Theres Gold in That Thar Punishment

Settlement of California class action suit could help Microsoft more than penalize it.

Microsofts settlement of a State of California class-action lawsuit ruffled quite a few feathers, but it probably will not lead to a better competitive balance in the industry.

As part of the $1.1 billion settlement announced last week, vouchers will be available to customers who purchased Microsoft software between 1995 and 2001. The vouchers range in value from $5 to $29, depending on the product purchased. Microsoft has pledged to donate two-thirds of unclaimed funds to California schools, and one-third of the unclaimed funds will go back to Microsoft.

A $1.1 billion settlement might seem like a painful punishment, but vendors like Apple are jumping up and down saying that this agreement will actually help Microsoft more than punish it—and they are probably right.

Many vouchers will probably go unclaimed and those that are claimed will probably be used to purchase Microsoft products that are already entrenched in the market.

Back in February 1999, Linux, BSD and open-source advocates gathered in Foster City, Calif., to demand refunds for the Windows operating systems that came preinstalled on the machines they purchased.

I dont think many companies and consumers will go after Microsoft for vouchers with the same vigor as the open-source community, but I do hope all the people who are eligible for vouchers go out and get them, because the settlement means nothing unless business and consumers take back the money that Microsoft has taken from them.

According to the settlement, vouchers can be used to buy notebooks, desktops and tablet PCs. This wont hurt Microsoft much because the majority of PCs from major vendors like Dell and HP still come with some form of Windows preinstalled. Even Penguin-loving IBM does not offer a wide variety of desktops and notebooks without some form of Windows.

Despite all the lawsuits, which were created to stimulate competitive balance, we are still in pretty much the same place we were before, and even a billion dollars in vouchers wont change that easily.

Senior Analyst Henry Baltazar can be reached at