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Oops: NY Times Article
I have learned that a subscription was necessary to receive that excellent NY
Times article so here it is in text:
DIGITAL COMMERCE / By DENISE CARUSO
The Ubiquity of Microsoft
The latest attack on Microsoft Corp. by the U.S. Justice
Department, accusing the software giant of anticompetitive
practices, seems to many people like one of those giant
research projects that boldly proclaims the obvious: "Study
proves that mice like cheese!"
Everyone knows that Microsoft likes cheese. With ownership of
94 percent of the PC market, its taste for toothsome morsels in
the form of
competitors and new markets is legendary.
But that view of the case is far too narrow. Something more is
here that demands closer examination. As a society, we have
remain ignorant about software -- the lingua franca of the
millennium -- and
about how the growing ubiquity of these invisible bits of data
reshapes our approach to almost everything: to art, commerce,
communication, and most certainly to business practices.
And Microsoft has taken brilliant advantage of that ignorance.
for example, do not understand how Microsoft's business works
or how it
has come to dominate the software industry.
The key to Microsoft's success is its strategy of linking its
operating systems -- the foundation of a PC's operations -- to
applications, to the Internet, to its consumer products, to its
tools and to hardware manufacturers in a tight, interdependent
Whenever it makes a significant modification to Windows -- as
it did in the
step from Windows 3.1 to Windows 95, for example -- everything
chain has to change, too. The entire PC industry is forced to
bind its product
development plans to the evolution of Windows to remain
relevant in the
And those developing competing software often find themselves a
half step behind because Microsoft has the advantage of
being able to create the next generation of its operating
system while developing the applications that will run on it,
incorporating new Windows features before competitors know
about them -- or at least before they fully appreciate their
nuances and full potential.
Customers are also caught in the competitive spiral, being
constantly pressured to upgrade "obsolete" software -- though
the definition of obsolescence is debatable.
And in contrast to
product-development cycles in old-style manufacturing
businesses like auto making,
extensive changes to an operating system -- and the
subsequent upgrades they force
throughout the chain -- require no costly retooling
of assembly lines and no new raw
materials. The main cost is human capital --
some months of programmers' time.
Microsoft's chairman, Bill Gates,
has denied that this tight linkage of system
software to applications gives
his company an unfair advantage. Rather, he says, it
is simply a way to keep adding
value for his customers.
In the case brought last month by the Justice Department, Gates
argued that Microsoft was within its rights to require that
PC makers who license the operating system include the
company's World Wide Web browser, Internet Explorer, to
"preserve a consistent customer experience when using Windows."
Doing so, he said, was comparable to Ford Motor Co.
not allowing its dealers to "replace a Ford engine with a
Gates did not mention that consumers already have a consistent
customer experience, plus or minus a few bells and
whistles, in any brand of car they buy. All have four wheels,
seat belts, brakes and accelerators, and so on.
And unlike Microsoft, which encourages Internet developers to
design Web sites that can only be viewed with its Explorer
browser, no auto maker would try to restrict road access to one
type of car, refusing others or flattening their tires.
Gates has also said that the ubiquity of Windows gives
developers "the incentive and the
certainty they need" to build products and thus keep the PC
industry growing and
innovating. But that argument rings hollow with the
entrepreneurs who refuse even to start
a software business for fear of bringing Microsoft crashing
into their tents. Those who do
invariably have an exit clause in their business plans that
states, "... and then we sell the
company to Microsoft" -- thus providing a steady stream of
innovation for ... Microsoft.
That is life in the free market, the company's defenders say.
But the Justice Department and a growing number of
Microsoft competitors are questioning whether such a market is
Today, anyone who wants to be a player in technology or media
has already made, or is likely to make, a deal with
Microsoft (for a partial list of partnerships, point your
browser to www.netaction.org/msoft/world/table.html).
Among these links in Microsoft's chain are financial
institutions, Internet transaction companies, Internet access and cable
television providers, game makers, entertainment and news
media, giving the company growing control over multimedia
Internet standards, server operating systems, enterprise
computing and desktop applications.
Microsoft's defenders say that antitrust laws in the United
States are outdated with respect to emerging technologies, and
few would argue with that point. But that does not answer the
question of whether it is possible, given Microsoft's huge
holdings and its chain-linked business strategy, to compete
with the company on its own turf.
And to date, no one has stepped forward to suggest changes to
antitrust laws that would better reflect the realities of the
information age -- laws that would balance free-market vitality
against the prudence of allowing any single company to
control so much of our digital future.