Date: Tue, 09 Nov 1999 12:33:07 -0500 From: robert.gilbert@concert.com To: www@freebsd.org Subject: CBS.MarketWatch.com - Soapbox: Ex-Novell CEO speaks out on Microsoft Message-ID: <38285AD3.1FEA7819@concert.com>
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This is a multi-part message in MIME format. --------------BA77ED7FFBD2AC7A232517C3 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Ex Novell CEO using FreeBSD.. http://cbs.marketwatch.com/archive/19991108/news/current/soapbox.htx?source=blq/yhoo&dist=yhoo --------------BA77ED7FFBD2AC7A232517C3 Content-Type: text/html; charset=iso-8859-1; name="yhoo&dist=yhoo" Content-Transfer-Encoding: 8bit Content-Disposition: inline; filename="yhoo&dist=yhoo" Content-Base: "http://cbs.marketwatch.com/archive/199 91108/news/current/soapbox.htx?sour ce=blq/yhoo&dist=yhoo" Content-Location: "http://cbs.marketwatch.com/archive/199 91108/news/current/soapbox.htx?sour ce=blq/yhoo&dist=yhoo" <!-- mtime: 942093865 --> <html> <head> <title>CBS.MarketWatch.com - Soapbox: Ex-Novell CEO speaks out on Microsoft</title> <script language="JavaScript"> <!-- // StocTrac function CheckStocTrac() { var allcookies = document.cookie; if (allcookies == "") return false; var start = allcookies.indexOf('CBSMWQuoteSeen=1'); 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Ask Bob Frankenberg.</p> <div align="right"><table border="0" cellpadding="0" cellspacing="0" width="135" align="right"> <tr> <td align="right"><font face="Arial" color="#008000"><strong>"I'm not sure that even Microsoft has enough money to pay restitution to all the companies that they've put under. But what's most important is that there are some constraints on Microsoft’s behavior as we go forward."</strong></font><p><font face="Arial" color="#000000"><strong><small>Bob Frankenberg, Encanto Networks</small></strong></font></td> </tr> </table> </div><p>The former chief executive of Novell Inc (<a href="/data/squote.htx?TICKER=NOVL&TABLES=table&SOURCE=blq/yhoo&dist=newsq">NOVL</a>: <a href="http://www.marketwatch.newsalert.com/bin/headlines?Query=NOVL&SearchOption=ticker">news</a>, <a href="http://messages.marketwatch.com/mwclub/tickerLink.asp?ticker=NOVL&dist=newsm">msgs</a>), Frankenberg headed the Microsoft (<a href="/data/squote.htx?TICKER=MSFT&TABLES=table&SOURCE=blq/yhoo&dist=newsq">MSFT</a>: <a href="http://www.marketwatch.newsalert.com/bin/headlines?Query=MSFT&SearchOption=ticker">news</a>, <a href="http://messages.marketwatch.com/mwclub/tickerLink.asp?ticker=MSFT&dist=newsm">msgs</a>)competitor in the early 1990s when it made software called DR-DOS, aimed at challenging Microsoft’s operating software. But DR-DOS couldn't cut it, and disappeared from the market. Frankenberg believes DR-DOS was driven out by a ruthless Bill Gates.</p> <p>Now a Silicon Valley executive with a company called Encanto Networks Inc., Frankenberg still holds a grudge. He refuses to use Microsoft's products. He's running his company off of so-called open-source software, that is distributed for free. </p> <p><strong>Bob Frankenberg</strong> sat down with <strong>CBS.MarketWatch.com</strong> to talk about what the ruling means for technology companies, consumers, and for the future of the world’s largest software maker.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: You fought Microsoft toe-to-toe in the personal computer operating system market, and lost. Do you find the court's labeling of Microsoft as a monopoly gratifying?</strong></p> <p><strong>Frankenberg</strong>: I don't know that it's gratifying, but I'd say that the decision is very well justified, and frankly, long overdue.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: What is the fallout in the technology industry from the court’s action?</strong></p> <div align="right"><table border="0" cellpadding="0" cellspacing="0" width="135" align="right"> <tr> <td align="right" width="135"><img src="/archive/images/pixel.gif" width="1" height="5"></td> </tr> <tr> <td align="right" width="135"> <table border='0' cellpadding='0' cellspacing='0' width='125' bgcolor='#99CC99'> <tr> <td align='right'><table border='0' cellpadding='5' cellspacing='0' width='124' bgcolor='#FFFFFF'> <tr> <td bgcolor='#99CC99'><strong><font face='Arial' size='2' color='#FFFFFF'>Today on CBS MarketWatch</font></strong></td> </tr> <tr><td><font face='Arial' size='2'><a href='/news/newsroom.htx?dist=hdlnbug&source=blq/yhoo'>Stocks jump in early trading</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/sina.htx?dist=hdlnbug&source=blq/yhoo'>Sina.com's latest financing</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/softbank.htx?dist=hdlnbug&source=blq/yhoo'>Softbank is making a list</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/hmc.htx?dist=hdlnbug&source=blq/yhoo'>Honda's net profit skids</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/adr.htx?dist=hdlnbug&source=blq/yhoo'>Drug, oil stocks surge overseas</a></font></td></tr> <tr> <td><a href='/news/news_index.htx?source=blq/yhoo&dist=hdlnbug'><font face='Arial' size='2'>More top stories</a>...