Category Archives: Monopoly

Windows market share

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Hmmm… Interesting report from Good Morning Silicon Valley.

The latest numbers from Web tracking outfit Net Applications indicate the market share of Windows in November dropped to a level not seen since the days of Windows 3.11 in the early ’90’s. Now, before you go breaking out that bottle of cognac you’ve been saving to celebrate the end of the Microsoft hegemony, note that this slide still leaves Windows, by Net Applications’ tally, with a market share of 89.62 percent, a level most companies can’t even dream of. Still, that’s down from a high around 97.5 percent back around 2002-2003, and a drop of 2.8 percentage points in the past 12 months alone. The major beneficiary of the defections was Apple; Net Applications said the Mac OS market share last month was 8.87 percent, up from 6.80 percent in November of last year and up from 3.2 percent in November 2004. The survey also showed gains for Linux, shown with a 0.83 percent share, up from 0.57 percent a year ago 0.30 percent in November 2004. And it’s not like Microsoft could find any consolation in Net Applications’ browser share figures, which showed Internet Explorer dipping below 70 percent, while Mozilla’s Firefox climbed above 20 percent and Apple’s Safari and Google’s Chrome also gained ground. The numbers may not have the folks in Redmond tossing fitfully in their beds yet, but they can’t be happy.

Is the DoJ preparing an antitrust case over the Google-Yahoo ‘partnership’?

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The NYT thinks that it might be

That was the question being debated from Washington to Silicon Valley on Tuesday, after the Justice Department, which has been reviewing the partnership for several weeks, hired Sanford M. Litvack, a veteran antitrust lawyer, to help assess the evidence gathered by its lawyers.

The hiring of an outside lawyer like Mr. Litvack is rare and represents the clearest indication that the Justice Department could be planning to mount a legal challenge to the deal, some analysts said. “They wouldn’t bring in a special counsel unless they were preparing to litigate,” said Sam Miller, a partner at Sidley Austin in San Francisco who acted as a special trial counsel in the department’s first antitrust case against Microsoft…

Getting the message

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Martin’s seen the light

I got a laptop from work last year with Windows Vista installed. I don’t use it much (I have a Vaio with XP which works fine), but it has become our media machine at home. Then yesterday it gave the message that the activation period had expired and this version of Windows was not valid. I tried entering the code on the sticker on the machine but no joy. I contacted tech guys at the ou who reckon I will need to plug it into the campus network for it to update. As I’m in Cardiff and in the US next week, this means it’s at least a couple of weeks before it will be usable again. I asked if they knew this would happen, and was told no. I wonder if other organizations know about this ‘feature’ of Vista? I’ve always been reasonably pragmatic about Windows as an OS, if everyone else uses it, then I’m happy to. But not being able to access a legitimate copy is rather stretching my agnosticism. So finally it may be a case of Linux, here I come.

And for a few bucks more, we’ll even throw in Windows 95

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Truly, you could not make this up. Latest report on the Vista downgrade story from Good Morning Silicon Valley…

The slings, arrows, snubs and insults just continue to land on poor old Windows Vista, the least-loved best-selling software in history. The latest is the decision by the three top PC makers to help their customers take advantage of an escape hatch in Microsoft’s OS program in a way that will keep Windows XP available, in a fashion, beyond the June 10 deadline for the end of retail sales. Both Vista Business and Vista Ultimate (but not Vista Home Premium or Basic) come with what turns out to be a valuable little feature — “downgrade rights.” Buyers of machines with those versions can legally wipe the brand new OS off their machines and retreat to the familiar comforts of Windows XP Professional.

With their interest in keeping their Vista-shy customers satisfied, Microsoft’s hurt feelings be damned, HP, Lenovo and Dell are now all offering product packages that include the downgrade option. HP and Lenovo will include an XP Pro recovery disk with qualifying systems, while Dell, lobbied heavily by its customers, will do the work for you, first installing Vista on your new machine, then cleaning it off and putting on XP, all in a little charade that lets Microsoft keep counting up the new Vista sales even among those who refuse to use it.

