Economics Snapshot - Google draws away from Microsoft and Yahoo
This BBC report discusses a deal announced between Microsoft and Yahoo.
“Microsoft’s Bing search engine will power the Yahoo website and Yahoo will in turn become the advertising sales team for Microsoft’s online offering”
This is an attempt to compete head on with the growing market dominance of Google in search engine queries but as the chart above shows there is a clear divergence between the market share of Google and the combined market share of Microsoft and Yahoo.
Microsoft and Yahoo’s combined share of U.S. search queries was 28% in June, down from 30% a year ago, according to comScore.
Microsoft to offer users a choice of browsers
The battle between Microsoft and the EU competition commission seems to have gone on for an age. In the latest move Microsoft has agreed to contact European users of its Windows software to a choice of Web browsers. The browsers featured in the ballot would be determined by market share; the five with the highest—at the moment, Internet Explorer, Firefox, Apple Inc.’s Safari, Opera and Chrome—are almost certain to be displayed. What is critical is the number of web users who then decide to switch to an alternative browser and click on an option for Microsoft IE to be removed as the default web browser. My default choice is now Firefox from Mozilla. Windows 7 is due for release on the 22nd of October.
Windows for a new generation?
It seems that Joseph Schumpeter’s process of creative destruction is still going full throttle ahead, with Google’s announcement this week of a operating system (Chrome OS) to rival Microsoft’s dominance through Windows.
read more...»Server demand dips as downturn bytes
The seasonal surge in user demand for the Tutor2u blog and other online resources last year caused our rather ancient server to crash leaving the website lying low for a while. So this year we are watching the performance of our new upgraded server with added interest. Elsewhere the recession has caused steep cutbacks in IT investment as businesses scale down their spending on upgrading systems or postpone them until conditions improve.
read more...»Contestable Markets – The Market for Smart-Phones
In AS microeconomics the examiner may set you a question about the effects of a new supplier entering a market. There are also frequent questions on the costs and benefits of competitive markets compared to industries dominated by a monopolist or a handful of new firms. In A2 economics, contestable markets form an important part of your study of the theory of market structures, economic welfare and efficiency.
Tim Weber, Business editor of the BBC News website has written a superb article on the competitive pressures building inside the mobile phone market – “as the market for high-end mobiles gets ever more crowded, which should you pick?” – this is a classic tale of a market space become evermore congested as the likes of Apple, Microsoft, Research in Motion and Symbian (developers of the software that run most of Nokia’s smart-phones) compete with each other for a share of the lucrative corporate and personal sector market.
It is a market where performance, functionality, speed and reliability of access, look and feel of the hardware and the length of battery life are all important non-price factors influencing consumer preferences. Price is significant – and the article makes reference to the need to attract heat-seekers or ‘early adopters’ – consumers who are willing to pay a premium price for being among the first to be seen using a new piece of kit.
Despite the obvious barriers to entry for new participants, the smart-phone market is increasingly contestable even though it is dominated by a handful of major players. The increasing use of open-source software has helped to make the battle for market dominance a more intense affair.
Far from being geeky, this is an article that gives you a super case study in how the existing operators are competing with each other. How will the market for smart-phones be affected by the recession?
The article is available here:
Regular articles on the economics of contestable markets appear on my blog here:
Nintendo poised to overtake Sony in the consoles battle
Sony has released results showing that it has sold 14.4 million PS3 machines worldwide since it went on sale late 2006 but this might not be enough to prevent Nintendo from overtaking them as the world’s biggest seller of computer games consoles in 2008. This classic oligopolistic market continues to see vigorous price and non-price competition between the three dominant players - Sony, Nintendo and Microsoft. This week - all ten of the top UK selling computer games are either for the Wii or Nintendo DS and five of the chart toppers are produced by Nintendo themselves. The company has sold more than 10 million Wii consoles and 70 million DS handheld machines worldwide.
More background available here “Consoles look to hit their stride”
Search engine market heads towards duopoly
The internet search engine market is moving inexorably towards a duopoly and that process has been accelerated this week with the news that Ask (formerly Ask Jeeves) has abandoned plans to compete with Google and Yahoo and switch instead towards providing search advice for its growing band of female internet devotees.
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