|
PureBytes Links
Trading Reference Links
|
Here's more Microsoft "free market" behavior from the Findings of Fact
detailing how Microsoft forced Compaq, HP, Gateway and others to knuckle
under to demands to include MSN and IE icons on the desktop while forsaking
all others or forsake the ability to sell PC;s. Also detailed are some of
the anti-competitive actions taken by Microsoft which significantly decrease
consumer convenience and ease of use (see letter from HP):
"206. When Microsoft learned of Compaq's plans for the Presario, it informed
Compaq that it considered the removal of the MSN and Internet Explorer icons
to be a violation of the OPK process by which Compaq had previously agreed
to abide. For its part, AOL informed Compaq that it viewed the addition of
an icon for Spry as a violation of their 1995 agreement. AOL did not object
to the presence of a Navigator icon; what concerned AOL was the fact that
clicking on this icon brought the user to the Spry ISP. Despite the protests
from Microsoft and AOL, Compaq refused to reconfigure the Presario desktop.
Finally, after months of unsuccessful importunity, Microsoft sent Compaq a
letter on May 31, 1996, stating its intention to terminate Compaq's license
for Windows 95 if Compaq did not restore the MSN and Internet Explorer icons
to their original positions. Compaq's executives opined that their firm
could not continue in business for long without a license for Windows, so in
June Compaq restored the MSN and IE icons to the Presario desktop.
213. In an effort to thwart the practice of OEM customization, Microsoft
began, in the spring of 1996, to force OEMs to accept a series of
restrictions on their ability to reconfigure the Windows 95 desktop and boot
sequence. There were five such restrictions, which were manifested either as
amendments to existing Windows 95 licenses or as terms in new Windows 98
licenses. First, Microsoft formalized the prohibition against removing any
icons, folders, or "Start" menu entries that Microsoft itself had placed on
the Windows desktop. Second, Microsoft prohibited OEMs from modifying the
initial Windows boot sequence. Third, Microsoft prohibited OEMs from
installing programs, including alternatives to the Windows desktop user
interface, which would launch automatically upon completion of the initial
Windows boot sequence. Fourth, Microsoft prohibited OEMs from adding icons
or folders to the Windows desktop that were not similar in size and shape to
icons supplied by Microsoft. Finally, when Microsoft later released the
Active Desktop as part of Internet Explorer 4.0, it added the restriction
that OEMs were not to use that feature to display third-party brands.
214. The several OEMs that in the aggregate represented over ninety percent
of Intel-compatible PC sales believed that the new restrictions would make
their PC systems more difficult and more confusing to use, and thus less
acceptable to consumers. They also anticipated that the restrictions would
increase product returns and support costs and generally lower the value of
their machines. Those OEMs that had already spent millions of dollars
developing and implementing tutorial and registration programs and/or
automatically-loading graphical interfaces in the Windows boot sequence
lamented that their investment would, as a result of Microsoft's policy, be
largely wasted. Gateway, Hewlett-Packard, and IBM communicated their
opposition forcefully and urged Microsoft to lift the restrictions.
Emblematic of the reaction among large OEMs was a letter that the manager of
research and development at Hewlett-Packard sent to Microsoft in March 1997.
He wrote:
Microsoft's mandated removal of all OEM boot-sequence and auto-start
programs for OEM licensed systems has resulted in significant and costly
problems for the HP-Pavilion line of retail PC's.
Our data (as of 3/10/97) shows a 10% increase in W[indows]95 calls as a % of
our total customer support calls . . . .
Our registration rate has also dropped from the mid-80% range to the low 60%
range.
There is also subjective data from several channel partners that our system
return rate has increased from the lowest of any OEM (even lower than Apple)
to a level comparable to the other Microsoft OEM PC vendors. This is a major
concern in that we are taking a step backward in meeting customer
satisfaction needs.
These three pieces of data confirm that we have been damaged by the edicts
that [] Microsoft issued last fall. . . .
>From the consumer perspective, we are hurting our industry and our
customers. PC's can be frightening and quirky pieces of technology into
which they invest a large sum of their money. It is vitally important that
the PC suppliers dramatically improve the consumer buying experience, out of
box experience as well as the longer term product usability and reliability.
The channel feedback as well as our own data shows that we are going in the
wrong direction. This causes consumer dissatisfaction in complex telephone
support process, needless in-home repair visits and ultimately in product
returns. Many times the cause is user misunderstanding of a product that
presents too much complexity to the common user. . . .
Our Customers hold HP accountable for their dissatisfaction with our
products. We bear [] the cost of returns of our products. We are responsible
for the cost of technical support of our customers, including the 33% of
calls we get related to the lack of quality or confusion generated by your
product. And finally we are responsible for our success or failure in the
retail PC market.
We must have more ability to decide how our system is presented to our end
users.
If we had a choice of another supplier, based on your actions in this area,
I assure you [that you] would not be our supplier of choice.
I strongly urge you to have your executives review these decisions and to
change this unacceptable policy.
215. Even in the face of such strident opposition from its OEM customers,
Microsoft refused to relent on the bulk of its restrictions. It did,
however, grant Hewlett-Packard and other OEMs discounts off the royalty
price of Windows as compensation for the work required to bring their
respective alternative user interfaces into compliance with Microsoft's
requirements. Despite the high costs that Microsoft's demands imposed on
them, the OEMs obeyed the restrictions because they perceived no alternative
to licensing Windows for pre-installation on their PCs. Still, the
restrictions lowered the value that OEMs attached to Windows by the amount
of the costs that the restrictions imposed on them. Furthermore, Microsoft's
intransigence damaged the goodwill between it and several of the
highest-volume OEMs.
221. Microsoft asserts that the restrictions it places on the ability of
OEMs to modify the Windows desktop and boot sequence are merely intended to
prevent OEMs from compromising the quality and consistency of Windows after
the code leaves Microsoft's physical control, but before PC consumers first
begin to experience the product. In truth, however, the OEM modifications
that Microsoft prohibits would not compromise the quality or consistency of
Windows any more than the modifications that Microsoft currently permits.
Furthermore, to the extent that certain OEM modifications did threaten to
impair the quality and consistency of Windows, Microsoft's response has been
more restrictive than necessary to abate the threat. Microsoft would not
have imposed prohibitions that burdened OEMs and consumers with substantial
costs, lowered the value of Windows, and harmed the company's relations with
major OEMs had it not felt that the measures were necessary to maximize
Internet Explorer's share of browser usage at Navigator's expense.
|