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  • Should Microsoft Be Forced to Unbundle Windows?

    September 24th, 2007

    I don’t know whether you realize this or not, but whenever you buy a PC, you are also paying for a copy of Microsoft Windows. It doesn’t matter whether you use it or not, or whether you wipe the drive and install your favorite Linux distribution. It doesn’t matter what you want. You still have to pay the dreaded “Microsoft tax.”

    How much? Well, that varies from PC maker to PC maker, depending on the quantities they buy and the particular configurations they choose. I’ve heard $40 for a basic OEM license, however. This may not seem like an awful lot of money, until you multiply that figure by tens of millions. Even forgetting the far-higher cost of buying a Windows upgrade kit at your local computer, it all ads up to billions of dollars.

    In fact, Microsoft makes roughly 81% profit from Windows. What a racket!

    Well, now a European think tank, known as Globalisation Institute of Brussels, is asking the European Commission to order Microsoft to unbundle Windows from new PCs. That would mean you’d only pay for Windows if you really wanted a copy. Otherwise, you can buy your PC naked, without an operating system and install whatever x86 compatible system you want. Or have it ship to you with a different operating system, but that opens a real can of worms.

    Since Microsoft isn’t faring terribly well at the hands of the European authorities, this possibility ought to be taken seriously. However, even if such a demand were made, Microsoft could stretch out the process for many years what with stonewalling, legal challenges and all the usual tricks a multinational corporation can play to avoid facing the music.

    Before I analyze the possibilities, I know some of you are going to wonder why Apple wasn’t mentioned in the same breath, since you can’t buy a Mac without Mac OS X. However, the situation is quite different, since Apple’s market share is roughly 3% worldwide, whereas Microsoft’s is well over 90%.

    So you can see where there’s an incentive to end Microsoft’s lock-in deals with PC makers and somehow force them to compete on a level playing field. The problem arises, of course, as to what choices a PC maker can offer instead of Windows. Obviously, there is no Dell operating system or HP operating system, to cite two obvious examples. To be sure, I call these companies PC box makers or assemblers because all they really do is pick various components from the same parts bins, and package them with a somewhat distinctive case bearing the manufacturer’s logo.

    Then they install a hard drive image that includes Windows, plus whatever junkware they’ve been bribed to include, and ship the boxes to retailers or customers.

    If Windows suddenly isn’t a requirement, where do they go? It would take these companies years to build their own operating systems, with no guarantee of success, so they’d probably look towards a suitable Linux distribution. The only thing is that Linux isn’t necessarily so friendly to novice users, without lots and lots of careful packaging and advance configuration.

    Yes, Dell does offer some systems with Linux preloaded, and HP is experimenting with a similar option. They might work well out of the box, but flexibility is rather limited. As soon as you stray beyond the default setup, you are almost certain to encounter problems with peripheral drivers. If you must use a Windows application, you may need to look for, say, an Office substitute, or be forced into the world of virtual machines.

    And then you’re back to installing Windows, unless you use WINE, the open source software on which CrossOver Mac is based. That lets you run some Windows applications without Windows.

    As far as I can see, of course, this reduces the prospects for mass market acceptance of Linux.

    Some suggest unbundling Windows would give Apple a golden opportunity to sell retail Mac OS X boxes that’ll run on any ordinary PC. Maybe, but Apple makes the lion’s share of its Mac profits from hardware, not software. They offer a vertical solution, with the hardware and software designed to work well together.

    Even if Apple could sell enough copies of Mac OS X to cover lost revenue from people who choose a PC box rather than a Mac — and that’s going to be awfully difficult — they’d confront the same chaotic compatibility issues that Microsoft must deal with. Instead of just working with a small number of carefully configured systems, Mac OS X would have to run on thousands and thousands of different PCs, many of which are home-built from spare parts acquired, perhaps, through a local computer outlet.

    Unfortunately, such consequences aren’t always obvious to the tech commentators who think Apple should do its own unbundling. Maybe they are too young or they have forgotten the near-disaster of Apple’s first and final effort to license Mac OS X. It nearly killed the company.

    Sure, maybe those licensing deals were badly negotiated, but that’s not where Apple is going these days. With sales of new Macs reportedly running at record levels and then some, there’s just no upside for Apple to sell its operating system to PC users.

    In the end, unbundling Windows may result in very little change, at least on the short term. The options available to PC makers are few and not at all suitable for many of their customers. Indeed, the entire effort may be a gigantic exercise in futility.

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