Competitive Dynamics in the Operating Systems Market : Modeling and Policy Implications

Based on concepts of population dynamics and organizational ecology, the study analyzes the evolutionary and competitive dynamics of the highly concentrated desktop/laptop operating systems market and draws conclusions on the impact of open source software on market competition. Market evolution is estimated and forecasted by applying the Lotka–Volterra model, which describes the competitive interaction of species for a common supply. Genetic algorithms are also deployed for the estimation of the model's parameters.Findings suggest that Linux can survive competition, even in a highly concentrated market, while Mac OSX is mostly benefited by the existence of Linux. As one step further, the study performs a sensitivity analysis of the possible effects on market structure induced by a rise in Linux adoption and identifies the conditions under which market structure can dramatically change, even to a competitive one. Results can provide valuable inputs for managerial decisions and strategic planning to the players of software markets