Breaking up Microsoft ---- Yuk!

I admit it. As a Microsoft stakeholder, I’m biased. Our company uses Microsoft Office applications and Microsoft Back Office Business Server with Microsoft Exchange. Our web site (www.pocketpcmag.com) is created and maintained with Microsoft FrontPage. Our success with Pocket PC magazine depends on Microsoft’s success with Windows CE. I use both a Windows Powered Pocket and Handheld PC. I even own a little Microsoft stock.

You probably don’t own a magazine dedicated to Windows CE, but if you are reading this, you probably do fit into some of the other categories. If the Justice Department (DOJ) succeeds breaking up Microsoft, we all lose.

CRIME AND PUNISHMENT

The purpose of the anti-trust law as I understand it is to protect the consumer and foster competition. The court case focused largely on Microsoft’s competitors, Netscape and Sun, and the way Microsoft misused its power to set up barriers to competition. There are many ways of looking at the case. However, I don’t believe the punishment of breaking up Microsoft fits the crime!

More importantly, the consumer, the industry, and the economy all suffer with the ongoing DOJ action. If the break-up actually happens, it will happen after even more time, money and energy is spent arguing the case. Then, if Microsoft loses, the government and Microsoft will continue to waste incredible amounts of resources trying to divide the company along a line (operating system verses applications) that does not really exist.

WHICH NEW COMPANY WOULD OWN POCKET PC?

The big question for our readers is which company – operating system or applications – would be responsible for the development of the Pocket PC and Handheld PC? According to the Department of Justice, it’s the operating system company. After all, Windows CE is an operating system, right? But end users don’t go out and buy Windows CE. They buy a Pocket PC or a Handheld PC that has Windows CE built into it, along with a suite of tightly integrated. Pocket applications such as Word, Money, and Excel.

Palm computer users do the same thing. One of the main reasons for Palm’s success is that its operating system and built-in applications are designed by the same company as a tightly integrated whole. The users of this highly successful product don’t think “operating system and applications.” They think “Palm.”

If Microsoft is broken up and the two companies are subject to government regulation, it will be more difficult and more expensive to come up with well-integrated operating systems and application solutions for devices like the Pocket PC. Few in this industry, besides Palm stockholders, will benefit from Microsoft not being able to integrate operating systems and office applications as part of small devices.

IS MICROSOFT CRIMINAL AGAIN WITH THE POCKET PC?

Palm has a big head start on the Pocket PC as did Netscape against Internet Explorer. Microsoft won the browser battle by bundling Internet Explorer free with its Windows operating system. Forcing computer manufacturers to include Explorer as part of Windows is what got Microsoft into trouble.

When you buy a Pocket PC or Handheld PC you get the computer, the operating system, and a suite of Microsoft applications including Pocket Word, Excel, Money, Explorer, Outlook, Access, and PowerPoint. All these are built in and ready to go, and you never need to re-install them. It’s been this way with Windows CE devices for over three years and it sounds good to me as a consumer. However, it could be argued that bundling these products is just another example of Microsoft’s unfair competitive practices. Think that’s farfetched? Not according to a cnet.com, Reuters story.

The article quotes Justice Department arguments filed in support of the government’s proposal to split up Microsoft. The Justice Department states that Microsoft is using its monopoly power to hurt competitors in the market for personal digital assistants, specifically mentioning the Palm computing platform.