PC Makers Are Unfazed by New Microsoft Browser Ruling
The day after a federal judge handed antitrust enforcers a dramatic initial victory in their high-profile case against software giant Microsoft Corp., the impact on personal computer manufacturers and consumers appeared to be surprisingly slight.
In the eight weeks since Justice Department officials first accused Microsoft of violating a 1995 consent decree by bundling its Internet Explorer browser software with its dominant Windows 95 operating system, the two sides have engaged in a no-holds-barred rhetoric war, with each camp claiming that the future of technological innovation is at stake.
U.S. District Judge Thomas Penfield Jackson’s temporary injunction called for Microsoft to immediately stop bundling the two programs. But on Friday, major PC makers said the ruling would have no impact on what software they will install on their computers.
“We currently have no plans to change what we’re doing in terms of offering Internet Explorer to customers,” said Jim Finlaw, chief spokesman for Houston-based Compaq Computer Corp., the largest PC manufacturer in the U.S. “We want to provide customers with what they want in terms of a browser, and the way we understand the market, Internet Explorer meets their requirements.”
Added T.R. Reid, a spokesman for mail-order PC titan Dell Computer Corp. in Austin, Texas: “What we’re doing today is what we were doing yesterday and what we’ll be doing tomorrow.”
The Justice Department initiated its inquiry out of concern that Redmond, Wash.-based Microsoft was using strong-arm tactics with PC makers to convert its dominance in operating system software into a similar monopoly in the increasingly important market for software used to browse the World Wide Web. Netscape Communications Corp. essentially invented the market when it introduced Navigator in 1994.
Jackson’s ruling raises questions about the future of Windows 98, since the next-generation operating system will tightly integrate Explorer’s Web-browsing features. But computer makers plan to continue installing Windows 95 until the judge’s final ruling, which is expected in May--about the same time Microsoft has said it will release its software upgrade.
Industry analysts said they did not think PC manufacturers will suffer as a result of the uncertainty.
“The fact that Microsoft now has to unbundle [Explorer] from their operating system really has no cost savings or additional expenses,” said Jeff Baker, who follows the PC industry for Principal Financial Securities in Dallas.
For its part, Microsoft said the ruling “does not appear to affect development plans or the shipping date for Windows 98,” said spokesman Mark Murray. Furthermore, “Compaq, Dell, Gateway 2000, Packard Bell and Micron have all indicated that they want to continue shipping the full Windows 95 product with Internet Explorer,” he said.
Those PC manufacturers said they are staying with the Microsoft product in response to customer demand. But Peter Harter, global public policy counsel for Netscape in Mountain View, was skeptical of that claim.
“It’s hard to believe that PC manufacturers can say that when Netscape has 67% of the market,” he said. (A recent Dataquest survey pegged Netscape’s market share at 57.6%, compared with 39.4% for Microsoft.) “Maybe that’s Microsoft-speak and there’s still a lot of intimidation and aggressive marketing going on.”
Still, Harter could not explain how the ruling would translate into greater sales of Netscape’s newest browser, Communicator, if the major PC makers continue to install Internet Explorer on their machines.
On Friday, investors bid up Netscape stock $1.63 to close at $27.88, and Microsoft shares fell $2.31 to close at $136.75. Both trade on Nasdaq. Shares of most PC makers fell in Friday trading: Dell lost 88 cents to close at $88.25 on Nasdaq; Gateway 2000 dropped $1 to end at $30.63 on the New York Stock Exchange; Hewlett-Packard slipped 13 cents to close at $60.94 on the Big Board; and Micron Electronics dropped 38 cents to close at $9.63 on Nasdaq. Compaq shares rose 31 cents to close at $56.31 on the NYSE.