</font></td> </tr> <tr> <td><a href='/news/columns.htx?source=blq/yhoo&dist=hdlnbug'><font face='Arial' size='2'>CBS MarketWatch Columns</a></font></td> </tr> <tr><td><font face='Arial' size='1'>Updated:<br>11/9/99 9:36:08 AM ET</font></td></tr> </table> </td> </tr> </table> </td> </tr> <tr> <td align="right" width="135"></td> </tr> </table> </div><p><strong>Frankenberg</strong>: I actually think that it will help bring a new level of competition. Obviously, this is just the first finding. We don't have any idea what the remedies will be. But what this says is that no matter how large you are, you can't completely control the market and the entrance of new competitors.</p> <p>The crucial question is, what's going to happen next? We have a finding of fact, but we don't have a ruling that says what's going to be done about it.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: What do you think should be done?</strong></p> <p><strong>Frankenberg</strong>: I'm not sure that even Microsoft has enough money to pay restitution to all the companies that they've put under. But what's most important is that there are some constraints on Microsoft’s behavior as we go forward.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: One Microsoft competitor, Sun Microsystems Inc. (<a href="/data/squote.htx?TICKER=SUNW&TABLES=table&SOURCE=blq/yhoo&dist=newsq">SUNW</a>: <a href="http://www.marketwatch.newsalert.com/bin/headlines?Query=SUNW&SearchOption=ticker">news</a>, <a href="http://messages.marketwatch.com/mwclub/tickerLink.asp?ticker=SUNW&dist=newsm">msgs</a>), is suggesting that Microsoft be constrained from buying up technology companies. What do you think about that suggestion?</strong></p> <p><strong>Frankenberg</strong>: Where Microsoft has seen opportunities, they have used their cash to take advantage (of assimilating) technologies -- at least the ones they haven't been able to co-opt from the people who have invented them. Using the market power and the financial power of their monopoly position, to then try to create adjacent monopolies is inappropriate.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: What does labeling Microsoft as a monopoly do for the Redmond, Wash. company's rivals in Silicon Valley?</strong></p> <p><strong>Frankenberg</strong>: I think that we will see far less fear of Microsoft. My guess is that you've had trouble getting some people to talk to you, out of concern for what will happen to them and their companies if Microsoft is displeased. That in itself speaks volumes as to what the atmosphere is in dealing with Microsoft.</p> <p>There's a very real possibility we'll see more start-ups in the Valley that go after areas that they wouldn't have before, out of fear of Microsoft squelching them.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: Some competitors are hopeful that Microsoft could be broken up, or even be forced to give away code for its operating software to competitors But is it possible that even if findings go against Microsoft, that the company will only get a hand-slap?</strong></p> <p><strong>Frankenberg</strong>: It's certainly possible that they'd get a $50 or a $100 million fine, which is a couple of weeks' interest on their cash. It would sound like a big number to the American public, but it would be meaningless. It's a nice political solution.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: What do you think Bill Gates is doing now?</strong></p> <p><strong>Frankenberg</strong>: Bill Gates, and Microsoft as a company, had to anticipate that this would be the result. My guess is that he would be working very hard now to find a solution that minimizes the consequences for Microsoft and its shareholders, yet is acceptable to the government.</p> <p>Bill's a businessman, certainly one of the most capable ones on the face of the earth. His goal will be to get the least impact on his business. That certainly could be with an out-of-court settlement.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: But doesn't Microsoft have a record of litigating cases to the end, then winning on appeal?</strong></p> <p>Yes, they do. Although, if we go back to the 1994 consent decree (in which Microsoft agreed to change its contracts with computer makers, ending a Justice Department investigation started in 1993), that basically was a settlement.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: Does Friday's court action set a precedent?</strong></p> <p><strong>Frankenberg</strong>: I think that the precedent that it sets has already been set in many other industries. If you have monopoly power, you can't use that monopoly power to go into adjacent markets and to dominate an environment.</p> <div align="right"><table border="0" cellpadding="0" cellspacing="0" width="135" align="right"> <tr> <td align="right" width="135"><img src="/archive/images/pixel.gif" width="1" height="5"></td> </tr> <tr> <td align="right" width="135"> <table border='0' cellpadding='0' cellspacing='0' width='125' bgcolor='#99CC99'> <tr> <td align='right'><table border='0' cellpadding='5' cellspacing='0' width='124' bgcolor='#FFFFFF'> <tr> <td bgcolor='#99CC99'><strong><font face='Arial' size='2' color='#FFFFFF'>Today on CBS MarketWatch</font></strong></td> </tr> <tr><td><font face='Arial' size='2'><a href='/news/newsroom.htx?dist=hdlnbug&source=blq/yhoo'>Stocks jump in early trading</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/sina.htx?dist=hdlnbug&source=blq/yhoo'>Sina.com's latest financing</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/softbank.htx?dist=hdlnbug&source=blq/yhoo'>Softbank is making a list</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/hmc.htx?dist=hdlnbug&source=blq/yhoo'>Honda's net profit skids</a></font></td></tr><tr><td><font face='Arial' size='2'><a href='/archive/19991109/news/current/adr.htx?dist=hdlnbug&source=blq/yhoo'>Drug, oil stocks surge overseas</a></font></td></tr> <tr> <td><a href='/news/news_index.htx?source=blq/yhoo&dist=hdlnbug'><font face='Arial' size='2'>More top stories</a>...