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    Heskett Column - What Happens When the Sumo Master Learns Judo? Summing Up

     
    12/17/2001

    Who's Afraid of the Sumo Who Learns Judo?

    Quotation
    These comments reflect general beliefs that the larger and more successful a competitor becomes, the greater the likelihood that it will not be a major player in future competitions in rapidly changing environments.
    Quotation
    —Professor James Heskett

    Respondents to the latest "What Do You Think?" column expressed a general lack of concern about adverse effects from Microsoft's settlement with the Federal Government for a variety of reasons.

    Charley Cullinane reminds us that "There is a portion of the population that does not trust Microsoft and its use of 'customer' information to market to customers and hold them digitally captive. This demographic will continue to provide sales to (a judo master competitor)."

    Both Dennis Crane and Richard Eckel suggested that a broader view of the competitive spectrum for information technology might lead one to conclude that what is happening is business as usual. Microsoft is facing a race with time and the markets to re-deploy monopoly profits from a waning desktop opportunity in order to become more competitive with sumos in other parts of the information technology spectrum. Crane concludes "history argues against Microsoft, as the leader in one generation of technology, becoming the dominant player in the next generation. As long as Microsoft continues to re-deploy the margins in its core business to explore new ones, chances are the market and customers will benefit relative to what would happen in a fragmented market ..." Citing the popularity of Linux at the server level, Eckel points out that "what that 800 lb. Gorilla (MS) is fighting against is a guerrilla army that is free."

    These comments reflect general beliefs that the larger and more successful a competitor becomes, the greater the likelihood that it will not be a major player in future competitions in rapidly changing environments. But they reflect something more: a belief that competition in information technology at this stage of the game requires non-traditional regulatory responses in a competition in which combatants have unusual means at their disposal, regardless of size.

    The comments raise several questions: What are the chances that Microsoft can defy traditional market dynamics? What kinds of strategic and organizational decisions would it take? If it were to successfully learn judo, would we (or should the Government) really care whether it could enhance its chances in the post desktop world? Do today's information technology industries really require a different approach to government regulation? What do you think?

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