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kumarvvr

I think we are in an era where being a monopoly is a net negative for companies.

That a monopoly like Intel has been toppled so fast, so easily and so efficiently is astounding.

How long did its monopoly last? 2 decades?

In the future, I would presume that the longer a company is in a monopolistic setting, the less valuable it becomes.

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I see it as the exact opposite. Intel is being toppled because it was not the only place one could get what they needed, especially Apple.

On the other hand, vertical monopolies are huge right now, since technology and automation allow you to gobble up adjacent businesses and squeeze out the margin at very little cost. You see this in many other business lines, even healthcare.

The question is how defensible is your monopoly?

Intel being a vertical monopoly is a large part of their downfall. Once the manufacturing side stumbled the entire company was impacted.

Intel wasn’t a monopoly

ASML seems like the one with a monopoly on the manufacturing side, and their market cap shows it.

Up until the launch of AMD's Ryzen, Intel having 80+% of consumer CPUs and 99% of server CPUs, would in fact, be considered a Monopoly.

‘Considered a monopoly’ by some regulator’s definition maybe, but not in fact a monopoly in the economic sense of the term.

Being vertically integrated was a large part of their downfall, not their monopoly status.

It generally has been a net negative over a sufficiently long time horizon in the tech industry. Intel is slowly being eaten alive from all directions but is currently so dominant in their markets (from a business standpoint) that it's difficult for many to imagine a world where they aren't the leader, at least from a revenue/profitability standpoint.

I think it has always been this way. Organizations lose coherance and agility the bigger and older they get, whether they're corporations, governments, or any other organization. Some manage to last much longer than others, though.

In your thesis, why is being a monopoly a net negative? Are you arguing the pole position inevitably leads to complacency in core products, or something else?

Exactly. When you are a monopoly power, especially in our times and coming decades, there is a high probability that innovation will stagnate and the focus and management will shift to extracting cash from the company's customers.

My contention is that the monopolies of the past had a long life. The monopolies of the future, will not be so fortunate and there will be someone else who will innovate better and creep up.

This shift, in my view, is because the industrial production base of the world, has become fragmented enough and optimized enough, that the capital and effort to innovate have come down.

I tend to agree, although I would contend the shift is really due to market segments with short product cycles.

With short product cycles, it doesn't take a that much calendar time for a monopoly to sputter.

Being a monopoly is never an inherent disadvantage. The only threats to a monopoly are government intervention and poor management.

I think the point is that monopoly power seems to breed poor management so consistently that it ultimately becomes a curse.

Monopolies may also thrive or die on their own inherent ability (or inability) to implement creative destruction, to obsolete their own products with a new, better line of widgets, or a changed business model.

One word: mobile.

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