In more extreme cases, look at John D. Rockefeller's Standard Oil. Rockefeller used to be the wealthiest person in the world (according to some, if you inflation adjust his money, he may have been the wealthiest person in the last 200 years). His company was broken into parts in order to promote competition.
John D. Rockefeller actually ended up being a lot richer because the courts broke up Standard Oil[1]. He went from having a controlling stake in the most powerful company in oil, to having a controlling stake in most of the powerful companies in the whole oil industry (ExxonMobil, Chevron, BP, Shell). I just wanted to clarify that point because the order in which your statement was crafted kind of made it seem like the courts broke up his wealth when they actually expanded it.
1.Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the breakup. He, as well as all stockholders, received proportionate shares in each of the 34 companies...The companies’ combined net worth rose fivefold and Rockefeller’s personal wealth jumped to $900,000,000.http://en.wikipedia.org/wiki/John_D._Rockefeller
I agree with your statement, while at the same time it was the monopoly that got him to the position he was in. It's hard not to make money once you're at that point. I don't think he could have gotten that rich if actual competition existed and he was investing in hundreds of companies. He didn't do any manoeuvring to get his stakes in all those separate companies, unless you count back room deals.
A monopoly is someone who owns an entire market. In the history of america, the only monopolies that have existed were government granted ones, like the US Postal Service. The government passed a law prohibiting the offering of first class mail. At the time they did this, there was a thriving and growing and diverse mail delivery system made up of thousands of small businesses and private contractors.
Standard Oil was never a monopoly, and never had monopoly pricing power. Standard oil was only ever able to get large because they quickly and constantly drove down the price of gasoline.
There is this tendency for americans to call businesses that are not monopolies under the definition to be monopolies to justify using violence against them (it is violence when a company is forcibly broken up or forced to not engage in "anti-competitive" (by which they really mean "competitive") activities.)
The reality is, none of these businesses were monopolies, and as much as I hate microsoft, they weren't a monopoly. Existing laws would have been sufficient for enforcement against microsoft for their crimes, which included fraud and misrepresentation. But the "anti-trust" laws are all about preserving government power and are used only against businesses that become big enough to wield influence and thus attract opponents in government... usually opponents in government in the pocket of competing businesses.
The US would be a better country and have a more robust economy, if Standard Oil had never been broken up. This and the "anti-trust" movement is a triumph of socialism over capitalism.
Standard Oil was able to use anti-competitive forces against competitors. They specifically were able to extract better rates for the transportation of oil with the railroad companies which helped give them a more competitive cost structure than peers. Because of the high cost of capital required at the time, many peers were driven out of business and were forced to sell to Rockefeller.
I love how ideological nonsense that bears no releationship to historical facts is considered "facts" and by not goose stepping along with your fascist ideology you feel justified in calling me ignorant. When its painfully obvious that all you are able to contribute to the conversation is a poor repetition of your vague memories of the propaganda you were told about the situation, when in reality, vertical integration, including the purchasing of transportation systems gave standard oil a competitive advantage. This is known as competition, and is not "anti-competitive". In fact, if you use the phrase "anti-competitive" seriously, you should lose the right to post on this website because you reveal yourself to be an unthinking socialist, and if you ever managed to start a company, you would surely fuck it up by following your ideology over reality.
In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.
This is not a definition, this is an expression of the leftist ideological position. I have seen many situations on Wikipedia where factually correct edits are reversed because they disagree with the ideology of the wikipedia editors who have stature.
It is kinda like hacker news where a useful comment like mine is voted down to zero, while someone calling me names and repeating ignorant comments that are consistent with the groupthink of the left, get modded up.
It is not that their name calling and ideological regurgitation are superior to my argument... it is that people vote based on ideology, often when they are profoundly ignorant of the reality.
I suggest that you not use Wikipedia as a source for definitions, as that one is particularly heinous. In common usage one could use the term "monopoly" to describe entities with strong pricing power, but common usage is not usage in economics, yet the wikipedia definition starts "in economics".
Any "Economist" who defines a monopoly as a company that does not have ownership of the entire market, is an ideologue pretending to be an economist.
According to my economics textbooks, when you say "ownership of the entire market" you are talking about a pure monopoly, which is different to a monopoly. You don't need the entire market to have monopolistic power.
So, I would disagree with your definitions, and your assertion that "in economics, they use this term correctly".
I would also suggest that your assertions seem somewhat ideological. Many people agree that trusts are bad for capitalism in that they restrict competition, and are not evidence of socialism.
I love how you just made up a term and then claimed that using the word wrong is justified because you made up a different term for the correct definiton.
Of course, you've never opened an economic texbook in your life.
I also love how you claim that my references to history are ideological assertions, then you make a broad and profoundly ignorant ideological assertion as a counter argument, except that, of course, you don't make an actual argument, you just say "many people believe".
Many people believe there is a good, that's not proof that its true.
You are a fucking ignorant socialist, and it is consequently no wonder that you are so dishonest as well.
It is fucktards like you that make hacker news (and any "social" news site) not worth participating on,..... because there are just too many ignorant, low intelligence people downvoting those who bothered to learn something and who bother to think.
Just in case there's any question of our relative positions here.
What di you make of the DeBeers 10 year diamond monopoly? If all the supposed monopolies out there, this seems the hardest to debunk. I read one economist say they were really a cartel with government protection, but he didn't cite any evidence. DeBeers seem to have controlled the trade through their own shrewdness. Only point I can think against it is there's nothing to stop people reselling diamond rings so it's wrong to say they control the market.
The only way a cartel can work is via government enforcement. Cartels can try to fix prices, but as soon as they do, if the price is above the free-market price, members of the cartel will try to gain marketshare by selling under the table at a lower price. Cartels are not sustainable in a free market for this reason.
I can't comment on DeBeers because I do not know enough of the history of the situation. I will say, though, that diamonds are essentially worthless, and it is primarily by brilliant propaganda / advertising that people continue to buy them.
That he complained that he "never even got a card" meant that he was not appreciated as a friend by his manager-- that's something completely beside the monetary wage. They should have been friends, after 10 years together.
And even if the manager was earning a low amount there's no reason that in just one year out of those 10 he could not have given him a Christmas bonus. Even a small amount, so that Mr. Smith would not have been able to say that he "never got a [...] Christmas bonus."
>That he complained that he "never even got a card" meant that he was not even appreciated by his manager
"I kind of forced him" to celebrate holidays, Rogers said.
That quote kind of puts a different perspective on it. His roommate had to force holidays on him, so is it a wonder his manager didn't give him cards? Maybe that's just the way he came off.
"He might not have meant something to somebody else, but he was like family to us. He meant something to us." - Dayhoff, his boss at Crab Shack. That sounds like he appreciated him to me. Quit acting like you guys care about Neil Smith more than his no-wage-raising, no-bonus-giving, no-card-giving manager. That guy actually lost somebody, you guys didn't. So don't be so quick to call him uncaring.
You're taking a couple complaints and extrapolating that to mean his manager did not appreciate him. You don't know to what extent his manager may have tried to show appreciation in other ways or what their relationship was like.
Odds are if the manager really liked him, the manager would have liked to give him a raise.
However, sometimes available finances simply do not warrant a raise. Sometimes higher management who does not know an employee says "why should we pay him more, we can just find another Joe to do the same job", without knowing the measure of the man.
A lack of raises in minimum-wage work is the norm. I know people who've worked in franchises for years who've barely been given raises (which are normally cancelled out by a minimum-wage increase a few months later anyway).
Why don't these companies give raises? The same reason Wal-Mart fights viciously to stop unionization; because higher-pay means higher-prices which for bottom-of-the-barrel pricing means less sales. I can buy a burger at McDonalds for a dollar; I have to shop like a pro to find the deals to get burger buns and burgers, cheese slices, pickles, ketchup/relish/etc at a comparable price to make an identical burger. Likely I'll end up spending at least $2 to make my own burger.
McDonalds is making profit off of a food item that costs less than $1. Looking at the economics of it, it's ridiculous. How many burgers in my lifetime would I have to make to equalize the cost of using electricity/gas to heat my stove top to fry a burger, and buying the frying pan in the first place, and the bun, burger, cheese, condiments.
