Duopolies – where only two companies have dominant control over a market – abound in the world of technology. Yet even those who are actually involved in a duopoly can barely understand the mechanism. This is partially because there are faux duopolies everywhere, such as AMD and Intel, which are more classic competitors, and wannabe duopolies such as Nissan and Toyota. The duopolies that interest me are specific to hardware running software.
There are currently three major duopolies in play: Windows PCs and the Macs, the Android phone and the iOS phone, and the Sony PlayStation 3 and the Microsoft Xbox 360.
There are probably other examples in other arenas, such as embroidery machines and machine tools, but you write what you know, as they say.
The duopolies above stem entirely from third party development. The game console is the most interesting example because it is the most competitive. A lot has changed over the years since Sega and Atari were still in the game. Sony and Microsoft have managed to bump other players out of the console duopoly (Nintendo is currently filling a niche and can probably exist outside the Xbox/PS3 milieu forever). So Microsoft knows this can be done and hopes it can pull a similar stunt with its phones.
But it can't. The Xbox folks were outside the normal corporate channels in Redmond and were not subject to typical internal Microsoft meddling. Ask yourself: Why, if Microsoft is so hot over its "Microsoft design language"-everywhere (aka Metro-everywhere) policy, does the Xbox not use the metro interface as well?
As long as the Microsoft phone group is dominated by corporate HQ it does not have a prayer. While Microsoft corporate is top dog in another duopoly (Windows versus Mac), it will never get its phone business bumping Apple or Google out of their phone duopoly. Why? Because this corporate group, unlike the Xbox folks, has never had to bump anyone from anything. It was a gift when DOS first appeared on the PC. They are uncompetitive people.
I'm forever amused by this dilemma. Now it seems as if Spain's Telefonica is adopting Windows Phone 8 hoping to put a crimp into the Android/iOS business in Latin America and Europe. A fool's errand.
Blackberry, of course, is in even worse shape in this regard, but it does have the opportunity of maintaining its niche status in much the same way as Nintendo. Nintendo seriously understands its uniqueness and its customers (even I play with the Wii U). This is a key to success outside any duopoly. Linux, for example, is the choice in the server farm, and thus does well against Windows/Mac on the PC. Blackberry might be able to do this too.
Microsoft, meanwhile, cannot manage it. Not unless it spins off the whole Windows Phone OS division and lets it experiment without restriction.
All three of these duopolies exist because there’s a very limited number of people who can develop for these systems and those people want to get paid as much as possible. Those developers cannot afford to work on an also-ran platform. Developers work for a dominant platform and the almost competition, period. That's how you get a duopoly in computers, game consoles, and phones.
Since we've seen these duopolies busted in the past – Sega, Atari, Nintendo, Blackberry – there is no reason it cannot be done again. I just don't see it coming anytime soon.