DOJ separates Windows from its reason

2000-06-07

Sometimes the simplest of statements can hide the most complex of matters. Take this one, for example: “The separation of the Operating Systems Business from the Applications Business.” As the whole court case was started on the basis of the line between the two being less than simple to define, it is worth delving a little into the detail: what, in technical terms, is the planned breakup said to entail? We need look no further than clause 7 of the final judgement. To quote:

"Operating System" means the software that controls the allocation and usage of hardware resources of a computer.

As far as the judgement is concerned, the operating systems business need concern itself only with the OS as defined above. The term “computer” is given a pretty broad definition, including PDAs, mobile phones and set top boxes (but, noticeably, not games consoles). Even broader is the definition applied to the term “Application”, comprising anything else you can think of. Which leads us to a very interesting situation, very interesting indeed.

First of all, Microsoft is currently shipping versions of its OS family with a whole raft of facilities that go way outside the scope of the definition of “operating system”. These include such high-level features as transaction servers and email facilities, but also lower level software such as calculators, media players and even text editors. The judgement considers all of these as “applications”, to be assigned to the applications business. The Microsoft OS business has been allowed a license in perpetuity to all “applications” which it currently sells as part of an OS package (apart from the browser, that is). In the future, it appears that it will be free to develop new applications but each will be under the scrutiny of the compliance committee. This makes things messy for the company, to say the least – after all, who decides when something is part of the operating system or not? For example, is internetworking software part of the OS? If so, what about secure internetworking software, such as encryption/decryption? Is a music player part of the OS – after all, it drives a hardware element of the computer.

The second issue is one of bundling. Microsoft is currently a customer facing organisation, delivering operating systems and applications that work in harmony. However it is the applications that are of more interest than the OS. Computers are evolving into devices and appliances – essentially sealed packages that perform specialised functions. Think of Network Attached Storage or Email appliances, or the EasyPC sealed PC initiative that has spawned the iPaq and NetVista, or even set top boxes and internet phones. All of these are manufactured from both software and hardware components, and the user of each is encouraged to ignore what is happening under the bonnet. In other words, the only way the OS can gain attention is by self-promotion, à la Intel Inside. Microsoft’s success has been helped by its appeal to the business end user and consumer alike. However the proposed division could hide OS for good behind an application fascia, forcing the company to become a pure OEM business – a far harder market to keep sweet than its traditional stamping ground.

Microsoft’s OS business may be permitted to develop new applications of its own, but it will have a standing start. It could buy its traditional competition (how ironic, if the new company acquired Corel and Borland), or start from scratch. One thing is for sure, it cannot survive on the strength of selling nothing but operating systems – the market is too slow and the potential for innovation is limited. The breakup of Microsoft will see two companies leave the Redmond fold – one is an applications business with good potential for growth, one is an operating system company that needs all the luck it can get to stay in the game. Windows owes a large part of its popularity to the availability of applications: without the latter, the former cannot survive.

(First published 7 June 2000)