Paul Krugman: Apple Will Fare Worse Than Microsoft
Is Apple (NASDAQ:AAPL) more vulnerable to technology market changes than Microsoft (NASDAQ:MSFT)? In a recent editorial in The New York Times, renowned economist Paul Krugman used the recent news of Steve Ballmer’s retirement as a launching point for a discussion about the differences and similarities between Microsoft and Apple.
Krugman noted that “network externalities” have enabled Microsoft’s Windows to retain its position as the dominant computer operating system in use, despite being an “inferior product” to Apple’s operating system. This is because, unlike Apple, Microsoft was willing to license its system to many cheap computer manufacturers during the 1980s.
The widespread usage of Windows has allowed the software giant to retain its lock on the PC market even today. On the other hand, although Apple’s operating system may have been superior, it holds a much smaller share of the market today because it elected to bundle its OS with its own machines and sell them for a premium price.