| BUSINESSWEEK ONLINE : FEBRUARY 1, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- READERS REPORT
A Demystified Look at Microsoft (int'l edition) The arguments put forth for Microsoft Corp. in ''A tough sell, but not impossible'' (American News, Jan. 18) echo the ''definition of sex'' smoke-and-mirrors that have gotten our President into so much hot water. Let's stop the legalistic nonsense and get to the point. The job of Microsoft's management is to maximize long-term profits across all products, which are intertwined. They know that applications software drives the sales of platforms and conversely, operating systems enable applications development. Microsoft's monopoly in the operating-system (OS) market has been leveraged to the detriment of consumers to ensure Microsoft's overall position, gaining them a top position in desktop applications and eventually in Internet services. The damage? Looking at historical pricing of Windows, Internet Explorer, Microsoft Office, and MSN services independently is meaningless. The initial cost of software is the smallest part of the cost of software ownership. To get a true sense of cost, you also have to look at installation, training, cost of conversion from one software to another, upgrade costs, and hardware requirements caused by ever more bloated software. Abuse of Microsoft's monopoly position probably did not happen through nefarious schemes but rather through the day-by-day decision-making process of a skilled, aggressive competitor. How would this work? First, your 80% share in OS becomes a lever to gain dominance in applications. You quite rightly involve developers in your next OS, called OS/2. However, you figure out that you will abandon OS/2 to IBM and instead move to Windows 95. You immediately tell your in-house applications developers to write for Windows 95, but you wait to tell competitors until they have so much invested in OS/2 development that they won't change. As a result, you launch Windows 95 applications nearly two years ahead of others. While the competition is struggling to regroup, you realize you can leverage by combining the key applications into a ''Suite'' which may well have failed if competitors had had Windows 95 versions of their then-dominant applications ready in time. Three years later, you have incredible market share. Now that you're dominant in applications, that bolsters your position in OS. Why spend money developing applications for someone else's OS? You decide not to offer your applications in any meaningful way for the two competing platforms, IBM's OS/2 and Apple Computer Inc.'s Macintosh. With older versions of Word and Excel running on those platforms, why would customers want them? Despite billions of dollars of OS development and marketing, neither competitor seems to be able to overcome your position. Then you get ''Net religion'' and realize that it will be Internet applications and services that will drive future OS sales. What do you do? Leverage your way into that market by ''improving'' your OS! Give away the browser and integrate faster, ''polluted'' versions of industry-standard software like Java. Never mind the costs associated with bug-laden software rushed to market and strong-arm tactics forcing hardware vendors to include your software. This will continue to happen until Microsoft is stopped by an outside force. Its operating-system group should be separated from the rest of the company. The interdependencies and leverage with which Microsoft operates is obvious to those of us in the industry. Bob Anderson Pacific Palisades, Calif. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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