Broken Windows: Microsoft & Dis-Economies of Scale

As a PC user, I found this recent story about Miscrosoft to be a perfect example of why Sun Tzu taught that size is not power. Companies such as Amazon and Apple have taken the lead in eBooks and tablet computing because of Microsoft has lost its unity and focus (3.4 Dis-Economies of Scalee-alone link]).

From this story, we learn that Microsoft had and perhaps still has a clear lead in some of this technologhy, but they are unable to convert this technology into profitable products because of internal division. In other words, their size prevents them from moving, a prediction of Sun Tzu's rules.

In recent years, Microsoft has been using their vast cash resources to buy small, successful companies, but by bringing these companies "into the fold," they have often killed their market potention. Such companies suck up cash in developedment but have a difficult time getting new productss to market because they run into conflicts with other Microsoft divisions. Large companies should instead "spin out" small companies, leaving them to grow or die on their own strangths. Companies such as Bungie, the developers of the popular Halo Xbox games, have prospered to the degree they have been able to establish their own independence rather than dependence.

UPDATE: A related article at on the Instability of Monopolies.

Warrior's Rules: