| > Did it matter that the hardware innovation of that era had to do with cost reduction? Yes. Why is this relevant? If the hardware innovation had been about attractiveness or energy efficiency or portability or any other factor, would Microsoft have been unable to compete? Would Windows have been non-viable if Compaq had been selling sleek aluminum boxes instead of beige boxes? Have hardware manufacturers stopped competing in price now? Last I checked, that was still a major selling point. > Did it matter that Microsoft was able to keep customers captive through closed document formats & protocols? Yes. This has nothing to do with the viability of the software-only strategy. Would anyone be less locked-in by Microsoft Office if it were running on a Microsoft Machine? > Did it matter that Microsoft both had and leveraged a monopoly position? A thousand times yes. Did it matter that Microsoft had OEMs over a barrel and got them to sign anticompetitive distribution terms? Of course. Sure, and you still haven't explained how any of this makes Microsoft's software-only business weak now. Microsoft reached their dominant position as a result of their software-only strategy. Software-only allowed them to partner with every PC maker to make sure that 95% of people would buy a Windows machine. > I would be reluctant to point to Android phones as an example of a software-only success, because that knife cuts both ways for Microsoft. How is Microsoft going to sell Windows Phone in a market where Google is dumping a free operating system as a loss-leader for potential ad-revenue? That's a good question, but I think the end answer will come down (partly) to price. If Windows Phone is a better experience than Android, but it costs an extra $15, will anyone care? Is anyone going to reject Windows Phone because it adds a couple percent to the price of their phone? (Especially when many Android phones are probably paying as much for patent licensing anyway.) > Regardless, here's a great illustration of the effects of Android's software-only model: That's an illustration of how crappy the carrier lock-in model is. Or perhaps how little Google cares about its phone users. There's no intrinsic reason Android couldn't use the Apple model and push directly to consumers. Nonetheless, Android is selling extremely well in spite of this. |