Marketing is ineffective if your product has no shelf space

Story: Linux doesn't need marketingTotal Replies: 7
Author Content
Dietrich

May 19, 2009
5:29 PM EST
I've been actively discussing this issue over at ZDNet.

The thread at ZDNet:

http://talkback.zdnet.com/5208-10535-0.html?forumID=1&thread...

My contention (in the U.S.) is that MS violates Section 5 of the FTC Act (Tying).

In the U.S., where retail store point of sale is concerned, consumer choice is intentionally being limited.

MS is guilty of 'Tying' their software to the sale of OEM PCs.

http://en.wikipedia.org/wiki/Tying_(commerce)

This is anti-trust anti-competitive and anti-consumer choice.

A consumer *should* have the choice to go to a store (walk-in, not the Internet) select and purchase a PC with or without an O/S present.

See the white paper study entitled Revitalizing Section 5 of the FTC Act Using Consumer Choice Analysis here:

http://www.abanet.org/antitrust/at-source/09/02/Feb09-Lande2...

Citing in particular, beginning on page 6:

==================================================== 3. Incipient Exclusive Dealing and Tying Violations.

There is substantial uncertainty over the market share required to establish a tying violation, and the amount of foreclosure necessary for an exclusive dealing violation.31 Similar uncertainty exists over how much pressure or inducement, in the form of a discount or other conduct, must exist before an arrangement will be termed a "tying" or "exclusive dealing" arrangement.32 The traditional market share requirements and degree of certainty over whether an effective tie or exclusive dealing arrangement should be found to exist should be relaxed when the case involves a defendant with a significantly larger market share than that of the plaintiff. In these "incipient" tying or exclusive dealing situations, incumbents often will be able to disadvantage significantly smaller competitors or would-be entrants because their market share is larger, even if it is not large enough for a traditional Sherman Act violation. Suppose, for example, a company introduces a new brand of super-premium ice cream. Suppose also that an existing seller of super-premium ice cream has 30 percent of this market, and also another 30 percent of the premium and non-premium ice cream markets. Then suppose the incumbent firm tells supermarkets that they have to choose between the established firm's products and the newcomer's products. No efficiencies would arise if the established firm's demands were met.

These facts, including defendant's low market share, would be unlikely to constitute either a tying or exclusive dealing case. Moreover, market definition and market power or foreclosure issues would be extremely difficult, lengthy, and costly to litigate. However, if the incumbent?s exclusionary strategy succeeded, consumer choice in this market, in terms of varieties of ice cream on the market, would be diminished for the short term. Moreover, successful exclusion would risk diminishing incentives to innovate and enter by non-incumbents in the long term. This conduct should violate Section 5 as an incipient exclusive dealing or tying arrangement.

The consumer choice framework helps explain why incipient tying and exclusive dealing arrangements should violate Section 5. Its focus on actual or potential choice in the marketplace should also increase predictability for the business community and make it more likely that reviewing courts would uphold the Commission's determinations. Moreover, treating incipient exclusive dealing or tying arrangements as a violation of Section 5 would advance international harmonization in an increasingly globalized economy by beneficially moving U.S. antitrust law in the direction of European Union competition law.

Conclusion

In conclusion, Section 5 of the FTC Act should be interpreted to be significantly broader than the other antitrust laws. But this expansive mandate only should be used within the consumer choice framework.

====================================================

Consumers don't have choice in the U.S. and that must change.

Dietrich T. Schmitz http://www.dtschmitz.com Twitter: @dtschmitz
azerthoth

May 19, 2009
5:47 PM EST
OK, I understand the reasoning behind your market control arguments, but what in the wide wide world of sports does that have to do with linux marketing?

I wont go into the self promotion at the end.

p.s. as to marketing having no effect w/o shelf space ... thats bunk just on its face, as proven by billy mays and the multi billion dollar available only through TV ads and not in stores model. Then there are several internet only models to choose from that are as effective.
Sander_Marechal

May 19, 2009
5:55 PM EST
Quoting:Then suppose the incumbent firm tells supermarkets that they have to choose between the established firm's products and the newcomer's products.


You won't catch Microsoft doing that (anymore). That's the problem. MS stopped saying to OEMs that they can only ship Windows and no other OS back when the US DoJ got involved. These days, it is strongly suspected that MS gives discounts on Windows prices to OEMs who only ship Windows, but there's no proof. The problem is that the razon thin margins in the OEM business mean that OEMs really need that discount in order to be competitive in the Windows PC market. Even if Linux would reach 10% sales then still 90% would be Windows PC sales so OEMs would still really need that discount.
hkwint

May 19, 2009
6:29 PM EST
Quoting:That's the problem. MS stopped saying to OEMs that they can only ship Windows and no other OS back when the US DoJ got involved.


Do we have proves or sources demonstrating that? Ken's story (about BlackHawk @ Dell) suggests otherwise.

Quoting:but what in the wide wide world of sports does that have to do with linux marketing?


I raised the point that Linux marketing is fruitless if people cannot choose to buy Linux without buying Windows. But I didn't want to elaborate on the latter as I think most people are tired of me starting that entire discussion all over without anything having been changed in the last decade.

Quoting:p.s. as to marketing having no effect w/o shelf space ... thats bunk just on its face,


I guess you shouldn't take that literally, it's just that there are (almost?) no Linux computers on the shelf space that don't require you to buy Windows. Yes, there are if you buy from small companies, but those don't benefit from the scale advantages that Del etc. benefit from, so there's no level playing field I'd suggest.
tuxchick

May 19, 2009
7:07 PM EST
Gah, the right-hand margin is cut off because of Dietrich's post. Dear Dietrich, if you are actually engaging in discussion here and not just hitting-and-running, please delete a few hundred of those equals signs. thanks, me.
jdixon

May 19, 2009
8:36 PM EST
> ...MS is guilty of 'Tying' their software to the sale of OEM PCs.

Well, duh. Now, prove it. The current agreements between Microsoft and the various OEM's are top secret, and any OEM who lets them out into the wild will probably pay dearly. The only way your going to see those agreements is with a court order, and I wouldn't put it past Microsoft to have fake agreements in place ready to hand out to the court.
tuxchick

May 19, 2009
9:05 PM EST
Proof is the sticky part. I've been told verbally that it is so by friends in the business, but nobody will go on record.

Yay, page is fixed, thanks dietrich!
dinotrac

May 19, 2009
10:21 PM EST
YAWWWWWNNNNN!!!!!

Perhaps somebody has missed the fact that Dell and others have offered Linux PCs for some time, or

that the first wave of netbooks were Linux-only.

Microsoft's best argument --

Look!! A whole segment of computers offered to the public with Linux only. We make Windows available as an alternative, and everybody wants it.

In another thread, I described how a lovely little Dell Mini-9 with Ubuntu came into my hands because the buyer couldn't tether his Treo-750 to it, something he could do with no trouble whatsoever on a Windows version of the same machine. He wants Windows boxes and Windows boxes only.

There is no law against giving people what they want, and no tying if vendors can offere other OS's.

Posting in this forum is limited to members of the group: [ForumMods, SITEADMINS, MEMBERS.]

Becoming a member of LXer is easy and free. Join Us!