Note that Microsoft has an extremely high operating margin of 40%, which indicates insufficient competition. Even Apple has "just" 30%. With all that money laying around, they can just gobble up anything but the biggest fish.
On the other hand, Exxon Mobil has an operating margin of nearly 20% despite selling an undifferentiated commodity in a market with many well-capitalized competitors. (They are not the only one: ConocoPhillips also sports an operating margin in the range of 20%.)
The particulars of a market often drive margins more than does the competition.
Also note that the oil companies I mentioned have higher margins than Comcast, and they operate businesses that are also capital intensive with lots of plant and equipment. They operate in more competitive markets than Comcast, and yet they have higher operating margins. Different markets produce different results.
The first big player in a space e.g. Atlassian just acquires any competition and guts it. Sure, that's as free market as it gets (ignoring anti-trust?) but I don't see the benefit to the consumer.
Or, at the other end, as a Canadian, UK taxpayer (and many others) your money goes to keep afloat gov't subsidized startups that could never compete in the free market otherwise... is this beneficial as well?
I just write ANSI C so maybe it's all lost on me somewhere.
Did Atlassian “gut” Trello or Bitbucket? I was using both before Atlassian acquired them and don’t fully understand what you’re talking about.
Can you elaborate a bit more about your theory？
We shouldn’t expect them to have similar margins.
The gross margins on those segments are completely different - twice as large for services.
Microsoft reports three segments with roughly the same size and similar margins.
Microsoft is almost entirely a software company.
The xbox 360 had such terrible heat dissipation problems that it got it's own moniker 'the red ring of death'.
In the old days their HID device devision was solid, and was doing some interesting things. Back in the 90s-00s their keyboards and mice were pretty much best in class (if you wanted a membrane keyboard), the natural keyboard was a big step forward in ergonomics. On the gaming side they had solid mid range flight sticks that the rest of the industry lacked (it was either crazy high end or literal trash). Hell they even tried some coolish experimental devices that were at least interesting .. Specifically I'm thinking of the Sidewinder Strategic Commander. A kind of one handed keyboard that was sitting on top of a two axis sliding mechanism.
In the 2010s they did some interesting devices (or branded some) like the kinect and the original surface tables (the ones that looked like cocktail style arcade machines)... and they started moving into compute devices like the 'second gen' surface branded tablets/convertables/laptops. Those seem less successful overall. I don't see too many enterprises giving people surfacebooks instead of lenovos...
MS have definitely had some failures and weirdnesses (and a few straight up "should never have happened" issues like the RROD), but that's part of innovation.
In the real world the technology industry does tend to have higher margins than other industries. There might be perfectly normal explanations for that, such as network effects, but there are also government policies that have the effect of reducing competition. For instance, intellectual property laws reduce competition in order to attempt to encourage innovation. The strawman version of capitalism doesn't exist in the real world. Margins can remain high for some time.
That being said, there are competitors for Microsoft's bread and butter products. If you want an alternative to Windows, try Linux. If you want an alternative to Office, try Open Office. For many users, however, they get a better experience with the Microsoft products than these alternatives, even though they are free. Microsoft has to keep making their products better than the alternatives or people will use others (though there are costs of switching and network effects that mean that MS probably doesn't need to have the absolute best product on the market in order for customers to keep using them).
Unless you go out of your way to buy cheap laptops the difference between macbooks and your favorite dell business longitude isn't as bad as you think.
Your argument is not that different from people who say things like "we don't have perfect competition, that is a market failure, the government must fix it". As I said before, perfect competition is a model. It isn't some utopian ideal. The argument as I phrase it is basically the Nirvana fallacy, and I don't think I'm mischaracterizing your views.
I would be more sympathetic to arguments like: "anti-competitive corporate behavior, like the formation of monopolies or cartels or other means that reduce output and raises prices, is not socially optimal. The government should prevent such behavior"
In other words, I think you adopt a position that tries to prove too much. This merger may be bad (or it may be good, I don't really know), but you don't have to rely on the argument that if competition isn't perfect then the government should step in in order to oppose it. That's not a good argument.
How are any of those things relevant for the comparability of the businesses of Apple and Microsoft anyway?
Apple's gross margin is about 40% because the marginal cost of hardware is somewhat expensive. Software companies typically gave gross margins of 65% or more, because the marginal cost of software is zero.
This is an odd take.