A rchive Date
[ 09-06-2000 ]
Category
[ International Relations ]
sub-Categoy
[ Microsoft ]
|
[MS Breakup: You'll Feel it Tomorrow
Jesse Berst, Editorial Director
ZDNet AnchorDesk
Thursday, June 8, 2000
The judge in the Microsoft case has called for a breakup.
The effects will be felt starting tomorrow.
If you're new to the planet, Federal Judge Thomas Penfield Jackson yesterday rubber-stamped the government's proposal that Microsoft be split into two companies, one selling applications and one selling operating systems. Click for more. This was a surprise to exactly no one, and the tech world has been well-seeded with expert opinions about what a breakup will mean. Most people say it has little immediate impact because Microsoft will appeal.
Ignore them.
By the time the Supreme Court hands down a final opinion, the industry will have changed so much that a breakup will be totally irrelevant. I wrote about this a year ago. It's even more true now.
Right now there are four things consumers and investors need to watch: The conduct remedies; Company morale;
Competitors' behavior; Stock price.
CONDUCT REMEDIES
Unless Microsoft can get another judge to get in the way, these remedies take effect in September. They tell Microsoft how to behave in the months ahead while the case is on appeal. It can't threaten or do anything to harm competing products, such as withholding licensing terms, sales or technical support. It can't force computer makers to take other Microsoft products as a condition of licensing Windows. It can't force manufacturers to agree to promote, distribute or use Microsoft products. It must provide the same licensing terms to all manufacturers.
This could affect consumers as computer makers are freed to put whatever software they want on the desktop without fear of reprisal from Redmond. It will also embolden more software developers to make products that compete with Microsoft. How well remedies can be enforced is another question.
STOCK PRICE
Microsoft's share price is likely to rebound. The uncertainty is over and investors can focus again on the company's solid fundamentals and continuing profits. But the ruling will put a ceiling on the stock price. No longer does the company appear to have an unbounded future. That ceiling won't come off until the final ruling from the Supreme Court.
That ceiling could have a dramatic effect on company morale.
COMPETITORS' BEHAVIOR
Keyword: Embolden. There are already at least 100 lawsuits against Microsoft and there will be more. More importantly, the ruling will give competitors the courage to challenge Microsoft. Things will really heat up, and soon.
COMPANY MORALE
The rank and file in Redmond yesterday were breathing a collective sigh of relief. They knew what was coming, and now it's here. MS employees know as well as anybody else what the company's strategy is: appeal, appeal, appeal. The ones that have confidence in that will stay, but a number of execs and middle managers are already voting with their feet and leaving.
A stagnating stock price isn't going to help that. Nor will the lawsuits that will continue to stack up.
The appeals process may take years, but the effect of this ruling will be felt right away.
 World Fact Book (CIA)]
|