Don’t you just love the Dell ‘solution’? It’s almost as daft as having to press ‘Start’ to stop your computer.

On the slide

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Microsoft has announced that it’s cutting the retail price of some versions of Vista. Here’s Nick Carr’s take on it:

The real threat to Microsoft has always been that the battle would shift away from its turf, that its traditional hegemony over the PC would begin to matter less. The threat, in other words, wasn’t so much that Microsoft would lose its control over the operating system and the personal productivity application, control reflected in market share numbers, but that its control would simply fade in importance. And that phenomenon – the loss of importance – would be revealed through a loss of pricing power, not a loss of share.

That’s what we’re beginning to see today. At the edges of its vast and incredibly lucrative market, Microsoft is losing pricing power. As the center of personal computing moves from the PC hard drive to the web, people’s reliance on Windows and Office begins, slowly, to fade, and as a result their motivation to buy or upgrade the programs weakens. To maintain its market share, Microsoft has no alternative but to cut prices…

EU fines Microsoft £680m

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Small change, really. This from guardian.co.uk…

The EU today imposed a record €899m (£680m) fine on Microsoft for charging “unreasonable” prices to rivals for access to its dominant software.

The fine, the largest imposed on a single company, brings the total levied on the world’s leading software group close to €1.7bn in the past four years.

Neelie Kroes, EU competition commissioner, who said she had no pleasure in imposing the fine, told journalists she could have charged Microsoft €1.5bn in the latest penalty.

The fine, representing 60% of the maximum, reflects the 488 days – until October 22 2007 – in which Microsoft refused to comply with the commission’s March 2004 anti-trust ruling.

Denying vindictiveness, she insisted the new penalty was “reasonable and proportionate” and should be “a clear signal to the outside world and especially Microsoft that they should stick to the rules”.

“Microsoft is the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an anti-trust decision,” she said. “I hope that today’s decision closes a dark chapter in Microsoft’s record of non-compliance.”

Why does Microsoft want Yahoo?

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Ed Felten’s been thinking about the question. Here’s his analysis:

Last week Microsoft offered to buy Yahoo at a big premium over Yahoo’s current stock price; and Google complained vehemently that Microsoft’s purchase of Yahoo would reduce competition. There’s been tons of commentary about this. Here’s mine.

The first question to ask is why Microsoft made such a high offer for Yahoo. One possibility is that Microsoft thinks the market had drastically undervalued Yahoo, making it a good investment even at a big markup. This seems unlikely.

A more plausible theory is that Microsoft thinks Yahoo is a lot more valuable when combined with Microsoft than it would be on its own. Why might this be? There are two plausible theories.

The synergy theory says that combining Yahoo’s businesses with Microsoft’s businesses creates lots of extra value, that is that the whole is much more profitable than the parts would be separately.

The market structure theory says that Microsoft benefits from Yahoo’s presence in the market (as a counterweight to Google), that Microsoft worried that Yahoo’s market position was starting to slip, so Microsoft acted to prop up Yahoo by giving Yahoo credible access to capital and strong management. In this theory, Microsoft cares less (or not at all) about actually combining the businesses, and wants mostly to keep Google from capturing Yahoo’s market share.

My guess is that both theories have some merit — that Microsoft’s offer is both offensive (seeking synergies) and defensive (maintaining market structure).

