Wednesday, September 27, 2006

Yet Another Story About Economic Illiteracy

Its kinda like shooting fish in a barrel - everywhere you look you see some reporter just not getting how economies work.

Microsoft is considering giving away its basic Microsoft Works word processing and spreadsheet software, aimed at preventing a possible challenge from Google, who bought web-word processor Writely in March, and began testing Google Spreadsheet in June.

However, the Redmond company runs the risk of hurting its Office business, which contributes a significant amount of revenue to the company's bottom line. The challenge will be how Microsoft handles the Web-based service while still making money off its Office suite.

Nearly every advance runs the risk of hurting the bottom line. That was competition does! It drives down price in order to fight to fulfill customer demand. When Apple release the iPod mini it threatened to hurt sales of the iPod. When IBM released the PC it threatened to hurt sales of the typewriter (can you even buy a typewriter anymore?)

Competition is destructive - especially for the companies competing, but it is Oh-So-Wonderful for us consumers.

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