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June 1999

View From the End (User)

By: Don K. Eitner (freiheit@tstonramp.com) http://www.tstonramp.com/~freiheit/

The Dirty Deals: IBM/Microsoft Killing OS/2

The Microsoft anti-trust trial resumed earlier this month with the US Department of Justice bringing back their famed economics witness, Franklin Fisher, to officially make a mockery of Microsoft's own economics witness' testimony from earlier this year.

But we all knew Mr. Schmalensee was full of it when the judge noted that Microsoft's lead witness had, in sworn testimony, contradicted earlier testimony given by him in one of Microsoft's numerous other legal battles (the private case brought on by Bristol Technologies).

The more interesting news to come out of the anti-trust trial's resumption is testimony given in a deposition by IBM executives which discusses, among other things, that IBM's price per copy of Windows jumped from about $9 for Windows 3.11 to about $46 for Windows 95 while other major OEMs were paying around $25 per Win95 copy. The testimony released makes numerous references to Microsoft's obvious dissatisfaction with IBM's decision to preload OS/2 Warp on their line of personal computers, a decision which was later reversed and it became nearly impossible to get OS/2 preloaded.

This testimony of Microsoft intentionally making it financially infeasible for IBM to offer OS/2 on their PCs and also remain in the undeniably larger Windows market seems to answer several burning questions that OS/2 users have been asking for years. It also seems to vindicate OS/2 users who were stereotyped, labeled, and assaulted by the mainstream media for complaining about what were called non-existent problems -- problems which we now have sworn testimony to prove did exist and that we were not imagining things.

But does the mainstream media take any responsibility or show any decency by offering a public apology for their mistreatment of us? Of course not. As far as they're concerned we lost fair and square and they don't owe us a thing.

Furthermore, there were several references made in IBM's testimony of other major OEMs such as Compaq working with IBM to install OS/2 on their own PC lines but then dropping those deals and citing pressure from Microsoft as the primary reason for doing so.

http://www.infoworld.com/cgi-bin/displayStory.pl?990527.pithreaten.htm - Aside from spelling out the licensing deal between IBM and Microsoft over Windows 95 (including some pretty hard numbers) this article contains a deliciously damning statement for Microsoft: "Norris said he asked a Microsoft official why IBM was paying more. 'Certainly Compaq pays a lower price than you because they don't compete with us' Norris quoted the Microsoft official as saying." Once again with the wielding of monopoly power to destroy competing operating systems. This is just as blunt as the numerous Microsoft internal e-mails about making Windows 3.1 betas give false errors if DR-DOS was found on the system instead of MS-DOS.

http://www.news.com/News/Item/0,4,37142,00.html - this article is particularly interesting to read if just for one statement: "Norris also testified that when he tried to sell IBM's OS/2 to personal computer makers, they feared purchasing it because of threats from Microsoft--even though they had customers who wanted it." All this time both IBM and the mainstream media publicly declared there had been no interest in OS/2 and that was why it failed in the market. Now IBM has testified in court that there WAS interest but it was killed off by PC makers' fear of retribution from Microsoft. Vindication for OS/2 users who fought long and hard to point out this fact to those who refused to listen.

Clearly, if IBM manages to adequately demonstrate in court any evidence to support these claims, they will have a very important mass of evidence to bolster the government's claim that Windows is a monopoly product and that Microsoft has acted anti-competitively to maintain that monopoly. Threatening major computer makers with financial death if they chose to install OS/2 alongside Windows 95 cannot be logically argued as anything but monopolistic coercion.

Proving that Microsoft has a monopoly with Windows is necessary to then prove that they wielded that monopoly to gain significant marketshare (and potentially other monopolies) in areas such as office productivity suites, internet web browsers, streaming media technologies, and so forth. Clearly there is evidence that all these things are true, but the judge (and the appeals court judge when Microsoft most assuredly appeals their loss in this case) must understand this. Microsoft's too-numerous-to-count foibles in the current anti-trust trial leave very little room for them to win this round -- even if the judge were somehow convinced that Windows is not a monopoly, he could surely not look past the horrendous credibility issues with Microsoft's witnesses and so-called evidence that Microsoft was forced to retract.

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