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Technology Stocks : How high will Microsoft fly?
MSFT 489.91+0.6%3:59 PM EST

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To: Dwight E. Karlsen who wrote (8223)6/2/1998 9:17:00 PM
From: cheryl williamson  Read Replies (4) of 74651
 
Dwight,

I thought it better to respond to you on this thread.

Regarding anti-trust law: I'm not really qualified to discuss
it. I don't know a thing about what the DOJ can and cannot do
with the law & its enforcement. My guess that they are somewhere
in between a bull-in-a-china-shop and one of those dogs that
bites you in the leg & locks its jaws so you can't get rid of
it. One thing I don't doubt is Joel Klein's resolve. After all
is said & done, MSFT will either make enough concessions to
satisfy the DOJ or they will suffer through a lawsuit that will
damage them commercially.

I would like to go back to this business of the PC as an off-the-
shelf computer. Assuming that MSFT had marketed MS-DOS on their
own, proprietary Microcomputers (ala Apple), I don't see how
anyone could complain about anti-trust (given the current
complaints). They could have integrated any pieces into the OS
& sold the it bundled with pastrami, if they wanted.

The PC succeeded and outlasted other microcomputer manufacturers
because it had the IBM stamp of approval and because there were
so many 3rd party developers writing applications for it. As you
pointed out, compatablity among the applications was a HUGE
problem, especially considering the weakness of the supporting
OS. I remember writing a non-3270 SNA client that had to co-exist
with an IBM 3270 emulator & an Attachmate 3270 emulator, neither
of which assumed anyone else was going to use the PC besides them.
What a joke! Both 3270 appls took over the ENTIRE PC, including
all the hardware channels.

MSFT attempted to establish itself as the "standard" for everything
early on. In the beginning it was necessary. If the machine didn't
work with conflicting applications on board, no one would buy it.
They never had the best applications, but because they wrote the
OS, it was generally safer to use theirs. The only way third party
developers could insure OS compatibility was to work with MSFT.

However, MSFT had a built-in conflict-of-interest: OS vendor &
application vendor. They had a tendency to keep the OS specs closed.
I belonged to an informal coterie of determined hackers who uncovered
the "mysteries" of MS-DOS & tried to inform the public (pretty much
a waste of time).

At some point, I'm not sure when, MSFT turned "standards" into
"lockouts" as they began to flex their muscles when PC's slowly
gained acceptance in the marketplace. MSFT's competitors in the
applications market never seemed to have all the features that
MSFT applications did, & they didn't work as well.

I read, recently, about some internal memos running around MSFT
about how they planned to gain marketshare vs. NSCP in the browser
market. This business of leveraging the OS to sell the application
is something they've always done, it's nothing new. Now, however,
they have more ways of locking out a competitor than just manipulating
the api's that they publish.

Your rhetorical question, I think, is a good one: would the public
be better off without a MSFT monopoly than with it? Ignoring the
competitive pricing issue, for the moment, it's clear to me that
it is a double-edged sword: with more 3rd party applications
developers in a competitive market, there's no question that the
product quality would improve, MSFT has neither the talent nor the
resources to produce the best products in every PC application they
particpate in. However, there would need to be an open process
for developers, so compatibility problems would be minimized. This
would require MSFT to publish the OS specs to everyone, the way
Java is published.

It is self-serving and arrogant for MSFT to say on the one hand that
the consumer benefits from having a single-source vendor, and on
the other hand to refuse opening up the 3rd party market to all
(not just preferred) developers. So, when I used the term "screaming
bloody murder" it referred to the difficulty that 3rd party developers
have in getting into a market dominated by the OS vendor, not because
they can't survive in rough waters. NSCP, of course, already is in
the market and maintains a 60% browser marketshare. They began to
complain because they were being systematically eliminated, by
contract tying, from the PC market. They also sell to the Unix
market, but they shouldn't be locked out of the PC market by the
OS vendor who is using its OS in order to force hardware vendors
to use its own browser.

BTW: Now that MSFT has ported IE to Unix, a fairer assessment of the
quality of the 2 browsers would be their Unix marketshare, where
they have to compete head-to-head in a level field.
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