WinInfo Daily UPDATE--December 19, 2003
1. In the News
- News Flash: RealNetworks Files Antitrust Lawsuit Against Microsoft
2. Short Takes
- My Opinion of Real vs. Microsoft
- Counterpoint: Microsoft Shortcomings
- Wal-Mart Opens Online Music Store
- Investigating Windows XP SP2
- Sun Blasts Microsoft's Product-Removal Stunt
- Microsoft and New York Align to Sue Spammers
- Austin, Texas: The Next Munich?
- VMware Rejected Microsoft Offer
- Announcing a New eBook: "Content Security in the Enterprise--Spam and Beyond"
- Take Our Print Publications Survey!
- Receive a Free Identity Management White Paper!
5. Contact Us
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==== 1. In the News ====
by Paul Thurrott, [email protected]
News Flash: RealNetworks Files Antitrust Lawsuit Against Microsoft
Digital-media giant RealNetworks dropped a bombshell on Microsoft late Thursday, filing federal antitrust charges against the company. RealNetworks accused Microsoft of illegally using its Windows monopoly to limit consumer choices and restrict digital-media competition by bundling its Windows Media Player (WMP) technologies in the OS. RealNetworks said Microsoft has "pursued a broad course of predatory conduct over a period of years by abusing its monopoly power, resulting in substantial lost revenue and business for RealNetworks." The company said Microsoft has forced PC makers to restrict how they install competing media-player software, all the while forcing WMP on them.
"Our board has made a carefully considered business decision to take this action to end Microsoft's illegal conduct and recover substantial damages on behalf of our shareholders," Rob Glaser, chairman and CEO of RealNetworks and former Microsoft employee, said. "Despite Microsoft's tactics, RealNetworks has continued to innovate and diversify. Over the past five quarters, we've successfully grown our business as a whole by introducing exciting new products and services, and we're on track for our sixth straight quarter of revenue growth. However, we believe our business would be substantially larger today if Microsoft were playing by the rules."
RealNetworks noted that its antitrust lawsuit against Microsoft is "complementary" to the European Union (EU) antitrust investigation of the software giant--an investigation that also partially concerns WMP. RealNetworks says it will continue to support and cooperate with the EU investigation. Critics, however, wonder whether RealNetworks is hiding something. Despite logging millions of paid subscribers to its subscription services, RealNetworks made a point of discussing its financial troubles in the press release that announced the lawsuit. "Excluding the Microsoft litigation costs, RealNetworks expects a net loss per share for the fourth quarter to be in the range of $0.02 to $0.03 on revenue between $52 million and $56 million," stated the release. "RealNetworks expects to provide quarterly disclosure of the cost of this litigation." Jonathan Zuck, the president of the Association for Competitive Technology (ACT), a Microsoft-friendly trade group, said RealNetworks is taking advantage of an easy target. "I think RealNetworks is trying to hide its red ink by blaming its problems on Microsoft," Zuck told CNET. "The company learned from Sun and Netscape that if you have a tough quarterly report to put out, why not blame Microsoft?"
==== 2. Short Takes ====
An often-irreverent look at some of the week's other stories, by Paul Thurrott, [email protected]
My Opinion of Real vs. Microsoft
Sorry Microsoft haters, but RealNetworks is out of line. As the company noted in the press release announcing its antitrust lawsuit against Microsoft, RealNetworks has more than 1 million subscribers to paid content, and 250,000 subscribers pay monthly fees for its RHAPSODY music service. But those boasts aren't the only reasons why RealNetworks' lawsuit is doomed; after all, during Microsoft's initial antitrust trial, Netscape also boasted about its number of users, and we all know what happened to that company. No, RealNetworks is doomed for two specific reasons. First, market conditions are different now. Thanks to the success of Apple Computer's iTunes Music Store and downloadable digital content in general, RealNetworks can hardly claim that Microsoft's inclusion of Windows Media Player (WMP) in Windows has shut out competition. If anything, Microsoft's inexpensive Windows Media-format licensing terms have aided competition: A slew of Windows Media-compatible players, services, and digital devices have hit the market in recent months. Second, and perhaps most damaging to RealNetworks, Microsoft's offerings are obviously superior to what RealNetworks sells. Microsoft's media player, media formats, and underlying technologies are all better than anything RealNetworks (or Apple, or anyone else) offers, as the widespread licensing of these products proves. Long-time readers know that I would be the first person to come down on Microsoft for antitrust violations. Heck, I called for the company to be broken up for its transgressions in United States vs. Microsoft. But this lawsuit has no merit. In corporate competition, as in sports, the best team often simply wins. That's the case here.
