Table: How Microsoft Muscles into New Markets

1. Start with an existing monopoly. Microsoft (MSFT) controls desktop computing. When it ships its Windows XP in October, the product will be included with most personal computers sold.

2. Bundle a new service into your monopoly product. When consumers access the Web from Windows XP, they will be asked to join Passport, a service that packages their name, address, and credit-card numbers into a digital wallet. With Passport, they don't have to type in their vital data each time they go to a Web site.

3. Extend into a new market. By turning most PC users into Passport users, Microsoft hopes to build a large base of consumers using the service. That makes it attractive for more Web-site operators to adopt Passport for authenticating customer data.

4. Cash in. Once a large number of consumers and Web sites are using Passport, the company could be in a position to charge transaction fees for services based on Passport--such as alerts when a traveler's airplane flight is late.

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