Microsoft conspires to charge retail customers even more money for its software!
Are those people crooks or not, trying to rob the public?
How many angels can dance on the head of a pin, anyway?
For Personal Use Only
>>>>>
dailynews.yahoo.com
Friday November 20 3:01 AM ET
Microsoft Has Considered Yearly Charge For Windows
By David Lawsky
WASHINGTON (Reuters) - An internal Microsoft memo released at the software giant's antitrust trial Thursday showed the company has considered charging an annual fee to computer users for its Windows operating system starting in 2001.
The potentially explosive revelation helps bolster government charges that Microsoft's monopoly in operating systems harms consumers.
The memo to Microsoft Chairman Bill Gates from a top executive said the proposal to charge consumers annually was ''the best thing long term'' and noted: ''We have increased our prices over the last 10 years (while) other component prices have come down and continue to come down.''
The federal government and 20 states have charged that Microsoft Corp. (Nasdaq:MSFT - news) illegally maintained its monopoly in operating systems and used that monopoly to compete unfairly against Netscape Communications Corp. (Nasdaq:NSCP - news) in the market for Internet
browsers.
Thursday's session was also marked by District Judge Thomas Penfield Jackson's observation that Microsoft Chairman Bill Gates had been an unresponsive witness.
Rejecting a Microsoft lawyer's charge that the government was showing Gates' videotaped testimony piecemeal to increase media coverage, Jackson said, ''If anything, I think your problem is with your
witness, not with the way in which his testimony is being presented.''
''I think it's evident to every spectator that, for whatever reasons, in many respects Mr. Gates has not been particularly responsive to his deposition interrogation,'' Jackson added.
Joachim Kempin, Microsoft's senior vice president for sales to personal computer makers, used the three-page memo released Thursday to lay out a strategy that would preserve the company's prices
even as PC prices plummeted, but he was also concerned the company could go too far and foment a rebellion among computer makers.
The December 1997 memo looked to consumers as a new revenue stream.
Until now, consumers purchasing new computers have gotten the Windows operating system wrapped in, without paying a separate fee.
Kempin's memo proposed changing that under the heading, ''License for limited time and create annuity business.''
''This is the best thing long term but it might disrupt end user operations and could require end user registration,'' Kempin wrote. Kempin reminded Gates that he had made the suggestion before and
added that it needed to be seriously addressed.
Kempin wrote that charging the annual fee was not an option until 2001, when a new version of Windows is expected.
Microsoft spokesman Mark Murray, asked afterward about the memo, said: ''This is not a licensing option that is near reality. It is simply an idea that is thrown out there to look into.''
The December memo was used by a government economics expert, Frederick Warren-Boulton, to support his allegation that the software giant had monopoly power and could raise prices far above what it could charge if it had competition.
''I believe Microsoft has raised prices above competitive levels by a significant amount,'' Warren-Boulton said in court.
Kempin's memo projected that if the trend toward cheaper computers continued toward the $500 level for Christmas 1998 -- and this month some complete systems are selling for less than $600 --
''our royalties... could be as high as 10 percent of total system price.''
Kempin said that Microsoft must ''resist... royalty price decreases firmly'' for the low-priced machines. He said the company's goal was to get the ''highest amount of dollars'' possible from computer makers for loading Windows on their machines.
But the memo also expressed fear that Microsoft's high prices might incite action by the nation's biggest personal computer maker to create a competing operating system.
''Our high prices could get a single OEM (Compaq might pay us $750 million next year) or a coalition to fund a competing effort (say in India),'' he wrote, referring to personal computer makersas original equipment manufacturers or OEMs.
One place that Kempin looked for a new flow of cash was personal computer owners.
Kempin devoted the last page of his single-spaced memo to concerns about who might be able to derail Microsoft's plan.
Kempin, after considering the threat posed by a coalition of PC makers led by Compaq Computer Corp. (NYSE:CPQ - news), dismissed it by saying he doubted they could market the product successfully. Kempin also doubted that computer makers would be willing to sell machines without
Windows or another operating system. ''Who would want to start with this and lose business?'' he asked.
Kempin also expressed concern that Sun Microsystems and Netscape might team up, but said that the ''compatibility barrier'' stood in the way.
Warren-Boulton testified Thursday that incompatibility with other systems had prevented competition.
Microsoft's lawyer, Michael Lacovera, suggested that the Linux operating system provided competition. Linux is a variant on the UNIX operating system and is used mostly by computer servers. But Warren-Boulton dismissed it, saying Linux had not constrained Microsoft's prices.
Copyright © 1998 Reuters Limited.
=============
<<<<< |
