“Microsoft continues to enjoy supremacy in the operating system
market. One would expect that Linux, being free, would by now have
gained a vast majority of the market share that Microsoft has so
carefully compiled. And yet this is not the case. Large firms and
corporations continue to use Microsoft products, as does a large
percentage of people not involved in “big business.” Why is this
happening? How can Microsoft retain its competitive edge when
its products cost in the upward regions of $300 and Linux is
free?“
“The answer itself is rather simple. People pay for a good
according to the marginal utility they glean from the last unit of
that good. In other words, when the marginal utility they derive
from a certain product drops below a certain point, they will
refuse to consume an extra unit of that good, and hence will not
pay for it. Taking the converse of this statement, it is simple
enough to see that when a consumer’s marginal utility is zero (or
as close as can get), that consumer does not pay for the good or
product….”
“Secondly, we say that Linux is free, but this is not to say
that the software that is run on Linux and is needed to take full
advantage of the operating system, is as well. That is, although we
don’t pay for Linux, we pay for the applications that we use on it
in the same way that someone using Windows would have to pay to buy
any application. Indeed, when you get right down to it, is Linux
really that much of a “better deal” than what Microsoft
offers?”