Let's not speculate about what US District Court Judge Colleen Kollar-Kotelly will decide later this year about Microsoft's fate. That's an academic exercise about a ruling that's certain to be appealed. Instead, let's look at how the market is judging the company.
After all, you can't appeal the decision of the marketplace. And it looks to me like the market is slowly turning its back against Redmond.
Let's start with operating systems. Despite nearly two years of intensive development, loads of incentives and far better costs, users of high-end systems -- those demanding more than eight processors -- aren't embracing Windows 2000 Data Centre. Microsoft acknowledges the situation and continues to work hard on breaking deeper into the data centre, but IT managers remain wedded to Unix or IBM's mainframe z/OS for their biggest, most complex and most important applications.
On the low end, Microsoft likes to paint Linux as more of a problem for Sun and other Unix companies than for itself. But the open-source operating system still has its best success on one- and two-processor systems, Microsoft's bread and butter. And in market share, Linux is still edging up; it's now number two in the server market, according to IDC.
IBM's all-out support for Linux is a clever attack not just on Windows, but on Microsoft applications as well. Once IBM sells a customer on Linux, that's one server that won't run a Microsoft product. This is giving developers greater incentive to build programs for Linux, quietly diminishing what has been a huge Microsoft advantage. Being with the press, I get to see a dozen or more new product press releases every day. Two years ago, it was rare if one of the new products worked with Linux. Now it's rare for them not to.
On the desktop, Microsoft's outstanding Office suite is also under the gun. Gartner has said that Sun's StarOffice 6.0 has a better than even chance of snaring up to 15% of the productivity market because "it's good enough" for the vast majority of PC users. That prediction would have been unimaginable to anyone who used StarOffice in 2000. But things change, and in 2002, it seems possible. What can we expect by 2004? We'll see further erosion of Microsoft's dominance, for two reasons.
First, there's simple economics. Microsoft Office, for example, sells for about $US600 retail, StarOffice a paltry $US75 and change. Granted, you get what you pay for, but most people don't buy a Lexus if a Toyota will do. When CFOs discover that the vast majority of the PC users in their companies can get by just fine with a product that's a sixth the cost, they'll insist on using it. Microsoft must now deal on price or lose deals. For once, the market is beginning to dictate pricing to the "monopoly".
Second, there are web services. By adopting web services technologies with admirable vigour, Microsoft has undone one of its major advantages: locking in the customer. If a Microsoft application can exchange data with a non-Microsoft application through web services, there's much less of an incentive for users to create a homogeneous Microsoft infrastructure.
None of this is to say that Microsoft will disappear. Rather, it will continue to grow and deliver important technologies. But the judgement of the marketplace in the coming years will be far harsher than anything a judge can impose.