Analysts had predicted all kinds of grim scenarios in the wake of a breakup of the so-called Microsoft monopoly but, with the U.S. Court of Appeals decision earlier this month that overturned the breakup order, Microsoft is back in the drivers seat of IT.
With the impact of a slow market for IT products spreading, companies are desperately trying to keep their financial heads above water through job cuts and pay and hiring freezes. Microsoft, on the other hand, is in relatively good shape because it has the lions share of the desktop PC software market. It has not been hit too hard by the IT slowdown; its biggest scare was its legal problems.
In an IT world where Microsoft is the feared leader and can put smaller, less competitive companies out of business, the court decision makes struggling companies even easier prey for the carnivorous nature of Microsoft.
Microsoft is in a good position to mow down the competition with its much-ballyhooed upcoming XP operating system. I dont see XP having a big effect on the enterprise server market (where companies are still deciding whether to migrate to Windows 2000, let alone to XP) because migration costs a lot and companies dont have the cash to upgrade. But XP will have a big impact on smaller businesses and on consumers, who will be bombarded with billion-dollar marketing campaigns to get the new operating system, which will be sold with most new PCs shipped next year.
The fact that XP will come bundled with a boatload of free software, including firewalls, messaging and a browser, puts vendors of these products at risk and could shut them out. In the long run, this bundling also puts consumers at risk of having no choice but Microsofts software if competition and innovation dont have a chance to thrive.
Microsoft may tout XPs free bundled software, but the only really free alternatives are the open-source KDE and GNOME desktop interfaces. Unfortunately, Microsofts 90 percent-plus dominance of the desktop market means these challengers have a huge installed base to win over and the hurdle of Microsofts financial advantage to overcome.