Using the Software Defense

As I write this column, US District Judge Thomas Penfield Jackson is preparing his ruling in the penalty … er … remedy phase of the Justice Department’s anti-trust action against Microsoft Corp.

Having found that Microsoft enjoyed monopoly power and misused its dominant market position, and having remarked on the excellence of a submitted brief that recommend breaking Microsoft in three pieces, there’s little suspense as to whether or not Judge Jackson will take an axe to the software giant.

In this light, there’s a growing consensus among pundits and competitors that Microsoft’s legal strategy is a failure. But it’s a little bit early to be piling on Microsoft.

Yes, the software industry is largely about perception, and Microsoft is definitely down. Its stock is trading for about half what it was six months ago. But Microsoft is not the only technology stock in the gutter. MSFT is a bellwether, and the judge’s ruling against Microsoft arguably contributed to Nasdaq declines recently. But there are many other, larger factors behind the decline of tech stock values.

Then there is the unveiling of the company’s Next Generation Windows Services strategy, key to whether the company will be able to position itself as a player in the software industry of the next few years or will become a desktop dinosaur. The launch was delayed until later this month. Microsoft blamed the delay on the significant distraction of the case.

But saying Microsoft’s legal strategy has failed and that the company is beat is premature. It’s a little bit like turning off the TV and analyzing a football game after halftime as if it were over. The Microsoft match is still too close to call.

A lot of signs point to Microsoft conceding this first legal round a long time ago. The company’s strategy for some time seems to have been focused on appeal. For example, look at the late filings of witness lists and evidence as Jackson was preparing his remedy ruling.

Microsoft seems to like its chances in the appeals courts, and the company may also like its chances in 2001 if a Bush administration enters the White House.

For all the hustle of settlement talks, I’ve never really seen Microsoft going for it. Publicly admitting it was wrong about anything is not one of Microsoft’s trademarks. But also, Redmond hasn’t played what it seems to view as the strongest card in its hand, victory through a long, drawn-out appeal. But with my luck, Microsoft will prove me wrong here by settling before this article is printed.

Look at it from the perspective of the IT veterans that you are. How many times has Microsoft come out with a sub-par product on the first release that fails to deliver on the promised features? Has Microsoft ever admitted that the initial rev of a product was inferior to competitors’ or had problems? Not until a second version came out, or, for specific problems that weren’t addressed in version 2.0, until the third version came out. The public face is that the product is the best, while behind the scenes Microsoft works hard to fix all the bugs.

If the software track record is any guide, Microsoft should be presenting its best case by, oh say, the time this issue reaches the Supreme Court.