Wednesday, May 30, 2012

Microsoft vs. Peotone; both start in 1985

Image representing Microsoft as depicted in Cr...
Image via CrunchBase

Business Model vs. Boondoggle

In 1985, Bill Gates who incorporated Microsoft four years earlier, released the first version of the Windows Operating System. It made him one of the country's youngest millionaires.

That was also the year that three Illinois state senators sponsored a resolution to begin the study of a new airport to serve the Chicagoland area. It has since evolved into the Peotone Airport, one of the state’s biggest boondoggles.

Look at the evolution of the two projects.

While state officials with ties to real estate and construction businesses were busy trying to sell their idea to anyone who would listen, Bill Gates of Microsoft was honing his product and becoming one of the richest men in the world—a billionaire by 1994.

That was the year the Peotone Airport was exhumed. It had actually died and was buried two years before when officials from two states and the City of Chicago voted against it. In 1992

At the final meeting of the BiState Policy Committee, when a preferred site for a new airport was to be chosen, the nod was given to an airport in Chicago's Lake Calumet area. Illinois and Chicago members, including ex-Gov. George Ryan. Indiana officials remained committed to the Gary site, the runner-up. Three separate amendments by the late State Sen. Aldo DeAngelis to study the Peotone site if Lake Calumet failed, were voted down unanimously. In the summer of 1992, Chicago Mayor Richard Daley withdrew the Lake Calumet site from consideration, reportedly because the Republican-led Illinois General Assembly would never give Lake Calumet a stamp of approval.

Thanks to Gov. Jim Edgar, in 1994, the Peotone Airport was brought back from the dead, though it has been on life support ever since, unable to ever breathe on its own. There was always state intervention to breathe for it.

What a contrast between a successful business model—Microsoft—and a government boondoggle—the Peotone Airport.

A successful business model must be reliant on customers to use it and stockholders to invest in it. Neither of those two things would happen without a basic need for it.

And then there is the Peotone Airport. Not only is it questionable that an airport near Peotone, about forty miles south of downtown Chicago, would attract enough passengers to make it viable, but airlines say they refuse to use it. No official need has been established for it.

In fact, aviation experts that cite a downward trend throughout the aviation industry, claim that building the Peotone airport would result in losses similar to the other state fiasco—Mid-America Airport near downstate Mascoutah—an airport that has sat virtually empty for more than ten years.

Both Microsoft and the Peotone Airport do share one aspect.

Microsoft has had many different versions. So has the Peotone Airport. The big difference is that each version of Microsoft was an enhancement of the product. Variations of the Peotone Airport have resulted in no significant change. It is not only not better than the airport proposed in 1985, it is much smaller, and even less useful. That hasn't stopped the State of Illinois however, from trying to convert useful farm property from unwilling sellers through condemnation in court.

Oh, there is one more big difference between the successful business at Microsoft and the Illinois boondoggle that is the Peotone Airport.

Microsoft continues to make money. The Peotone Airport continues to cost Illinois taxpayers money.

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