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How I See It with Ted Ohashi: Natural Monopolies

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Each week on How I See It, Ted Ohashi discusses current business themes from an experienced yet fresh perspective. This week, Ted outlines natural monopolies and how they relate today to companies like Microsoft and Apple.

Additional Information:

Company: InvestmentPitch
Website: www.investmentpitch.com
Date Published: Feb 14, 2013
Transcript: Available

Video Transcript:

Hello. My name is Ted Ohashi and this is How I See It
Many people believe Government is the answer to all of our problems. If there’s a service that everyone needs, they want the Government to own it and run it. Take the electricity generation and distribution business. In the past, many of these operations were government owned and operated. The government liked the idea so much there was a term developed that made it sound more acceptable. They are called natural monopolies.
Then of course there’s the other extreme. If the economy created a monopoly, people would clamour for the government to break it up. At the start of the 20th century, trust busting was a popular activity that amounted to using government power to break up railroad monopolies.
In historical terms there isn’t much evidence that governments building up or breaking down monopolies created any long term benefits.
So it is interesting to be witnessing what is the economy’s way of handling probably the highest profile monopoly in recent times - Microsoft’s dominance of the computer operating system through Windows. In recent years, Windows has been in 90% or more of all personal computers.
One of Bill Gate’s greatest contributions to Microsoft might have been keeping the government from taking steps to break up the operating system monopoly. I remember rumours years ago that Microsoft kept Apple alive so there would be one credible competitor to Microsoft.
Now it seems Steve Jobs may have the last laugh. The popularity of the smart phone and tablets was really a Steve Jobs/Apple Inc. creation. Current trends show consumers are increasingly using phones and tablets instead of their PCs.
At last count 37% of PC users have switched to smartphones and tablets to surf the Internet and check Facebook. Approximately one quarter of tablet and smartphone owners say they are using their PCs less for Internet access and Facebook.
This doesn’t mean the PC is dead. Not by a long shot. If 37% have switched, it means 63% haven’t. And a look behind the numbers shows that the PC is still preferred for the more active “work” or “creation” functions as opposed to the more passive “communicating.”
But in today’s world, changes happen quickly. Current trends in smartphone and tablet usage might be signalling the downfall of the PC and the Windows monopoly. All without government intervention.

From the offices of Investmentpitch.com, I’m Ted Ohashi.

If you agree with How I See It, please tell your friends. Or if you want to tell me how you see it, send me an email at Ted@investmentpitch.com or follow me on Twitter at @TedOhash