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  • Can Microsoft’s Executives Be That Stupid?

    March 7th, 2013

    So here we go again. An AP story out of Amsterdam this week reports that the European Union Commission has fined Microsoft the princely sum of $733 million. Why? Well, as many of you recall, Microsoft was supposed to offer Windows users in Europe a choice of browsers when they first setup the OS, or their new PCs.

    That agreement came out of a 2009 settlement, in which Microsoft paid a fine of 860 million euros (over $1.12 billion based on current exchange rates) to give customers a way to choose a browser other than Internet Explorer. You’d think that would have been the end of it, as this agreement seems one that’s fairly easy to fulfill, right? But not so.

    According to the report on the latest findings, Microsoft failed to offer the browser choice on some 15 million installations of Windows 7 in Europe from May 2011 until July 2012. Microsoft admitted the transgression, saying it was a mistake, and evidently cooperated in the investigation.

    The mind boggles.

    It’s really hard to believe that Microsoft wasn’t aware of the violation or the cause of that violation from Day One. You’d almost think they never tested their OS installations after shipment, and wouldn’t Microsoft’s rivals in the browser wars, such as Opera, complain? But I’m more concerned about the regulators at the European Union who allowed this clear violation to continue for so long before clamping down. Sure, exacting hundreds of millions of euros from Microsoft had to be an attractive prospect. I’m not saying it was deliberate. But the failure to notice what happened simply doesn’t make sense.

    Or maybe so few people care about Microsoft these days that they simply didn’t bother to complain. After all, it would take but one phone call and a few photos or screen shots to confirm the lack of browser choice on a new Windows 7 installation in Europe. How was this allowed to go on for so long?

    In all, Microsoft has paid some 2.2 billion euros ($2.86 billion) in fines as the result of their alleged abuse of market power. These days, of course, Windows users routinely install other browsers, and not just in Europe, and that decision is made without a ballot box. Firefox and Chrome have both taken a hefty portion of the market, but have yet to unseat MSIE.

    According to one survey from Net Market Share — and the numbers vary considerably depending on the source — all versions of Internet Explorer held 55.82% of the market as of the first part of 2013. Firefox remained in the number two spot, with 20.12%. Google Chrome had 16.27%, and Apple Safari held position number four with 5.42%, but Apple’s browser is evidently no longer being developed for Windows users.

    Such surveys don’t reveal mobile browser share, where Apple and other WebKit browsers, including the ones supplied with Android (Internet or Chrome) have the sort of dominance that Microsoft enjoyed on PCs for many years.

    But Microsoft isn’t just squandering money on fines, and this latest fine could have been easily avoided. They are also throwing bad money into those terrible ads for Windows 8 and the Surface tablet, not to mention Internet Explorer. Evidently Microsoft believes that sound and fury, in a sense yelling at potential customers for attention among the clatter of TV spots, has to have a positive outcome. The facts, however, are otherwise. Windows 8 has not been that well accepted, and Windows Phone 8 and the Surface tablets have essentially gone nowhere.

    Faced with this situation, you’d think Microsoft’s CEO, Steve Ballmer, and his executive team, would be working overtime to deal with the company’s serious problems, and not pretending everything is just peachy. Were there any consequences when the company failed to properly configure Windows 7 installers for the European market? Was one person, or a whole team, responsible for failing to present the browser selection interface?

    When it comes to Windows Phone, rather than doubling down and updating the platform as if nothing was wrong, why isn’t Microsoft going back to the drawing boards and figuring out how to deliver a compelling mobile OS that would help drive cutting-edge hardware, rather than also-rans? With PC sales declining, why isn’t Microsoft rushing to build a Windows 8 Service Pack to address the worst ills? What about just restoring the Start Menu for starters, a feature to which users have been accustomed for years? The apparent popularity of third-party solutions has to convey a message, one hopes.

    Doing fast fixes shouldn’t be difficult for a company with Microsoft’s resources. Take a look at an auto industry example. Despite great sales for the 2012 Honda Civic, the new model received tepid reviews, and lost the cherished “recommended” rating from Consumer Reports. Honda did a fast refresh, and the 2013 Civic is far better in almost every way, from looks, to comfort, interior fit and finish and, of course, ride and handling. This relatively quick fixer-upper must have costa Honda hundreds and hundreds of millions of dollars, and it had a positive result.

    Microsoft should follow Honda’s example, and get on with the job of revamping Windows Phone and Windows 8 into platforms customers might really like.



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