By PAUL KRUGMAN
[…]
The
trouble for Microsoft came with the rise of new devices whose importance it
famously failed to grasp. “There’s no chance,” declared
Mr. Ballmer in 2007, “that the iPhone is going to get any significant
market share.”
How
could Microsoft have been so blind? Here’s where Ibn Khaldun comes
in. He was a 14th-century Islamic philosopher who basically invented what we
would now call the social sciences. And one insight he had, based on the
history of his native North Africa, was that there was a rhythm to the rise and
fall of dynasties.
Desert
tribesmen, he argued, always have more courage and social cohesion than
settled, civilized folk, so every once in a while they will sweep in and
conquer lands whose rulers have become corrupt and complacent. They create a
new dynasty — and, over time, become corrupt and complacent themselves, ready
to be overrun by a new set of barbarians.
I
don’t think it’s much of a stretch to apply this story to Microsoft, a company
that did so well with its operating-system monopoly that it lost focus, while
Apple — still wandering in the wilderness after all those years — was alert to
new opportunities. And so the barbarians swept in from the desert.
Sometimes,
by the way, barbarians are invited in by a domestic faction seeking a shake-up.
This may be what’s happening at Yahoo: Marissa Mayer doesn’t look much like a fierce
Bedouin chieftain, but she’s arguably filling the same functional role.
Anyway,
the funny thing is that Apple’s position in mobile devices now bears a strong
resemblance to Microsoft’s former position in operating systems. True, Apple
produces high-quality products. But they are, by most accounts, little if any better than those of rivals,
while selling at premium prices.
So
why do people buy them? Network externalities: lots of other people use
iWhatevers, there are more apps for iOS than for other systems, so
Apple becomes the safe and easy choice. Meet the new boss, same as the old
boss.
Is
there a policy moral here? Let me make at least a negative case: Even though
Microsoft did not, in fact, end up taking over the world, those antitrust
concerns weren’t misplaced. Microsoft was a monopolist, it did extract a lot of
monopoly rents, and it did inhibit innovation. Creative destruction means that
monopolies aren’t forever, but it doesn’t mean that they’re harmless while they
last. This was true for Microsoft yesterday; it may be true for Apple, or
Google, or someone not yet on our radar, tomorrow.
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