died. MS-Windows was born.
Eventually, a division of Novell called Digital Research Labs (?) created a competing d.o.s called DR-DOS. DR-DOS had an uphill battle from the beginning, despite the fact that it was fully compatible with applications created for MS-DOS. To add to Novell's difficultry, Microsoft claimed that DR-DOS was INcompatible with Windows. Windows was gaining popularity at the time. This hurt DR-DOS even though the claim was false. Also, MSFT threatened to make future versions of DOS and Windows incompatible with Novell's networking software -- called NetWare -- if Novell continued to promote DR-DOSS. Novell gave in.
By the time the US government finally stopped MSFT from collecting the "CPU tax" for MS-DOS, Microsoft had made many millions of dollars. MSFT stopped charging for DOS based on the number of computers made but they weren't punished for the charges they had already made in the past. Also, they weren't stopped from tying the licensing of Windows to MS-DOS. A manufacturer no longer had to pay for DOS for ALL its computers if it only wanted copies for a few computers, but the manufacturer still had to get Windows if it wanted DOS.
The fact remains MS-DOS is a mediocre at best. IBM knew this. During the late 80s, IBM realized they wouldn't be able to create a succesor to MS-DOS without Microsoft's cooperation. Bill Gates would find a way to stop any competition. IBM enlisted MSFT to develop OS/2. OS/2 1.0 was a major disaster. IBM made bad technical decisions regarding both their PC hardware and the OS/2 operating system. MSFT didn't actually sabotage OS/2. IBM's mistakes arose from their background in mainframe computing as opposed to microcomputers.
IBM did eventually, after much time and money, create a good operating system based on OS/2. IBM OS/2 Warp came out before Windows 95, was compatible with all MS-DOS and Windows 3.x programs, and had a graphical interface. However, MSFT was already the major applications maker in the microcomputer industry. MSFT did not make programs for OS/2 Warp. This contributed to the overall lack of software for OS/2 and the failure of IBM's operating system. Microsoft started in operating systems, used that to expand to applications, and now can use their power in the applications field to protect their own operating system. They do this by refusing to support a threatening operating system from a competitor.
Another way that MSFT protects itself is by announcing "vaporware." MSFT announces a product and release date. Even if the product does exist, it won't be ready by the announced release date. However, the announcement makes consumers hesitate to try a competitor's product when a similar MSFT product is, allegedly, just around the corner. The MSFT product isn't ready by the original release date so they postpone the release date repeatedly until the product is ready to be released (although it will still have bugs).
Also, starting with Windows, MSFT implemented a new method for protecting its own prgrams. Windows uses special shared files called dynamic link libraries (DLL files). With DOS, MSFT could only damage a competitor's program during an upgrade to DOS. With Windows, MSFT can either damage a competitor's program or boost its own by modifying DLL files. Changing a DLL that a competitor's application relies on may prevent that application from working. On the other side of the coin, MSFT can change a Windows DLL during the installation of one of Microsoft's own applications. The new DLL can add new minor features to the Windows operating system. The subtle improvements can enhance the performance of the Microsoft application. This is all well and good for the MSFT app, the operating system and even the user. However, it is a bit unfair to competitors because they are not given the technical information about the operating system DLL that MSFT's own programmers receive. Of course, the enhancement to Windows may improve the performance of the competitor's application as well; but by then it's too late: the user has already bought and installed the MSFT app.
So, to recap: Microsoft protects itself in 5 ways. 1)It cripples competitors' applications. 2)It stealthily upgrades the operating system during *application* installations. 3)It withholds applications for competing operating systems. 4)It announces "vaporware" to prevent experimentation. 5)It uses unfair contracts to tie products together.
Finally, Microsoft's power to do these 5 things evolved from power it originally inherited from IBM.
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