Microsoft under siege

Microsoft under siege

Microsoft's new monopoly status has not sent the Australian channel into panic mode but inspired a mixture of cautious optimism and apathy as resellers await the Department of Justice's final ruling.

Curiously, many resellers contacted by ARN were not even aware of Judge Thomas Penfield Jackson's ruling that Microsoft is officially a monopoly.

Of those who were, many remain sceptical that the decision, which is the first handed down in a long legal process, will have any immediate effect on either Microsoft or its partners.

Others were gleeful that the monster had finally got its just desserts and were confident the market would consequently open up.

Both sentiments were tinged with the realisation that the giant software company would eventually have to undergo an overhaul, (or was already in the process of doing so), either forced by the Government to change or metamorphose voluntarily due to changing customer expectations.

According to Ian Buddery, managing director of IT services provider eServ, regardless of the eventual outcome of the trial, the current situation will force Microsoft to evaluate its strategies, and it might be the resellers who reconsider their relationships with Microsoft rather than Microsoft having to reassure the reseller.

"If Microsoft feels more restrained in the future because of this, that can only be a good thing for the industry," said Buddery, explaining that resellers will have more opportunity to sell non-Microsoft products because Microsoft has been forced to rethink its aggressive market tactics. Competitors will then have a better chance of generating customer demand.

"In my view, there isn't anyone in the industry who isn't aware of Microsoft's incredibly aggressive approach to the market," said Buddery. He believes Microsoft continues to look after its own interests at the expense of the industry, agreeing with the ruling that "Microsoft has stifled competition".

He cited as two examples Microsoft giving away Internet Explorer for free to kill off Netscape and selling Microsoft Money for $50 in an attempt to damage Quicken. "Companies reflect the personality of the people who lead them. Right now, Microsoft is the 900- pound gorilla of the industry," he said.

Buddery said one of the first indications the market is pleased about the announcement was the fact the shares in Red Hat stock rose from $15 to around $100 shortly after the announcement.

Yet Brian Walshe, marketing director of Microsoft partner Praxa, said he often gets frustrated when the company doesn't respond in kind to the criticism it receives.

"As a partner we get frustrated that Microsoft isn't as aggressive as it should be. At trade shows and the like people bag them to the nth degree but Microsoft very rarely does that to its competition."

He also defended Microsoft's actions in the context of Netscape and Quicken accusations, arguing the point that the industry and media had double standards for Microsoft as an industry leader and its competition.

"The Netscape thing is interesting. Netscape basically got up and said they wanted to wipe Microsoft out. If Microsoft had said this about Netscape, people would have been howling. But if people call you the antichrist you should at least be able to compete against them," he said.

Walshe suggested that Microsoft has changed of its own accord over the last couple of years, due to market forces rather than any legal troubles, and will continue to do so.

"The issue here isn't whether or not they have changed but whether or not the press and the industry acknowledge the change or continue to paint a bad picture of Microsoft," he said.

And he is adamant that changes will never encourage a move away from a channel model of distribution. "Microsoft is very, very channel friendly. We've gone from a $20 million a year business to a $110 million a year business since 1992, mostly on the back of Microsoft."

According to the New York Times, the US Justice Department is considering several ways to resolve the Microsoft antitrust case. One of the more drastic ideas was to divide Microsoft into several parts, each of which held Microsoft's intellectual property but had to compete with each other.

Another suggestion put forward was for Microsoft to publish the proprietary source code of Windows or make it auction the Windows code so other companies could sell competing systems. Another was to split Microsoft into three companies, one for controlling the operating system, one for the applications programs and one focused on the Internet.

Yet according to Judge Jackson, Microsoft is a monopoly that is free to charge what it wants for its operating systems and is not threatened by rival platforms, such as Linux.

His finding of fact appeared to reject the company's defence that it was besieged by competitors.

Microsoft's local office dismissed the findings as a serious threat to the company or its channel, saying that it would not affect Australian operations.

Microsoft partner Great Plains Software agreed the finding would not impact the company as a developer. Gail Johnson, Great Plains Australia's marketing manager, said it would be business as usual. "We will continue to work with Microsoft," she said.

And Microsoft's stock stability appears to reflect this lack of urgency and concern. Prior to the announcement, analysts were predicting that if found to be a monopoly, Microsoft's share price would drop 25 per cent. In fact, it has only dropped about three points.

"People here just don't make technology decisions based on a court case in the States," said Walshe.

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