Counterpoint: Microsoft Shortcomings
But I'll say this: Microsoft hasn't designed Windows properly when it comes to add-on products such as Microsoft Internet Explorer (IE) and WMP. Quite simply, Microsoft has no reason not to create these products in a more elegant, componentized fashion that separates the end-user UI from the underlying technology, thereby simplifying the removal of these products from Windows and leaving the supporting services available for other applications and Windows to use. I've had this conversation many times with various Microsoft folks: If Microsoft had made Windows correctly, removing IE wouldn't be a concern, and the same is true of WMP. I firmly believe that the end user should be able to remove any applications, including WMP, from Windows. If you don't want it, you shouldn't have to use it, and Windows should be intelligent enough to handle its absence seamlessly. I hope Windows Longhorn, currently due in late 2005, will address this problem.
Wal-Mart Opens Online Music Store
Speaking of the many companies that have opted to license Microsoft's Windows Media formats, retail superstore Wal-Mart yesterday opened its online music store, Music Downloads. Like all non-Apple stores, Wal-Mart uses Microsoft's Windows Media Audio (WMA) 9 format to encode its music, but the company is offering tracks at a somewhat discounted rate, at 88 cents apiece. (Albums typically cost $9.44.) Apparently, the current version of the store is a test, and Wal-Mart is hoping to receive some customer feedback before the music store's wide-scale rollout in 2004.
Investigating Windows XP SP2
I've been looking at the new Windows XP Service Pack 2 (SP2) beta, and a few things stand out. First, when the system reboots for the first time after installation, the OS gives you the option to enable Automatic Updates immediately, before you log on. Microsoft has significantly updated Windows Update with a new Express Installation option that downloads and installs all the critical and security updates your computer needs. The new Internet Connection Firewall (ICF), enabled by default, now appears prominently in the Control Panel Network and Internet Connections applet, and ICF now comes with a multitab configuration window that contains numerous options. (In the original version, the only obvious UI was one check box, which let you turn ICF on or off.) Microsoft has updated IE 6 to version 6.0.2900.2055, and IE now includes pop-up ad blocking, a feature that will announce itself the first time a Web site attempts to launch a pop-up ad. You can also easily manage the way IE handles pop-up ads, which is useful. Also, IE now includes a Manage Add-ons configuration utility that lets you enable or disable the new types of plug-ins this browser supports. And Microsoft Outlook Express (also version 6.0.2900.2055), like Microsoft Office Outlook 2003, now blocks images in HTML email by default, offering a button that you can click to enable the images on a case-by-case basis. Overall, SP2 has the look of a major XP update, and I'll be previewing it soon on my SuperSite for Windows.
Sun Blasts Microsoft's Product-Removal Stunt
Sun Microsystems Executive Vice President Jonathan Schwartz said that Microsoft's recent announcement of its removal of Java-enabled products from the Microsoft Developer Network (MSDN) shows how out of touch the company is with its customers. "Microsoft's recent unilateral decision to discontinue support for Windows 98 and other products as of December 23, 2003, offers users a lesson, and an opportunity," Schwartz wrote in an open letter to Sun's customers. "It's a lesson in how a company with legendary market dominance can lose sight of customer priorities and force an unnecessary transition onto a customer base already paralyzed by viruses and security breaches. It's also an opportunity to explore a world of alternatives that Sun and the open community are creating to deliver a more affordable and secure desktop operating environment--called the Java Desktop System." Ah yes, throwing that little marketing angle in there at the end is essential.
Microsoft and New York Align to Sue Spammers
Microsoft and the state of New York announced Thursday joint lawsuits against one of the nation's most egregious spammers. The suits target Scott Richter, currently listed as the third most prolific sender of spam in the world, according to spam researchers. Richter is accused of sending illegal spam messages in 35 countries and disguising the email so that consumers can't trace it. "Deceptive and illegal spam, like the kind we're attacking today, is overwhelming legitimate email and threatening the promise and potential of the Internet for all of us," Brad Smith, senior vice president and general counsel at Microsoft, said. The move comes just 1 day after President George W. Bush signed the nation's first antispam bill into law.
Austin, Texas: The Next Munich?
The city of Austin, Texas, is apparently considering a move to a hybrid open-source software (OOS) solution, with some desktops running Linux and others using Microsoft's proprietary Windows system. But don't start plastering bumper stickers yet: If Austin does ultimately move to this hybrid solution--and it's not yet a certainty--the decision to do so is still many months away and will be phased in over a long time. The impetus behind the possibility is obvious: Austin is facing a $30 million budget shortfall, and it's paying Microsoft more than $3 million in licensing fees. The inevitable question is this: How much will taxpayers end up paying city employees to train on, install, and support Linux?
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