Monopoly or minnow? The future of Microsoft

The one definite result to emerge in the latest round of court action was the ruling that Microsoft be prevented from claiming its products are Java compatible. Sun (and the Java community) is still basking in the warm glow of success at getting this preliminary injunction.

But an appeal hasn't been ruled out by the Redmond giant, which would delay any meaningful action from being taken. Microsoft may be able to come up with a solution which appeases the courts - but means very little in practice. It achieved a similar feat when it backed down over forcing PC makers to put Internet Explorer on the desktop by generously giving them the option to include other browsers. So, round one to Sun - but Microsoft is in no way down and out over Java.

More damaging was the publication of leaked documents - the Hallowe'en Memos - by Eric Raymond. At the time, he told Silicon.com: "I felt it was important that the practices described in [the documents] be revealed to the public. Microsoft has a long history of bullying and predatory behaviour that people inside the software industry have been aware of, but people outside are largely ignorant of. I believe that when customers realise what kind of company Microsoft is, and how it behaves, they'll seek alternatives."

Some industry experts immediately smelt a rat, however. Could the leak have been a deliberate ploy? Raymond believes that this proposition is highly unlikely, but the fact remains that people's perception of Microsoft has changed. From being an impregnable, all-powerful monolith, the company is now seen as fallible, and more importantly under pressure. That's very convenient when you're fighting off monopoly charges.

Raymond's assertion that people will seek alternatives to Microsoft now that the "truth" is out is also a little naïve. The average tenure for an IT director is three years. It would take a very strong character to move away from Microsoft so that ten years down the line their organisation won't be tied to a quasi-monopoly. This is an unnecessary risk for anyone to take. And as they say - if it ain't broke, don't fix it. So the user community is unlikely to rebel.

There's a strong developer community familiar with Microsoft products as well and a swathe of students being trained on them. The debate about whether Microsoft's products are good or not will run and run (feedback we've had over the last two weeks suggests opinion is divided 50/50 on this), but one thing's for sure: most of us use them, and they work. As Meta Group analyst Ashim Pal said in Silicon.com's studios a fortnight ago: "Microsoft is getting a very bad press. People are seeing that Bill Gates is not warm and fuzzy as a person, and that is creating negative impressions of the company. But from a business perspective, nothing really changes."

Talk of the US Department of Justice (DoJ) forcing Microsoft to be split into two companies (if not more) is also a red herring. A Silicon.com poll showed that 60.4 per cent of our viewers are in favour of this - but it's an unlikely outcome.

Pal continued: "Even if the Department of Justice was to make the determination that this should happen, Microsoft will fight it, and that will take a number of years to play through the courts. You're also likely to have a number of vested interests, such as shareholders and institutional investors, who would strongly oppose such a move. So the bottom line is, it's not going to happen."

It's possible that Microsoft will impose this 'punishment' on itself to deflect any further criticism - but even then we could end up with a two-headed Microsoft. And two heads are better (or in this case more powerful) than one.

This isn't to say that there's no hope for the anti-Microsoft lobby. "Microsoft is being deflected. It's being driven by a very small core team who are now out of the loop. This will slow the company down," Pal said.

A similar phenomenon struck IBM during its anti-trust battles - and that was with a much larger management team.

Independent analyst Tony Clifford-Winters came up with one solution that the DoJ would be well advised to take, namely that Microsoft be forced to "publish all its interfaces, its APIs and its object definitions, so that anyone who wanted to produce a piece of software that runs on the Microsoft operating system would be able to do that". This technique was used by the EC against IBM.

But the problem is, as Pal said, the DoJ doesn't understand technology and so may not go down this route. It's equally true that Microsoft doesn't understand politics, but Gates still holds the upper hand. A few more strategic games of golf with key Washington figures and increased political lobbying - something which Microsoft eschewed until recently - will see a far less naïve operation emerge.

So we should be wary of reading too much into the current situation. But we - and the DoJ - mustn't forget that Microsoft IS a bully. "They've been using techniques that any legitimate company really shouldn't be using. Some of their products really shouldn't be on the market," said Clifford-Winters.

Just ask any of Microsoft's technology partners whether they were 'encouraged' to adopt Microsoft products for their own internal use before any agreement to cooperate was signed. When Gates says jump, the reply is always 'how high?' A bit of bad press is unlikely to change that.

Microsoft's position remains extremely strong - and odds on it will stay that way.

(The full versions of the interviews mentioned in this article are in RealPlayer format in the Trials of Microsoft channel.)