f you look at msft share price- it becomes obvious that msft has never been stronger and never held such a vast monopoly over software.
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MSFT's monopoly over PC operating systems is nearly complete. In
fact, the reason they got into hot water with the federal government
(FTC), was over possible anti-trust violations with respect to MS-DOS.
These allegations were put forth by none other than Bob Metcalf,
former CEO of 3COM. 3COM had had a joint-development project going
on with MSFT to produce what is now a failed internetwork product
(Lan Manager, I believe).
The results of the association were disastrous for Metcalf's career,
(he was ousted from the CEO spot at 3COM), and not good for 3COM
shareholders. Bob went ballistic and blamed his former partners,
Microsoft.
Well, it's not unusual for both associates and competitors to complain
about MSFT. It seems like it's the rule rather than the exception.
Anyway, Metcalf decided to get even by instigating this probe by the
FTC.
The point being made by the advocates of this probe was valid. They
alleged that Microsoft engaged in illegal restraint of competition
by being a vendor of software operating systems AND applications while
not supplying 3rd party competitors with the O/S specifications for
writing the applications. They saved the "secret" O/S function calls
for themselves, thus gaining a competitive advantage at the expense
of their competitors.
Anyone who ever had the misfortune of having to write device drivers,
applications, or servers for MS-DOS machines will acknowledge that
this was indeed true. It was even acknowledged by MSFT when they
finally published the MS-DOS spec, (AFTER Windows 3.1 was released),
and charged $130,00 for it.
This, in my mind, is a clear violation of the anti-trust laws.
However, there was, in 1990, no legal precedent for this kind of
action in the PC industry, which was still a brand-new business.
Though the investigation did little besides slap MSFT on the wrists,
it put them on the Fed's "black list". Now they have to mind their
manners or face more scrutiny.
One reason that monopolies are bad for our capitalist system is that
it does not encourage quality of products or service. Competition
in the marketplace has always had a net positive effect on the
economy as a whole because the quality products survive and the
crummy products fail. Consumers are left with a higher standard
to choose from. That is why SUNW endorses open systems so strongly:
they believe in their products and WELCOME competition, even from
MSFT. SUNW believes that they will prevail and prosper, as a result.
Microsoft has attempted to be proprietary, shifted the burden of
O/S support to hardware vendors, tacked on extra "surcharges" to
Windows NT, and published software that didn't deserve an alpha-test
a-ok rating because they don't have any competitors for PC operating
systems.
Now, I believe, that is about to change. They have serious
competition in the corporate market from vendors who have been
there a lot longer than MSFT. They may do ok with their workgroup
servers, if they can take the market away from Novell, and some
low-end workstation clients, but that's about it for Windows NT.
DEC is trying to sell it in place of the long-forgotten VMS on
their Alphas, but NT is not ready for prime-time. HP has made some
noises about climbing aboard, but, so far it's just noise.
The rest of their software business will be applications. Many of
them will be Java applications. MSFT is chafing under the
prospect of abiding by the restrictions of an open Java standard from ISO. They don't like it. They're not used to it. They prefer
shooting from the hip.
This boils down to moderating profit margins from their software
business. Perhaps they are hedging their bets by getting into the
media business.
cherylw |
