10-Aug-01
More Empty "Concessions"?

Eastman Kodak threatened to file anti-trust charges over Microsoft's soon to be released Windows XP.

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Eastman Kodak worked in good faith with Microsoft to make sure their digital photography software worked well with Windows XP. When they got a chance to try XP, they found their software had been almost completely locked out in favor of a much less capable Microsoft product. Further, they found Microsoft had hijacked their photo print business, diverting it to vendors willing to pay Microsoft a cut for every photo.

Kodak threatened anti-trust action. Legal experts figured they'd have little trouble showing monopoly leverage and would probably collect triple damages if it went to trial. Microsoft has responded by announcing changes in Windows XP that will allow Kodak's software to be more easily installed.

It appears they are not conceding on the matter of hijacking Kodak's photo print business.

Analysis

Responding to their conviction, Microsoft announced "concessions" to the OEMs allowing them some control over the Windows XP desktop. When the announcement was "clarified" a couple weeks later, it proved entirely empty - they conceded nothing. We expect this announcement to be just as totally devoid of substance - purely a delaying action and public relations stunt.

We hear this story over and over. A company with an innovative product works with Microsoft to assure the product works well with Windows. At the last moment, the deal is off, a rip-off of the product is "integrated" with Windows and the original developer is locked out.

If the damaged company has enough money, they can sue. Microsoft will likely buy off the suit and pay extra for silence. Companies that don't have enough money to sue Microsoft are just plain screwed. In either case, consumer choice is now limited to the less capable Microsoft product - whether you want it or not. Innovation in that product line ends completely, further harming the consumer.

The problem for Microsoft is they now stand convicted of illegally leveraging their monopoly. That means a much easier time in court and triple damages for companies they have injured. What they did to Kodak appears to be blatant leveraging, plus "co-mingling of code" (the latest courtroom buzz phrase).

So why does Microsoft continue, and in fact intensify, behavior that appears illegal? It's simple, they have little choice. The financial pyramid they have built their wealth on requires profits and growth rates they cannot achieve legally. Like a drug addict staring death in the face, they will not quit, because this is their whole way of life.

We recommend you seriously examine whether your business can move to alternatives. If Microsoft succeeds with their .NET plans, your business costs will continue to rise exponentially (Microsoft's wealth comes from your pocket, you know). If Microsoft's plans fail, they will fail hard, and businesses that have bet on their success will be severely disadvantaged.

We recognize that many businesses truly are trapped now, and will have to wait for other businesses to prepare an escape route, Those that can should be looking for the exits. Microsoft's hunger will continue to increase.

- Andrew Grygus

©:Andrew Grygus - Automation Access - www.aaxnet.com - aax@aaxnet.com
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