Not giving a raise helps keep these people in a job, it's sad that it has to be this way (for more reasons than one), but thats what this world is. Although to look in the back of most McDonalds if you found one competent worker like Mr. Smith you could fire half of your day-staff. I've seen 3 good workers turn out orders faster than when every station is full and there's 20 workers in a store, because when there's a lot of them they're inevitably students and the managers are like 19 and endlessly chatter.
The real question you should be asking is if his pay is so low, why didn't he get another job? There's a reason he stayed.
Did he deserve it? Maybe, the article mentioned he started out as a waiter and (moved up?) to dishwasher. Maybe dishwasher paid more, who knows. But my whole point is a manager in a restaurant has less control over raises than you seem to suggest.
>Of course I can always ask on the web, but having to break off from coding, pose a question, and then wait for it to get answered before I can continue really breaks up my learning curve.
You're skipping a vital step. Searching for the answer on the web. Most of the time the question you want to ask has already been answered.
Very true! Most things can be solved that way. But sometimes your issues are not googleable. I remember back when I was just learning javascript, it would never in my wildest dreams occur to me that there were host objects and that you couldn't write over them, since I'd only used compiled languages before... it took 5 seconds for my friend to start laughing when he looked at my code because I had named a variable "top."
Sir Michael Atiyah said of Witten, "Although he is definitely a physicist, his command of mathematics is rivaled by few mathematicians... Time and again he has surprised the mathematical community by a brilliant application of physical insight leading to new and deep mathematical theorems... he has made a profound impact on contemporary mathematics. In his hands physics is once again providing a rich source of inspiration and insight in mathematics."[6] One such example of his impact on pure mathematics is his framework for understanding the Jones polynomial using Chern–Simons theory. This had far reaching implications on low-dimensional topology and led to quantum invariants such as the Witten–Reshetikhin–Turaev invariants.
Even if his degree is in physics, and he's part of the "physics department" at IAS, I would classify him as a brilliant mathematician who decided to apply his energy to his passion, physics. And, come on, the guy won a Fields Medal.
When looking at an idea it’s useful to ask yourself: “Would it have been possible to build this company 12-18 months ago?”
This reads like a list of stuff that has been possible for a lot longer than 12-18 months:
Direct Access To Customers
Anything as a Service
Always Connected
Zero Barrier Distribution
Social Context
Assume The Device Is Portable
Location Aware...
I'd say dig a bit more, all this stuff was possible in Feb 09. You have the right approach, but the wrong examples.
Maybe that's the problem at Microsoft: they think they can solve problems by throwing lots of people at them. They put together large teams to build products. And large teams require managers.
I didn't know Microsoft had a problem, they seem to be doing pretty well. They have some good products. Apple being successful doesn't necessarily translate to Microsoft sucking. They are both damn good companies.
@volski: "Apple being successful doesn't necessarily translate to Microsoft sucking."
Completely true, and as Steve Jobs famously said in 1997:
"If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things here. We have to let go of this notion that for Apple to win, Microsoft has to lose. We have to embrace a notion that for Apple to win, Apple has to do a really good job."
@volski: "I didn't know Microsoft had a problem, they seem to be doing pretty well. They have some good products."
Personally, I use Microsoft Excel and Microsoft Exchange, and I feel they are best in class. For every other product they offer, I feel there are better alternatives.
The notion that Microsoft has a problem stems from the fact that most of the new product lines that Microsoft has put to market in the last 10 years, few have been a success. Microsoft's profit comes mostly from licensing and servicing Windows and Office.
Meanwhile, in the last 10 years Apple has introduced iTunes, iPod, iPhone, and iPad -- all mega hits. What makes it a sad sight to see is that every time Apple comes up with another iDevice, Microsoft tries to compete, and it simply hasn't worked out for them. Windows Marketplace, MSN Music, Zune, Kin, Windows Mobile 6.5, Courier -- the list goes on.
A dose of reality, Microsoft was in the smartphone market long before Apple. WinMo 6.5 was the last in a line of OS releases from the CE lineage that was incredibly successful. Apple for all its success with iPhone did not truly pioneer this space, they embraced and extended to borrow a term.
IBM was a damn good company for many years after the industry had effectively left their technology behind. Even today they make serious money; if that satisfies your criteria for doing well.
They just didn't grow in proportion to the industry.
