Feb. 25 (PRNewswire) -- A leading American economist set the record straight
on the higher costs that will result from an artificial breakup of the
Windows operating system. Consumers and the IT sector will pay the price
of a $30 billion increase in software costs if Windows is broken up as
some Microsoft critics and government attorneys seem to be advocating.
study, authored by Professor Stan Liebowitz of the University of Texas
at Dallas and presented today by the Association for Competitive Technology
(ACT), specifically addresses recent papers that claim there would be
no costs associated with a Windows breakup. Professor Liebowitz' paper
uses real- world, fact-based examples from the high-tech marketplace to
support his conclusion that breaking Windows into competing versions will
result in consumers seeing fewer choices and higher prices for software.
are living in a fool's paradise if they think that the Windows standard
will remain intact if the product is divided among multiple companies,"
Dr. Liebowitz said. "Just look at what has happened with the Unix and
Linux operating systems where competing versions are nowhere near compatible.
This example provides absolute and directly relevant evidence of what
we would see in a fragmented Windows marketplace," he added. The professor's
findings were debated at a conference that explored remedy options in
the Department of Justice's antitrust case against Microsoft.
Liebowitz' paper says that while some would argue that competing versions
of Windows will produce only minor changes to Windows, it is not supported
by any facts or plausible arguments. "Even with just one company producing
Windows, we've seen an average 20 percent increase in functionality a
year," Dr. Liebowitz said. "It will be impossible for competing operating
systems to remain compatible with one another while they are adding functionality
at these rapid rates."
The Liebowitz study is predicated on a single scenario - the District
Court orders a breakup of Microsoft into three "BabySofts", with each
BabySoft retaining its own flavor of Windows. We believe this is the least
likely of all breakup scenarios, with only a 5% likelihood. Far more likely
is the scenario where Microsoft is broken up into separate BabySofts for
operating systems, applications, and/or other business units (35% likelihood).
Another possible case has the BabySofts divided by market groups, (e.g.,
consumer and business systems) (10% likelihood).
Liebowitz also presumes there will be no concomitant benefit to the marketplace
from increased competition among the BabySofts. Even accepting Dr. Liebowitz'
figures, we project a contingent marketplace risk of less than US$1.3B
over the first three years of a Microsoft breakup. Combining the study's
baseline figure for installed 32-bit Windows operating systems (Windows
NT and Windows 95/98) yields a contingent risk from this scenario of only
$5 per installed user.
paper claims that there has been an average 20% increase in Windows functionality.
This refers only to modified or added application programming interface
(API) functions, used almost exclusively by other software developers.
This shouldn't be interpreted to mean that Windows 98, for example, has
60% more features than Windows 95, released three years earlier. It doesn't
This study presumes a number of worst-case scenarios to reach forecasted
costs of US$30B. However, we believe a contingent annual risk factor of
$5.09 per installed user to be miniscule. Current and future users and
adopters of Microsoft Windows need not fear the financial implications
of a potential breakup remedy.
is just more fear, uncertainty and doubt that benefits no one but Microsoft.