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Dissecting Microsoft's Rebuttal

Looking at the Testimony of Compaq's Capellas

  • June 4, 2000
  • By Paul Ferris

Recently Microsoft submitted a "Supplemental Offer Of Proof" to the court as part of its defense. In it, testimony by the CEO of Compaq corporation is highlighted (it's first in the list). It has never ceased to amaze me, the amount of misinformation that Microsoft has been willing to submit, either as evidence or as P.R., rebuttal and this testimony is just as baffling.

In lieu of the case and the fact that people's opinions are being submitted as evidence, I offer my own opinions in direct contrast to those of Capellas. Unlike Capellas, I have no big qualifications as having run a PC Original Equipment Manufacturer (OEM) like Compaq. No, my qualifications are actually higher--I am a consumer, and I'm not happy with my lack of choice in the market of the past few years.

From the "Supplemental Offer Of Proof":

Michael Capellas

Michael Capellas is President and Chief Executive Officer of Compaq Computer Corporation, the second-largest computer company in the world and the largest global supplier of personal computers, headquartered in Houston, Texas. Microsoft anticipates that Mr. Capellas would testify to the following general propositions at an hearing.

  • 1. Customers have come to depend on Microsoft introducing new and innovative products on a regular basis.

This is not true. Customers may have come to depend upon Microsoft to bring new technology to them--but with very, very few exceptions, this new technology has always originated from sources outside of Microsoft. Microsoft, despite its protestations to the contrary, has rarely originated innovative new products--it's using a technique called the "close follower," which is not innovative in the slightest.

  • Distracting Microsoft with a break-up will slow its release of new products and innovations, thereby delaying the availability of new products and innovations to customers.

This statement bears little in the way of faith of the market that is out there the one that is supposedly so cutthroat for Microsoft. If Microsoft is delayed, the world can continue without them barring the way. Consumers have had no choice in operating systems for almost 10 years now. Breaking Microsoft into two companies may not even bring that choice. What you say here bears no evidence of history or even example.

If Microsoft is prevented from bundling Office, for example, consumers may be allowed to choose from a variety of office suites, all of them suddenly on a more competitive field. Those products will very likely bring the new innovations that have truly been missing from Microsoft's products over the past decade. Think of how many new, really innovative features have actually appeared in Microsoft's office products--and how many originated elsewhere and were copied. Those companies will likely be able to reap the benefits of producing the innovation, hire more staff and create more innovations.

Look at Internet Explorer. Have any really new features, of Microsoft's design, seriously good ones--have any appeared in the product since Netscape was effectively destroyed? No. Microsoft copied and Netscape's plans and ideas and did in fact add their own touches to the their product while the development of Navigator was in full swing. Navigator is now officially dead. Where are these new innovations in the browser industry now?

They're gone--where's your theory of innovation now? Somebody outside of Microsoft needs to invent some new browser features, so that Microsoft can "innovate." Let's get real here--Microsoft's arguments would have merit if they were truly the innovative force they claim to be.

  • 2. What customers want from Compaq and other OEMs are computers that "just work" right out of the box; home users generally do not want to assemble lots of components, and business users do not want to act as their own system integrators. The base platform that most customers want includes a personal computer, an operating system and a set of basic productivity applications that can be used to accomplish important tasks.

Compaq provides such a solution to customers by integrating the PC with the operating system and the associated hardware peripherals and software applications. The fact that the operating system and certain key applications have been developed and tested by a single company to work seamlessly together generally makes the software more reliable, better performing, and less costly for OEMs to deploy and support, all benefits that flow to the OEM's customers.

I agree with your statement about what customers want--and I imagine that as a computer systems integrator you would know. I just disagree that Microsoft has provided a good example of computers that "just work." Computers running Microsoft technology are so widely known for dismal software quality that it practically makes the rest of your points here mute.

The part that is really misleading is the next sentence where you go on to state that consumers don't want to assemble their own components. This is also true--but breaking Microsoft into two companies is not going to create this problem. Integrators that have a good standard operating system to place applications on top of will just as quickly load something like Wordperfect Office as Microsoft Office. Today, thanks to the weight that Microsoft has wielded in the past, this isn't an option--tomorrow it might be, if competition in this vital market is restored.

The next sentence about the one company testing the products is totally without merit. Microsoft is free to make their APIs (application program interfaces--the glue between something like Windows and an application) as compatible and non-compatible as possible. By truly isolating the standard underpinnings of an operating system from the applications, more companies will be free to use Windows as a base for developing software, without having to worry that their products won't look as good or break when new versions of Windows are released that contain new features that only Microsoft's own developers knew about.

The problem is that Microsoft is currently free to do what it wishes in this arena, and use their API to break competitors software. Being in control of that API and the applications also puts Microsoft in a situation where they can force consumers to "upgrade" by changing that API, thus breaking perfectly good applications--often, non-Microsoft ones, such as Netscape Navigator for example. These changes force consumers to go out and re-purchase technology they already own.

This has got to stop, and if it means that the price is that Microsoft will have to make some kind of standard available to the public, then that price will be the one paid. Consumers must be able to have multiple choices for competition to be restored. Not just in hardware, such as from OEM's such as Compaq and Hewlett-Packard, but in software, such as Microsoft Office, Wordperfect Office, and so on.

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