And they've had to cut and refocus on their core products to maintain profitability.
Microsoft is now in a very similar situation.
Fumbled opportunity might not drag down today's numbers, but it's still a problem.
"Apple being successful doesn't necessarily translate to Microsoft sucking." - absolutely.
I remember reading somewhere (I'll post the link if I find it) that in terms of computers, Apple and Microsoft actually occupy very different positions in the market. Apple have something like 91% market share in desktops and laptops priced above $1000, while Microsoft dominate cheaper priced machines (how many Apple computers can you buy below $1000?). A person who is a Mac user is unlikely to voluntarily switch back to Windows, they tend to keep buying Macs despite the price tag (product differentiation justifies the price in their mind). How many people spend over $1000 on a new PC? Gamers and people who need/want advanced hardware, but they are in the minority of PC users.
Obviously, this is in relation to the historical relationship between Apple and Microsoft, now Apple is mainly a consumer devices company in terms of revenue, and Microsoft will go toe-to-toe will Apple in the tablets and smartphones markets soon. Will be interesting to see how the relationship fares as this happens.
I didn't know Microsoft had a problem, they seem to be doing pretty well.
In the mobile market? How about anything next-generation web? Social media? Microsoft doesn't seem to be doing well anywhere except the increasingly unimportant desktop and Office suite space.
Windows Live, Bing, Xbox, Servers, Cloud Services...
It's easy to bash on them, but they make quality products in a diverse range of markets. Sure they fail and fail big, but who the hell doesn't? If you have made anything successful, you've probably failed 100s of times. It comes with the territory.
Um, not to get all defensive, but we at STB are making quite a bit of money. It's probably over a million a quarter per developer. I don't know many people who can say that. ;)
Are you only including developers, or all the people who work on a product? I imagine that MS has a rather large team of non-developers working on products as well.
You want to be careful with that metric. You know the cleaners don't make much money, why not fire them?
I did actually mean all the people that work in development on the product. That is, in MS terms, all SDE, SDET, and PMs. I happen to know this figure is accurate for Windows (over a million per developer), although that doesn't include sales/marketing, administrative costs, etc. As for the cleaners comment, I don't really get your point.
Anyway, my statistic wasn't really meant to be taken that seriously, just proof that server is actually making money over here.
As I remember correctly, Office saves everything else at MS right now (by a large margin, followed by OSes). The gaming has recently been making more money than they are loosing (and will probably become their next important money maker). But the rest of the revenue makers are so low compared to those three that it's not even funny.
I suspect that they will probably announce service based offering (consulting) type in the long run (5-10 years maybe?) because they might not be able to sustain high margins of profit on Office and Windows sales due to competition and alternatives.
Right now they don't seem to have a great vision either, so we'll see were they are heading...
So I guess that we can say for sure (2009-2010 numbers) that online stuff is now loosing money, windows is now doing better that office, and gaming is quite behind but stable and profitable (albeit a lot less that office or windows). Let's be frank too, were talking about billions here, so those segments are quite big.
That's okay though - At least MS is smart enough to make an investment in a nascent technology. I bet everyone is losing money on the cloud, or barely breaking even.
Even Rackspace's Net Income is only 10 million dollars, coming off of 178 million dollars worth of revenue.
MCS (Microsoft Consulting Services) has been a business component for them for a long time. Whereas someone like IBM-GS seeks to make as much margin as they can off the services side, MCS is in the unique position of being willing to make smaller margins because the licensing revenue is significant. That attitude has been changing in the past 5 years but it is still part of the MCS culture.
John D. Rockefeller actually ended up being a lot richer because the courts broke up Standard Oil[1]. He went from having a controlling stake in the most powerful company in oil, to having a controlling stake in most of the powerful companies in the whole oil industry (ExxonMobil, Chevron, BP, Shell). I just wanted to clarify that point because the order in which your statement was crafted kind of made it seem like the courts broke up his wealth when they actually expanded it.
1.Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the breakup. He, as well as all stockholders, received proportionate shares in each of the 34 companies...The companies’ combined net worth rose fivefold and Rockefeller’s personal wealth jumped to $900,000,000.http://en.wikipedia.org/wiki/John_D._Rockefeller