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

To: Gerald Walls who wrote (33632)	11/10/1999 11:22:00 AM
From: Conky Lives!	Respond to of 74651

Would the OS part be allowed to distribute Notepad with Windows? Notepad is a freely distributable application. The source is readily available with VC++. Any programmer can freely build it and/or modify it, and freely distribute the thing.

To: Gerald Walls who wrote (33632)	11/10/1999 2:23:00 PM
From: William Chaney	Read Replies (1) \| Respond to of 74651

>>>Would the OS part be allowed to distribute Notepad with Windows? If not, does someone have to buy such a basic application as a Separately Priced Product? This statement really identifies the basic problem with the ideas floating around that there has to be some regulation of MS. Who will be the regulators and how will they decide such questions. It's hard to envision any workable solution to Judge Jackson's finding of facts other than a breakup. I find the regulation solutions to have a lot of problems, although the actual breakup into two or more companies is more complex than the AT&T example used since that had local and long-distance phone service as a easy way to identify the parts of the company. Such a breakup, if performed, would be best structured if no restraints were put on the operating system company (MS-OS). As you correctly point out, what goes into the OS package is a problem now and these regulation scenarios are not workable over the long term. Any attempt to do so would look foolish four or so years from now. For example, a basic word processor, such as Notepad, and more appropriately, network connectivity software, is now expected to be part of the OS package. Six years ago you bought your network connection software separately. Under a OS/APP breakup structure, the MS-OS company could put anything it wanted into the OS. However, it would have the incentive to negotiate equally with the MS applications company (MS-App) and other companies for such items. In this example, the MS-OS company would go to Netscape, Spyglass, and MS-App and say, "We want to incorporate a browser in our OS. What kind of deal can we work out?" These companies would then decide how much to charge MS-OS. There would be no barrier keeping MS-App or Netscape (or both) from giving the browser for free to MS-OS, but the costs would then be carried by them alone and the benefits (increased sales) would belong to MS-OS alone. MS-OS could decide it was the best business decision to incorporate both browsers into the OS. MS-OS and MS-App would be two separate companies with separate shareholders. Even if they started by giving each MS owner 1 share of each new company per MS share owned, after a while people would sell and buy shares in both companies. MS-OS would decide how much of a word processor to put in, consistent with its costs and the benefits of increased sales and profits. It would negotiate with MS-App for Wordpad or Word, Corel for WordPerfect, Sun for Star Office, or, with other companies for any number of nearly defunct wordprocessing apps such as Wordstar or Describe. If MS-OS wanted to write such an application to avoid having to deal with these companies, it could spend its resources to do so. Likewise, the MS-App company would have equal incentive to write applications for any OS that was available. If it decided that Linux was popular enough to write for, it would then have the incentive to do so, without worrying about the effect on the OS sales of the other arm of the same company. MS-App would ignore an OS only at risk of losing sales. The only thing driving its decisions would be the responsibility to its shareholders. The point is that the decision of what apps to include in the OS would be made on the basis of cost to the OS company and the profit derived from increased sales. The companies that developed these apps would have an equal incentive to get what they perceived as a fair price based on their costs of development. A modification on this would be to create two or three equal OS companies starting with equal rights to MS operating systems and let them negotiate and develop the OS separately. In a breakup scenario the Judge might consider this along with the creation of MS-App to provide the competition on the desktop if he felt that the OS "Monopoly"-his words- was too established for a simple breakup described above to work.

To: Gerald Walls who wrote (33632)	11/10/1999 5:34:00 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 74651

A utility, which could be supplied as part of the system, or as a separate entity to work with the system, supplied by another software designer, is just that - a component that can be built in or added on, as long as the outside designer has a clue on how to incorporate the utility into the system. Your point is well taken, and there is also a legal precedent that might apply to future issues like this. Do you remember the Stacker compression utility that was popular several years ago? At first this utility was designed by STAC Electronics and bundled with the system as a way of saving hard disk space, in the days when disk memory was more costly than it is today. Well, Microsoft decided it need not buy Stacker, and instead it would use a slightly modified version of its own. This decision really hurt STAC, and the company forthwith filed a lawsuit charging MSFT with copyright infringement. Eventually STAC won. Here's the lesson: If MSFT writes a utility, it is copyrighted and legally protected. If someone copies the utility enough to infringe the copyright, they'll be prevented from selling it and may also have to pay damages. The copyright law, in other words, self regulates that problem, allowing the system developer to produce his own utility, but on the other hand, not preventing an outside software developer from providing something better, as long as it is original and does not copy what already exists. The rules of the game are not all that difficult to follow. The more they are abused, the more likely it is that some outside body, whether it be a government agency or a court, will impose regulation that can be obnoxious, costly, time consuming, and inferior in all respects to the self regulation that decent companies are capable of imposing, provided that they have the will. As one of the most noted experts on administrative law wrote (about 30 years ago), "This is not a country of laws, but of laws and men."