So Reggie, when did Jeep have to deal with "free forever" competition? Or even "free forever" radio add-ons? When did Lotus or Borland have to deal with "free forever" software, hardwired into your new PC whether you wanted or not? With Michael Dell there to enforce "choice" in the Microsoftese sense?
Oh, and before you go off on the "Nav was always free, blah blah blah, there was this article about Spyglass, NYT, 3/2/98, which I'll quote briefly: (from search.nytimes.com , but no promises on the link working)
Colbeth approaches Microsoft from the vantage of a battle-tested pragmatist, not as a lawyer or economist. Microsoft, he says admiringly, is filled with brilliant, tireless workers. "It's a great company," he said. "I have tremendous admiration for Bill Gates as a businessman."
But Microsoft shapes the environment, Colbeth says; others must adapt. "Does Microsoft squeeze suppliers? You bet it does," he said in his office in the Chicago suburb of Naperville. "But that is just the reality in any industry where one company has an 85 percent share, as Microsoft does in the operating-system market. That gives it enormous leverage in the market, and it uses it.
"And do you lose innovation in the software business because companies figure it's crazy to compete with Microsoft? Yes, I think you do," Colbeth said. "But I also think the effect is to drive innovation into other parts of the information technology business. You can't compete head on against Microsoft, so you are forced to innovate in other areas."
But you'd be happy to tell Colbeth there's no place to hide, right Reggie? You can't compete, except in the antitrust context, where there's allegedly a world of competition up against Bill and Co.
Yet the Internet was on its way to becoming a household word, and all the major technology companies feared being left behind. As a company, Microsoft was a bit late in noticing the rise of the Internet, but by late summer 1994 it was negotiating with Spyglass to license Mosaic.
Its original offer in August 1994, Colbeth said, was $100,000. That would have more than doubled the cash Spyglass had in the bank at the time, but the amount seemed extremely low for an important technology that Microsoft would put into millions of PCs. "It was our experience and it is the accepted belief within the industry that the first offer from Microsoft on licensing deals is always $100,000," Colbeth said.
Microsoft's argument for why Spyglass should accept the offer, Colbeth said, was twofold: the endorsement value of having Microsoft license Spyglass technology would help it enormously in marketing; and if Spyglass refused to license its technology on Microsoft's terms, Microsoft would develop it in-house.
But that would take six months or a year, and Netscape, backed by Microsoft rivals, was getting ready to begin selling its browser. Microsoft talked to Netscape about licensing its browser, then struck a deal with Spyglass in December 1994 for $2 million, for use with its Windows 95 operating system.
Later licensing deals to use Spyglass technology on other operating systems, including Apple's Macintosh and Windows 3.1, and a final payment for all future use brought the total that Microsoft paid to Spyglass to $13.1 million.
By the end of 1995, Spyglass had also licensed Mosaic to 82 other companies, including IBM and Digital Equipment, for use in their software products. The revenue stream from the licensing deals was around $20 million a year.
But a month earlier, in December 1995, when Gates announced that Microsoft was shifting its product development to "embrace and extend" the Internet, he also said Microsoft would be giving its browser away. A byproduct was that the Spyglass browser licensing revenue quickly disappeared, as smaller Internet software companies went out of business and many big customers shifted to Microsoft's free browser.
"Twenty million in revenues went away — poof — in a year," Colbeth said.
Somehow, Colbeth seems to perceive the problem was "free" IE, not Netscape. He was confused, right Reggie? You know better, just as you know better what antitrust law is supposed to mean, and everything else.
Cheers, Dan. (sorry for the excessive sarcasm, political blowback) |
