Microsoft: An Interesting Case Study

Mr. Hyde

As much as I admire and appreciate the development and engineering talent over at Microsoft, I have come to absolutely despise their marketplace policies. They have become the bully on the beach who kicks sand in the face of 98 pound weaklings. They have become arrogant, hostile and out of touch with the consumers they purport to serve. Their actions are at times extremely unfair and in fact, may very well be illegal. If you look back, you can see fairly early where this pattern of monopolistic behavior got its start, and clearly, their attitude has only gotten worse as time has gone forward.

Beyond the actual beginnings of DOS and the whole Gary Kildall and CP/M debacle, the first time that many of us became aware of the "Microsoft Attitude" was when DR-DOS first came out. This clone operating system evolved into a very competitive release with a bundle of features and its early success had Microsoft in a real panic. They began to spread Fear, Uncertainty and Doubt (FUD) about the product, and worked to develop improved versions of DOS while spreading the word about how "incompatible" and "unstable" DR-DOS was. According to some, they even made the in-your-face decision to ensure that DR-DOS would have specific problems with their newer updates to MS-DOS and other applications they controlled, such as Windows 3.1.

In order to respond to DR-DOS 5, which included a task switcher, memory manager, the ViewMAX graphical shell among other things, Microsoft released MS-DOS 5. When DR-DOS 6 hit the streets, it included a disk optimizer, a remote file transfer utility, and a file-undelete application. In addition, it included a built in disk compression program based on SuperStor. This release became a runaway hit, and Microsoft was not at all happy about it. They responded with DOS 6, which bundled a variety of utilities to respond to DR-DOS, like a disk defragmenter and ScanDisk. Microsoft at this point wanted to include disk compression into the mix, but did not feel they had the time to develop their own technology, so began discussions with STAC to license the technology used in their Stacker compression program. Microsoft and STAC were unable to come to an agreement regarding licensing fees, so Microsoft took a step that would become infamous. Instead of paying for the technology, they buddied up to STAC, learned all they could about their program and processes and then reverse-engineered the product, wrote their own version of it and told STAC to take a hike. They released DOS 6.2 with DoubleSpace, their own version of Stacker. STAC was furious, and sued in court. While it turns out that STAC itself was ruled as having infringed on Microsoft technology also, the courts ended up ordering Microsoft to pull DoubleSpace from their product line. Dos 6.21 was released sans compression, and later 6.22 was released with a re-written compression engine called DriveSpace. Overall, the courts had ordered Microsoft to pay STAC $120 million in damages, and also that STAC pay Microsoft some $13.7 million for their transgressions. In the end, Microsoft made a deal with STAC. They agreed to a cross-licensing pact that involved royalty payments to STAC of $1 million per month for some 43 months, and also bought some $39.9 million in STAC shares.

The battle with STAC was over, but would establish a few key patterns that would set the tone for other situations that would follow. Microsoft developed a reputation for "buddying up" to companies in order to get access to their technologies, then tell them to take a hike as they decided to build their own interpretation of that technology using some of the information that they had learned during that period of faux-friendship. They had been accused of doing that with QDOS, with STAC, and even with Apple and their Macintosh GUI technology. In fairness, the same has been said of Apple regarding Xerox technology, but it was now Microsoft that was getting the brunt of the attention and resentment from the industry as a whole.

The resentment would be furthered with the introduction of Windows NT. Microsoft had been working closely with IBM on the OS/2 project for some time, yet it turns out that in secret they had started their own project later called NT that would compete directly with OS/2 and in fact include some of the technology and engineering data that they had learned during their collaboration with IBM. When NT was announced, IBM was understandably upset and many felt that OS/2 was now doomed by this "stab in the back" maneuver by Microsoft. However, Microsoft moved boldly and arrogantly forward, defiant in its success. They left IBM in the dust and moved forward with their growing domination in the consumer market.

They would gain further critics as they "bought off" other companies to stop competing with them. After Steve Jobs was brought back to resurrect Apple in the wake of the disastrous "Benedict Scully" era, he stunned an August MacWorld Expo crowd by announcing a $150 million bailout from their arch-rival Microsoft. It was a shock to see a gloating Bill Gates up on the big screen touting how great some of the Microsoft technology was and how Apple users would benefit from it. It was a way for Microsoft to ensure that the Netscape browser would die an ugly death on the Mac in favor of their new Internet Explorer browser. Some may call Jobs a traitor, but Microsoft had merely lived by the law of Corporate Darwinism: Survival of the Fittest. They had taken advantage of the weakness of Apple and thrown money at the problem to in essence buy them off. If this deal was looked at by itself, it may not have angered the masses so much, but given the history of brutal, anti-competitive behavior that Microsoft had exhibited in the past, it was to many another example of the power and arrogance of what was becoming one of the most hated corporations in the American landscape.

When Corel had pinned its future on Linux and released what would turn out to be the second most popular desktop version of Linux to date, just behind Red Hat, Microsoft again took notice. They had been able to keep the Corel Office Suite relegated to a small niche market by using its exclusionary licensing and bundling agreements with many OEM and Vendor organizations, and had been hammering away at their graphics business with their own vector based efforts. The purchase of Visio helped seal the deal in terms of face to face obliteration, and Corel, in part because of its own horrible mismanagement, was left wounded and very vulnerable. In what some consider an act of mercy, Microsoft bailed out Corel with a $135 million cash infusion. This cash came with a cost, however. Soon, the founder was ousted, Corel had promised to get out of the Linux business, to stop supporting their new and popular Corel Office for Linux and to sell off their Linux OS product entirely. They had agreed to refocus their efforts on the graphics business with a new commander at the helm and had further agreed to support the upcoming Microsoft .NET strategy as a partner. Microsoft had done it again, and the shareholders were happy.