Question

In defending his company against allegation of anticompetitive practices, Bill Gates, claimed that if someone developed an operating system for personal computers that was superior to Microsoft’s Windows 95 operating system, it would quickly become the market leader, just as Gates’ DOS System became the market leader in the 1980’s. Opponents countered that the market situation has changed so that even a markedly superior operating system wouldn’t capture significant market share

Answer 1

Solution-

A personal computer is experience goods that customers have to use it first before judging the quality and effective offunction use. Since Microsoft products have been launched since 1980s, the product are used in a widely area andcustomer groups such as in houses and offices now. Other new operating systems like Apple may have the same orhigher quality than Microsoft; however, they do not have strong network externalities like Microsoft that seems to bethe standard for many computers. Moreover, customers are likely to stick to the existing program instead of changing toa new program because they have to waste the time to learn a new thing.