BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Thursday, 8 June, 2000, 15:13 GMT 16:13 UK
Will the ruling affect you?

Microsoft claims it is being punished for its success
By BBC News Online's Iain Rodger

It is not at all clear that consumers will notice much at all for some time as a result of the US court decision to split Microsoft.

Bill Gates introduces Windows 2000

Microsoft is appealing - a process which could take years - and, even though the company is supposed to observe the ruling in the interim, it could be a while before any changes become apparent.

Also, much of the strength of opposition to Microsoft came from the fact that it is so dominant in the PC market - and that dominance is not going to evaporate overnight.

Consumers need powerful reasons to switch from what they are used to, especially if they have to put their hands in their pockets to make that change.

Dominant

Microsoft's operating system is estimated to be installed on more than 95% of the world's PCs. Even taking into account the Apple Mac OS system, Microsoft's share is still said to be well in excess of 80%.

This means businesses and individuals are already tied in to Microsoft's products - it's what they know and, like it or loathe it, there is an awful lot of work involved in changing.

Microsoft has been kept on its toes by the anti-trust case and this has helped the consumer

Timothy Ryan
Futurebrand

Nick Wiseman, editor of Euromedia, part of the Kagan research group, questions whether it is even possible to say how the ruling will affect consumers until we see exactly how Microsoft is finally broken up.

But he says the main issue is undoubtedly compatibility. He says Microsoft did at least provide a common platform which helped the opening up of the global PC market.

Richard Perks, senior retail analyst at Retail Intelligence, agrees. He says the universality of Microsoft software helped to reduce the kinds of compatibility problems that really infuriate consumers.

Market leaders

The Windows operating system is not the only reason why Microsoft is in the position it is today.

Its Internet Explorer, Outlook e-mail software, Word text-processor, Excel spreadsheet, and Powerpoint presentation package are all market leaders.

Joe Bernstein, editor of online news service Silicon.com, said the monopoly power was so strong, "the reality is that consumers and businesses may have preferred it was business as usual with a single Microsoft".

One effect of the ruling could be that a wider variety of products will be bundled with computers by retailers - but this simply will not work if there are concerns over compatibility.

In any case, the operating system is not by a long way the fastest moving area of the market. The internet and hand-held or mobile devices are at the heart of the biggest growth area.

Here, Microsoft has struggled to make a big impression and it could be that the lengthy court battle will distract Microsoft enough to allow its competitors to build up an insurmountable lead.

Limitations

This by-product of the court action could limit Microsoft's ability to repeat its abuse of the dominant position it holds in the market - the basis of the action taken by the US government.

Another by-product of the action, says Timothy Ryan, senior technology consultant with Futurebrand, is that Microsoft has concentrated enormously on improving Windows, a bonus for the consumer.

He also says it might have been better if Microsoft had been split up differently.

If, for example, it had been made into a company marketing an operating system and applications targeted at the business market, and a similar company targeted at the consumer market, there would have been more new competition created, he said.

The two new companies would have been driven to work in partnership with other manufacturers, whereas splitting Microsoft into separate operating system and applications companies leaves them still very powerful in their own areas.

Uncertain future

The US government is confident the measures will allow the two new companies, and their rivals, to create "exciting" new products and end Microsoft's abuse of power.

Many in the industry would like to see the emergence of a universal platform open to all, rather than the near-universality on its own terms created by Microsoft.

Open industry standards would reduce compatibility problems while giving small companies the opportunity to develop innovative products.

For Microsoft itself, the founder, Bill Gates, has argued vehemently that the ruling will impede innovation.

If true, this will be unwelcome to consumers, but many industry commentators feel that innovation has in fact been stifled by Microsoft's ruthless protection of its market share.

It remains to be seen whether the industry can take advantage of the outcome of the case, especially while the opportunity to move forward is in effect prevented by Microsoft's vigorous pursuit of the appeal process.

See also:

07 Jun 00 | Business
Microsoft split up
01 Jun 00 | Business
Microsoft attacks break-up plan
22 Feb 00 | Microsoft
What's it all about?
02 Jun 00 | Business
Canada woos Microsoft
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories