In fact, this is a load of nonsense. In a free, competitive market, the number of competitors is always going to be exactly the number the market can sustain, no more, and no less. Back in the late 1980s, I remember seeing an issue of ''PC Magazine'' which did a blockbuster review of about 60 different word-processing packages for MS-DOS. Nowadays you would be lucky to find half a dozen different packages for Windows. 

  

 In economics, we talk about the “fixed cost” of setting up to manufacture something (product design, building of factories etc), versus the “unit cost” of building each piece of product for sale (price of raw materials, wages for factory workers etc). Clearly, your profit depends on how much you can sell each unit for, minus the unit cost, plus you also have to ''amortize'' (apportion some share of) the fixed cost over the first ''n'' units you sell. For instance, you might expect to recover the fixed cost over the first two years of selling the product, just in time to develop a new version with an new amount of fixed cost. 

  

  

 [Proprietary] software relies on recouping the costs through selling the software. Since the unit cost is essentially zero, the costs being recouped are largely fixed costs. Once these have been paid off, the price of the software can be greatly reduced, and the company can still make a profit. 

  

 But conversely, if there are a number of different competitors with proprietary software products, the price could drop to the point where only the number-one vendor is still making a profit, while all the rest are losing money, and eventually go out of business. This seems to happen sooner or later in every market segment with proprietary products, which is why proprietary software is dominated by a small number of very large companies.