A senior vice president of Compaq Computer , testifying on behalf of Microsoft in its antitrust trial, said the company currently has no alternative to shipping up to 90% of its consumer-oriented personal computers with the Windows operating system.
But the official, John Rose, testified that he disagreed with the characterisation of Windows as a "monopoly" contained in an internal memo describing terms for Compaq's latest Windows licensing agreements with Microsoft.
"All the way back to 1993 we had a vision for the Presario as not just a PC, but a center of information, entertainment and communication. It was a paradigm shifting device," Rose said. The company chose Windows as the best operating system to help the company achieve that vision with Presario, which is a popular line of computers, aimed at consumers, he said. Compaq would be receptive to trying other operating systems that "fit that vision" but none has been developed that rival Windows, Rose added.
"Until that materialises," US District Court Judge Thomas Penfield Jackson asked Rose, "there is no commercially viable alternative?"
"That is correct, your honor," Rose replied.
Rose, however, disagreed with the characterisation of Microsoft as a monopoly. A Nov. 10, 1998, document written by an unidentified Compaq employee regarding negotiations for a Windows 98 licensing agreement between the two companies was entered into evidence under seal today. But Jackson allowed government attorney David Boies to read an excerpt to Rose in open court.
"In the past, Microsoft's OEM (original equipment manufacturer) business terms are indicative of what one would expect from a monopoly," the document said.
"I don't agree with the term," Rose testified. "With 20,000 development people, they can use any terms," he said, adding that he did not know who authored the document.
Rose began his cross-examination in court this afternoon and, at times, it seemed his testimony bordered on hurting Microsoft more than helping the company. For example, Rose testified that up to 70,000 software applications exist that can run on Windows 98, even though a large number of those applications were written for earlier versions of Windows and/or MS-DOS. One of the arguments brought by the U.S. Justice Department and 19 states is that Microsoft has coerced independent software vendors into writing applications compatible only with Windows, creating an "applications barrier to entry" for other upstart operating systems.
The main reason Microsoft called Rose as a witness was to counter a claim of James Barksdale, chief executive officer Netscape Communications, which is Microsoft's rival in the Internet browser market, Barksdale testified in October that Microsoft threatened to revoke Compaq's license for Windows because Compaq pre-installed Netscape's Navigator browser on some personal computers, along with the America Online service.
On the witness stand, Rose maintained that Microsoft had threatened Compaq's license in May 1996 because the computer manufacturer was in violation of its agreement to leave the OEM pre-installation kit (OPK) for Windows as is. As part of that agreement, Rose said he had a verbal contract with Microsoft as of Aug. 8, 1995, to leave icons for the company's Internet Explorer browser and Microsoft Network online service on the desktop. But those icons were removed on some computers and replaced with icons for AOL and Netscape, which Rose said was in violation of that agreement with Microsoft.
Rose testified that a separate agreement with AOL reached only weeks after the Microsoft contract was "in violation of our corporate strategy and our agreement with Microsoft"” Different Compaq officials negotiated the two deals and "we had a communications breakdown," he added.
"When Microsoft threatened to cancel the license did Compaq agree to put the IE icon back onto the desktop?" Boies asked.
"We agreed to follow the OPK rules," Rose testified. "We agreed to comply."
(Wasserman is Washington D.C. bureau chief for The Industry Standard.)