Chris Norton

Competition Is Not Good: Rebuttal

I read this article on OSNews a couple days ago: Competition Is Not Good by Kroc. I admit that I'm slightly baffled by the case that is being made for why competition is not a good thing. Here I present my reasons for this and some alternative arguments for the points raised.

Need I Point Out The Obvious?

I think one of the fundamental flaws in the article is the logical contradiction that becomes evident near the end. The author argues that competition is not good because it sets up non-competition (a monopoly), which leads to stagnation of the technology. I'm not sure how Kroc didn't notice but this contradicts the rest of the article. Competition is bad, but non-competition is worse? Sorry but a market either has competition or it doesn't. If there's only one vendor then there's a monopoly; two vendors and there's competition. I fail to see how a "lesser of two evils" scenario isn't immediately obvious.

Price vs. Quality

Kroc points out that a low price does not necessarily mean a low TCO, which is quite true, but I think there might be something missing here. That thing is the fact that price is not the only reason people buy products. To use the car manufacturer analogy, if people only bought things for price then no-one would ever purchase a Mercades over a Daewoo. Quality is a factor in all purchasing decisions but – and this is the important part – people have to weight this against the price and decide whether it's worth it and whether they're really only getting ripped off.

Perhaps the best example of what I'm talking about is the case of Apple Inc. I don't think anyone in their right mind would argue that Apple makes cheap products. What they do make (or are meant to make anyway) is products with superior quality. According to Kroc's slightly short-sighted view of the competition process this must mean that they don't get any business. Yet every year Apple pumps out more and more stock that is eagerly snapped up by the public. Sure, not everyone likes having to pay hundreds of dollars more for basically the same hardware as a PC but they pay extra for the extra quality.

Competition vs. Standards

Competition gives us the current format war between HD-DVD and Blu-ray as well as the plague that is DRM. Surely that means it's bad right? Again, this isn't entirely true. Here, standardisation must be used a counter-force to competition. This isn't a pipe dream either: the reason there's a format war at the moment is, basically, because the two sides were two pig-headed to agree on what the features to combine from both were. The camps did try to sort out a solution whereby there would be a single format for HD content but no compromise was ever reached. Good work human nature.

As for DRM, well, this isn't actually caused by competition but by paranoia and complete disrespect for consumers. Instead of doing the intelligent thing by lowering artificially high prices, providing enhanced quality, including extra features and so on, the record labels instead chose to treat all of their customers like scum. They didn't even try to compete, they tried to strong-arm the industry into a shape that they preferred. This is not what competition means.

So, I think the thing to realise here is that, while competition can be good, it does need to be tempered by some sort of standardisation and rules. This is why we're meant to have government bodies doing things like inspecting quality to make sure that it doesn't fall below acceptable levels or that companies don't engage in unfair business practices, or standardisation bodies to make sure there's a base that everyone agrees to work with.

Driving Technology … Into The Ground?

I like the choice that is given:

Whilst I do understand what the author is saying here, I think (yet again) that there are some things missing.

First of all, no mention is made of what operating system that 1GHz computer is running. Similarly, why does the 4GHz computer need to run Windows Vista? If there's a more efficient OS out there, then why not run that on the 4GHz machine? Logically that would be the ideal option.

Secondly, we again come back to a question of getting what you pay for and whether or not that's really worth it. It's entirely possible that someone could create an operating system that would boot instantly, be ideally efficient, etc – the only problem is no-one is willing to pay $10,000 for it. Say what? You see, it turns out that programmer pay checks are really the biggest cost involved in creating software. No company would be willing to spent an extra few years tweaking their software to run as fast as humanly possible when people only care that it runs fast enough and is cheap enough (and those companies that tried this are now in the graveyard of the tech industry). Microsoft has gotten to where it is today by building software that's "good enough" for most people, while being significantly cheaper.

Continuing on from that last point, and coming back to the price vs. quality debate again, is that the software from days of the Amiga and RISC OS simply does not have the features of the "bloated" software of today. True, some of that bloat is unnecessary due to unnecessary features, poor designs, poor programming, etc, but overall it's because it's simply too expensive to add in a new feature without increasing lag or boot time or whatever. Usually software engineers correctly make the right choice when it comes to decision between features, cost and performance.

Hardware and software are actually not as "in cahoots" as some people may think. Intel does not keep pumping out faster and faster chips because Microsoft makes slower and slower software. If Intel didn't make faster and more efficient chips then people would stop buying them, regardless of whether or not the software ran fine on them. After all, competition always results in a rival that puts out a superior product for the same price.

I do think one quote from the article is particularly telling: "Imagine an Amiga after 25 years of constant leading progress …" Hang on, what does "leading progress" mean? Leading who? I think the author is inadvertently referring to Amiga out-competing it's competitors. Yet it didn't. IBM won out because it had hardware and software that were good enough for consumers, while being cheaper, and because IBM and Microsoft just did a much better job of selling their systems. People won't buy what they don't know is there.

Anti-competition

I do agree with this but I've actually already written the counter-point above. It's only natural that a business will use every trick in the book to get ahead and make more money … if they can get away with it. Especially if it ends up turning customers away. People are pretty stupid in general but eventually everyone wakes up. Notice that the tide is starting to turn on the DRM issue. The music industry is starting to find out that, as people wake up to what DRM is and what the consequences are ("what – you mean I can't copy the song onto my iPod!?!?!"), customers are going to stop buying those products and their customer base is going to start dwindling away.

As consumers we also depend on third parties to step in to mediate some times. In Australia the ACCC is meant to act as a corporate watchdog and protect us from cheating companies. They don't always do their job effectively but it's a lot better than if they weren't there.

Summary

The take away message is that all the problems with competition laid out in the article are not really problems with competition itself but problems with how companies approach competition or expose a lack of proper control over the process. On the whole competition completely results in better conditions for consumers, we just have to be careful that we don't trust in the process too much and weed out the poor products from the good ones.

I also think that, if you're going to write such an article, you should check that the fundamental point ("competition is not good") is actually backed up by what you're saying and that you're not really saying something else ("competition is not always ideal in and of itself – but it's better than the alternative").