</font></td> </tr> <tr> <td><a href='/news/columns.htx?source=blq/yhoo&dist=hdlnbug'><font face='Arial' size='2'>CBS MarketWatch Columns</a></font></td> </tr> <tr><td><font face='Arial' size='1'>Updated:<br>11/9/99 9:36:08 AM ET</font></td></tr> </table> </td> </tr> </table> </td> </tr> <tr> <td align="right" width="135"></td> </tr> </table> </div><p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: But hasn’t Microsoft's monopoly power dwindled since the trail started? New competitors now are on the scene, including the Linux operating system.</strong></p> <p><strong>Frankenberg</strong>: Their market share has hovered around 95 percent for several years now in PC-based operating systems, despite the enormous amount of attention given to Linux, Free BSD and other operating environments. There hasn't been a significant change in Microsoft's market share, or in its control of the market.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: In your current company, Encanto, you don't use Microsoft’s software. You're using a Linux-like software, right?</strong></p> <p><strong>Frankenberg</strong>: We are using an open-source software product; it's Free BSD, as opposed to Linux. Free BSD is a particular flavor of the Unix operating system. It does an exceptionally good job. The operating system is distributed for free. Those that write enhancements to it are required to make those available to everyone. This has resulted in a significant amount of innovations and new capabilities.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: What's an example of how Microsoft wields monopoly power?</strong></p> <p><strong>Frankenberg</strong>: When I was responsible for Hewlett-Packard's PC business, I remember a year in which the price of MS-DOS and Windows moved up by 60 percent in one year with almost no change in (the product). Those prices aren't seen directly by the consumer; they're built into the prices of PCs as they're sold. But of course, that meant all manufacturers had to increase their prices.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: Why was it so tough for you to take on Microsoft? Did DR-DOS fail for the simple reason that Microsoft had better software?</strong></p> <p><strong>Frankenberg</strong>: Practices were in place that made it virtually impossible for DR-DOS to succeed. Microsoft received processor royalties (from) a large number of the PC companies. They paid for the Windows and DOS operating system for every machine that they shipped, regardless of whether it was loaded on the machine or not. For this, they received a significantly lower licensing fee. That meant it was almost impossible for DR-DOS to be sold into a company, because they would effectively pay twice for the OS. They would have to pay Microsoft once for the shipment of that computer, and they would pay Novell again.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: Much of the Microsoft antitrust case focused the integration of Microsoft's operating system with Internet browser technology, and how it affected competitors, including Netscape Communications. In retrospect, isn't browser technology fairly insignificant? Would more browser competition change the technology market?</strong></p> <p><strong>Frankenberg</strong>: Browsers certainly are a commodity today. But it definitely could have been a platform on which new applications could have been written. </p> <p>I think Microsoft did significantly impair (Netscape's) ability to become a true alternative platform to Windows by incorporating Internet Explorer into the Windows environment, and making it clear to anyone who was writing applications that the best and safest way to go would be to (write programs that work with) Internet Explorer, and not Netscape.</p> <p>In the findings of fact, there's an extensive section on what happened with browsers, and the fact that there could have been an alternative environment that could have delivered great capabilities to the Internet. That healthy competition was essentially cut off.</p> <p><strong><small><font face="Arial" color="#008000">CBSMW</font></small>: If the court's side against Microsoft in the findings of law, and legal punishments are doled out, what would that solve?</strong></p> <p><strong>Frankenberg</strong>: What this could portend is a return of a healthy competition at the next round of technological change. It's too late for the browser. But for the next round of technology, it could be a far more open environment with better prices, easier-to-use-products and better support. <img src="/archive/images/cbsmw_fin.gif" WIDTH="51" HEIGHT="14"><br> <img src="/archive/images/pixel_black.gif" vspace="10" width="445" height="1"><br> <em>SoapBox airs the views of investors, executives, companies and just plain folks. 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