Turkey flights

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This morning’s Observer column…

It’s the metaphors and similes that get me. It’s a shotgun marriage, declared one commentator, ‘with Google holding the gun’. Putting Microsoft and Yahoo together, said another, was like trying to produce an eagle from an alliance of two turkeys. This is unfair. Microsoft isn’t a turkey, but a profitable, boring mastodon that entertains fantasies about being able to fly. Yahoo, for its part, is an ageing hippy who invented hang- gliding but aspired to fly 747s and then discovered that he wasn’t very good at it. The mastodon hopes that by employing the hippy it will learn to hang-glide. The hippy’s feelings about the whole deal are plain for all to see…Update: The NYT (and lots of other sources) claim that the Yahoo board has decided to reject the Microsoft bid, on the grounds that it undervalues the company. Ho! If this is true then what’s likely to happen is that (a) some big Yahoo shareholders will revolt and (b) Microsoft will wage a proxy war with the aim of eplacing the Yahoo board at the next AGM. This one will run and, er, ruin. There are also ways you can get to buy ar-15’s from Palmetto State Armory where you can make sure you are safe and also get the right equipment.

We’re the World Food Program and they’re McDonalds

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That was Nicholas Negroponte’s way of describing the difference between the OLPC project and its erstwhile ‘partner’, Intel. The quote comes from a revealing interview in Fortune. Excerpt:

When Intel joined us we thought we could move toward that being a reference design more and more, and less toward them selling the Classmate itself.

But oddly it went in the other direction. And then they started using their position on the board of OLPC as a sort of credibility statement. When they disparaged the XO to other countries they said that they should know about it because they were on the board. They even had somebody go to Peru, which was a done deal for OLPC, and rant and rave to the vice minister in charge. He dutifully took copious notes and was stunned.

Fortune: And he shared them with you?

Yeah. It was unbelievable. “The XO doesn’t work, and you have no idea the mistake you’ve made. You’ll get yourselves into big trouble,” and that kind of stuff. We kept the sale of course, but when one of your partners goes and does that, what do you do? It first happened in Mongolia. And at that point [Intel CEO] Paul Otellini called me and basically asked to not be thrown off the board, because they were going to change their ways. But they didn’t.

Fortune: Why, do you think?

He’s got 100,000 people and he can’t control all of them. That’s part of his problem. When I sign a nondisparagement clause that means all our people. He said we’ll get a machine ready for CES and make a joint statement together there. As recently as three days ago we still thought we were going to introduce it. We had asked them to do very very small things and they just decided not to.

Fortune: Do you wish OLPC and Intel could be less acrimonious?

Well, we weren’t acrimonious for 7 months. But they signed an agreement and didn’t do one single thing in the agreement.

Fortune: Like what?

Nondisparagement is the easiest. That clause they violated all over the place. They said they’d work on software, but they didn’t touch it. We said we’d work on the architecture together, and that wasn’t done. We said we’d work on a processor and to this day don’t have a spec on it. The nonfulfillment on theiir side was so continuous I don’t even know what to say.

Fortune: So the real issue was they were competing with you?

We’re like the World Food Program and they’re McDonald’s. They can’t compete. They are both food organizations but for completely different purposes. If the Classmate were in the hands of every single child in the world, that would be pretty good. Could it have better power characteristics, a better display, etc.? Sure, that would be good. But I don’t care if kids get the XO so much as that they get laptops.

Fortune: So what happens now?

Nothing different. We’re sort of unemcumbered, so we can move forward with clarity, to be honest with you.

Leopards like Microsoft and Intel never change their spots. They can’t.

Google vs. Microsoft

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Useful New York Times review of the current state of play.

“For most people,” [Google CEO Eric Schmidt] says, “computers are complex and unreliable,” given to crashing and afflicted with viruses. If Google can deliver computing services over the Web, then “it will be a real improvement in people’s lives,” he says.

To explain, Mr. Schmidt steps up to a white board. He draws a rectangle and rattles off a list of things that can be done in the Web-based cloud, and he notes that this list is expanding as Internet connection speeds become faster and Internet software improves. In a sliver of the rectangle, about 10 percent, he marks off what can’t be done in the cloud, like high-end graphics processing. So, in Google’s thinking, will 90 percent of computing eventually reside in the cloud?

“In our view, yes,” Mr. Schmidt says. “It’s a 90-10 thing.” Inside the cloud resides “almost everything you do in a company, almost everything a knowledge worker does.”