The promiscuity of Java programs and the ability of browsers to provide cross-operating system interfaces together threatened a wholesale disruption altering the pivotal status of the Windows-based desktop PC. The operating system could become a stripped-down version of its former self merely ensuring that Java-based instructions fetched by a browser from the Internet properly controlled computer hardware functions. Although it was hardly in Microsoft’s business interest to implement such a Windows-displacing option, others stood ready to take it up. Linux, for instance, was a free “open-source” operating system emerging through the pooled volunteer efforts of programmers over the Web. After 1995, Linux versions exhibited increasing ability to run Windows-dependent programs. A Linux provider could offer a skeleton operating system in lieu of Windows. Such a stripped down product would not even be confined to desktop computing devices. Not requiring extensive hardware, it could serve as a universal operating system for a variety of devices such as cellular telephone terminals, TV set-top boxes, and any number of portable single-purpose devices for sending e-mail or purchasing from on-line businesses or tapping into giant databases on remote servers. The devices would not have to become complex, since the programs they accessed on the Net—those written in Java at any rate—could be executed not only as needed but piece by piece.
All such developments of a future Net- or server-centric scenario could obviate what Microsoft rivals sneeringly called the “bloatware” of big desktop programs such as word processors and spreadsheets. Their remote storage on widely-used networks, and the advent of “thin” access devices, could usher in a “post-PC” era of computing as different from the two decades of the PC as the PC era was from that preceding the PC revolution.
3 See “The Real Threat to Microsoft,” Business Week, November 30, 1998, p. 36.
For the exclusive use of Y. Gao, 2017.
This document is authorized for use only by Yuanyuan Gao in Industrial Organization II: Spring 2017 taught by Erich Muehlegger, University of California – Davis from April 2017 to June 2017.
Microsoft on Trial ___________________________________________________________ CR14-99-1522.0
Microsoft’s management was fearful that these potentially revolutionary developments would undermine the company’s highly profitable position as the leading provider of personal computer operating systems and important Windows-dependent applications packages. [See Exhibit 2 regarding Microsoft’s profits during the mid- to late-1990s.] To avert them, or at least turn them to Microsoft’s advantage, the company aggressively pursued a series of tactical and strategic moves. Those measures plus Microsoft’s dominant position in the provision of personal computer operating systems led to the major government antitrust suit pending before Judge Jackson.
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