Predicting Microsoft's Future by Examining the Past

A look at the fate of WordPerfect might give us a glimpse into Microsoft's future

This month, Microsoft found itself embroiled in an antitrust-related case in a US district court in Salt Lake City. The charges date back to the early 1990s, when a competitor dominated a certain market but was slow to the market with a version for Windows, later losing out to the software giant and then crying foul.

Don't check your calendar -- it's not the year 2000 all over again, and Judge Thomas Penfield Jackson isn't going to come lumbering out of a closet and try to cleave Microsoft in half like some horror movie villain.

This is a new case, with a new opponent in WordPerfect and a pretty complicated backstory. It goes something like this: In 1994, Microsoft-wannabe Novell purchased WordPerfect for a then-whopping $850 million, combining it with Borland's Quattro Pro spreadsheet, which it also purchased, to create its own Microsoft Office competitor. These efforts failed, and in 1995, Novell announced its intention to exit the office productivity market, which must have been great for sales. A year later, it sold WordPerfect (and Quattro Pro) to Corel for a considerably smaller sum of $180 million.

Novell was itself purchased by Attachmate in 2010, but numerous Novell patents were separately sold to a consortium of companies (including, go figure, Microsoft) so that the purchase would be approved by US antitrust regulators. And today, WordPerfect trudges along in obscurity as one of many small and poorly selling Corel products. To say it's a footnote in the history of personal computing would be pretty accurate.

But let's get back to the court case. Back in 2004, Novell filed an antitrust lawsuit against Microsoft, alleging that the software giant illegally tried to eliminate competition in the office productivity applications market during the brief two-year time that Novell owned WordPerfect. You know, in 1994-1995. I imagine that a combination of things triggered this suit, perhaps involving the statute of limitations and Novell's declining fortunes, but whatever the reason, the company sued.

Although a host of lawsuits waged in the wake of Microsoft's US antitrust trial a decade ago have long since come and gone, this one continued even though Novell was sold to Attachmate. And in the past few weeks, this lawsuit actually went to court. And perhaps even more amazing, former Microsoft CEO Bill Gates even appeared to testify -- something he didn't even do, in person, for the infamous US case.

I wrote about Gates' court appearance in the WordPerfect case a few weeks ago in WinInfo. Gates said at the time that WordPerfect, which controlled 50 percent of the word processing market in 1994, but less than 10 percent in 1996, was simply outclassed by Microsoft's word processor, Word. Put another way, the best product won.

Parallels between this case and Microsoft's US antitrust case are hard to ignore. In both cases, a once-dominant company complains that Microsoft was able to usurp its market position by unfairly integrating its products with Windows, giving the software giant's solutions an advantage the competition could never match.

Although that argument sounds correct on the surface, I've discovered that Novell and WordPerfect lost to Microsoft for the same reasons that Netscape, the primary subject of the US antitrust trial, did. And in each case, the outcome had more to do with internal missteps than with anything Microsoft did competitively, fairly or not.

But you don't have to take my word for it. You can simply read a book by former WordPerfect executive vice president W.E. "Pete" Peterson, whose AlmostPerfect tells the real story. (Although a bit plodding, Peterson's AlmostPerfect is only  $2.99 in Kindle format if you're curious.) Like Gates, Peterson also testified in the WordPerfect antitrust case in the past few weeks. And the way he tells it, WordPerfect simply blew it.

In AlmostPerfect, Peterson describes Novell's decision to "go to war" with Microsoft as the software giant's lousy DOS-based version of Word quickly improved and gained market share. But Novell's strategy for doing so was flawed: The company decided to heavily back IBM's OS/2 instead of Windows, believing that the Microsoft effort was a sideshow that would be quickly relegated to the trash heap of history as users moved to OS/2 in droves.

When that didn't happen, Novell had to reallocate resources, delay its OS/2 version of WordPerfect, and begin work, belatedly, on a version for Windows. But by the time Novell reversed course, Windows 3.0 had shipped, along with Microsoft's first version of Word for Windows. WordPerfect was already sunk. Novell just didn't know it yet.

Hubris played a huge role in Novell's defeat as well, and the company spent the first half of the 1990s desperately trying to out-Microsoft Microsoft. It purchased Digital Research in 1991 to obtain the MS-DOS alternative DR-DOS. And then it bought Unix System Laboratories from AT&T in 1993 to acquire rights to the UNIX operating system, even though that ownership was at best murky and debatable. But Novell's OS endeavors in the 1990s were just about as successful as its office productivity efforts.

These historical events are coming to the forefront now because of a strange court case that was simply never settled even as the ownership of WordPerfect and then Novell changed hands over a period of several years. But I find some interesting symmetry between the early 1990s and today, and think it's possible to see one vision of the future in the past.

Back then, we were making a transition from the command-line interfaces of DOS and CPM to the GUI of Windows, OS/2, and the Mac. And today, we're making a similar transition to highly mobile devices and cloud computing services.

Each time this type of sea change occurs, there's a chance that those who dominated the old way of doing things will be supplanted by clearer-thinking, faster-moving rivals. And this time, it's Microsoft that could be on the wrong side of history. Microsoft, of course, is trying to overcome this eventuality and become one of the rare exceptions to the rule.

Heck, it's happened before. But the reverse has also happened before, as the fate of WordPerfect -- and Netscape, for that matter -- shows us. I can't tell how it's going to turn out, but I'm interested in witnessing history again.

And I can't wait to read the eventual book.

TAGS: Windows 8
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