Microsoft Must Move On

Microsoft should move as far as it can from its business model of yesteryear.

After judge Colleen Kollar-Kotelly ruled in the Microsoft antitrust case a little more than a year ago, we said in this space that it was time to move on, urging Microsoft to take the ruling and its remedies seriously. It seemed at the time that Microsoft had vowed to adopt new competitive practices. CEO Steve Ballmer said, "Microsoft has learned and grown through the experience of the last four years. We must be aware of how our actions affect others and are perceived by them." But recently, the company has been engaging in behaviors that evoke the Microsoft of old.

Office 2003, for example, requires customers to buy a slew of other new Microsoft products, such as Server 2003, SharePoint Portal Server and Exchange 2003, without which full Office 2003 functionality cannot be obtained.

RealNetworks recently launched lawsuit claims that Microsoft uses anti-competitive methods to ensure the dominance of Window Media Player, making it difficult for other media software to compete on Windows operating systems. The lawsuit harks back to the accusations of tying a separate application—Internet Explorer—to a monopoly product —Windows—that did in rival Netscape and formed the foundation of earlier antitrust proceedings against Microsoft.

Microsoft has been liberal in spreading fear, uncertainty and doubt—FUD—with regard to products it has on the drawing board. The disclosures of "Longhorn" technology, the next major release of Windows, fall into this category. Its Longhorn road maps show products that will by default contain applications that other companies now sell.

In another instance of using a long lead time to take advantage of its market dominance, the company late last year issued a beta release of a service pack for Windows XP, promising the final service pack release seven months later. And rather than a service pack containing necessary patches and fixes, Microsoft has made this pack sound like a milestone release.

While Microsoft was able to weather its previous legal storm without losing critical market share, it now faces a much different competitive climate. Customers that were already considering a move to Linux may see a protracted legal fight with RealNetworks as the final justification to move away from Windows.

Some companies will wonder what effect the case will have on Microsofts already-long gap between Windows revisions. Could these customers wait even longer for Longhorn, which could include changes due to the lawsuit? In short, FUD could work against Microsoft this time.

For these reasons, we recommend that Microsoft live up to its words of a year ago. Microsoft should move as far as possible from its business model of yesteryear and focus on improving its products without locking out competitors.

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