Microsoft settlement talks & restructuring

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Written By: Cheshire Cat
Published: 31st March, 1999
Content Copyright © 1999 Bloor. All Rights Reserved.

As part of the ongoing antitrust suit against Microsoft, talks have started between the parties to try to find a resolution. At face value it doesn't seem likely that this will be successful. Central to the issue is Microsoft's stance on the right to innovate and the intellectual property rights.

The case against Microsoft is that the company has abused its monopoly in the operating systems market to extend its dominance to Internet browsers. The case is also likely to include the distribution by Microsoft of a polluted version of Java that would have the impact of negating its run anywhere capability. The trial proceedings seem likely to be delayed due to unrelated court business, effectively giving an extra period of grace in which to reach some agreement.

Radical proposals by the US States involved have included the auctioning of Windows source code by Microsoft or to break up the company along product lines. Faced with such threatening options, and with a general hardening of attitudes to Microsoft, it would seem to be in Microsoft's interest to attempt to reach a less damaging compromise.

The recent reorganisation announced by Microsoft has raised comment that it was an attempt by the company either to put it's own house in order before the courts took the initiative, or to put a structure in place which would minimise the impact of any enforced break-up. The separate product-related divisions will each have their own sales, marketing and development resources, but Microsoft claims it has nothing to do with the lawsuit. Instead, the divisions have been created so that the company could move beyond its goal of putting a Microsoft-driven PC on every desktop.

In Bloor Research's opinion, the operating system division will continue to be the principal cash cow for some years. The reorganisation should be seen for what it is - internal refocusing to increase the effectiveness of other product areas. If the case should go against Microsoft and any of the more radical proposals adopted, Microsoft will still be in considerable trouble.

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