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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Charles T. Russell who wrote (33243)	11/8/1999 4:41:00 PM
From: cheryl williamson	Read Replies (2) \| Respond to of 74651

Charles, Thank you for your thoughtful response, Charles. You have covered quite a bit of ground. Let's see here.... By PC, I'm assuming that you mean an INTEL based 8088(et al) instruction set device. If you do, you now need to extend the term PC to include the AMDs of the world who've built instruction set compatible CPU and companion chip sets. Yes. There is a limited amount of 'cloning' that occurs without the threat of litigation. Well, right now I'm looking at a "Data Master" PC. I have no idea who made it. It will run FreeBSD, Linux, Windows, & NT. I don't even know who made the processors. They could be K6's or Pentiums. From what I can see, The "Data Master" is an off-the-shelf PC. I imagine that I could take the top off, Check out what was in it, go down to my local Fry's and buy all those components, and advertise it for sale on E-Bay. Who would sue me (in theory)??? BIOS code and the micro code on chip sets are indeed copyright(able). The BIOS spec was published with the original PC back in 1980 (???) I have the printed code @home somewhere. The interrupts are still the same now as then, as far as I know. You could write your own with a better way of making the instructions work, but they would be doing the same thing as the original IBM-BIOS. What would stop Microsoft from building a PowerPC line of computers tomorrow. Nothing I know of. Microsoft now directs all of their R&D towards the power PC. Is this a good thing for the market? I can't answer that, but I can tell you that the moribund PC market itself would be energized by more competition in the applications arena. Something sorely missing right now. Let's then assume that in 5 years, that this new MS computer has 70% marketshare? Does the bundling of the OS and the hardware exempt them from antitrust litigation. No it wouldn't. Yes it would. It's not illegal to hold a 70% marketshare of anything. It's their computer. They are spending R&D dollars on it and competing with everyone else. If they win the competition, they have built the better mousetrap (and paid for it along the way). What ultimately got Microsoft into trouble was the predatory nature/posture they took when dealing with Sun, Netscape and AOL I think that was just the straw that broke the camel's back. They already had been under investigation for years. Separating the browser from the operating system is just a red herring. It is nonsense. From a legal standpoint, my lay opinion is that you may be right. The problem is the tying and predatory pricing. Did Microsoft stifle innovation in the browser market. They did not. Look at the quality of Netscape Nav, Opera etc. Did they stifle innovation in the OS market, no. Linux is an excellent operating system. Look at the Java OS. My contention is that MSFT has an inherent conflict-of-interest because they publish a proprietary O/S for an open system piece of hardware in order to make money on applications programs, and that that is the definition of their business model and has been since the licensing argreement Gates signed w/IBM for MS-DOS distribution. I believe they DID participate in predatory business practices because that was what they felt they needed to do to make a profit. Linux has gained cachet mainly because of DOJ pressure in this lawsuit. Before that it languished in the university because no one would push it for fear of retribution by the boys in Redmond. As for Java, MSFT attempted to pirate it from SUNW, in violation of Sun's copyrights. I'm not forming my arguments because of that, however. It is because I believe the consumer would be the ultimate beneficiary of an open O/S for an open platform. The reason is that the consumer secretly wants a monopoly, defined as standard-bearer. Because of public domain hardware this is exactly why I'm supporting the divestiture of DOS/Windows and NT from the MSFT catalogue. A standard O/S for a standard piece of hardware is a good idea. cheers, cherylw

To: Charles T. Russell who wrote (33243)	11/8/1999 6:51:00 PM
From: RTev	Read Replies (1) \| Respond to of 74651

Excellent post. (I don't agree with all of it, but it's refreshingly well argued.) What ultimately got Microsoft into trouble was the predatory nature/posture they took when dealing with Sun, Netscape and AOL. It was documented. And when it played back in court it was pretty frightening. ... Separating the browser from the operating system is just a red herring. It is nonsense. I think that you're right on that point. The bundling was attacked because the DOJ hoped that they might be able to use Microsoft's '95 Consent Decree to put a wedge between what they saw as predatory practices and the market. The Circuit Court closed off that less severe track by agreeing to Microsoft's liberal interpretation of the decree. That left DOJ with little option but to mount a full-scale antitrust action. In that action, they defined the single tying act as part of a broad pattern of acts designed to protect Microsoft's platform franchise. Jackson seems to suggest that it's too late for any change in the tying practice to fix the alleged (and now decreed) market manipulation. The cost of the various products to consumers is mentioned -- sometimes prominently as when they analyze Microsoft's high costs of developing and marketing a free browser -- but it doesn't become a prime aspect of the case. In fact, the plaintiff case, as Jackson has refined it, comes down to something that Microsoft correctly identified early on: "Freedom to innovate." Microsoft did many things wrong in this case, but something they did right is pick up on that phrase and use it throughout as their prime PR stance. The gov't case charges that Microsoft's practices stifle the market and put a damper on innovation. Microsoft did not successfully counter that charge in court, but they have at least been successful in the PR battle. I appreciate you're point that "the consumer secretly wants a monopoly, defined as standard-bearer" and that other monopolies are likely to rise in the internet economy. I agree except that I think the consumer cares mostly about the standard and doesn't care whether it comes from a monopoly or from some other mechanism. Several standard-setting methods have developed. Only in a few instances have they depended on a monopoly to set them. The standard that's eventually embraced by mixed market forces might not be the best standard, but it's at least as likely to be a good one as a standard imposed on a market by a monopoly. The DOJ didn't grab onto the clever catch-phrase, but their case boils down to "Freedom to innovate". It's just that they define it as a broader freedom.