Microsoft’s Breakup Could Trigger Tougher Competition in the Linux Market, IDC Says

FRAMINGHAM, MA – JUNE 27, 2000 – The remedies placed on Microsoft by Judge Thomas Penfield Jackson could be bad news for players in the Linux market. According to IDC, both desktop/personal productivity players and Linux hardware startups could face more competition if Judge Jackson's orders are not reversed.


The first part of Judge Jackson's ruling orders Microsoft to split into two independent entities. "The most immediate impact of this split would be to free the applications business to make decisions related to market opportunities outside the Windows platform," said Dan Kusnetzky, vice president of IDC's System Software research. "As radical as it might seem today, the applications business could address the up-and-coming Linux client markets and could place energy into porting its server products over to the server operating environments, including Linux and Unix."

IDC believes an independent Microsoft applications company could present a serious threat to desktop/personal productivity players in the Linux space — including Corel, Applix, and even Sun Microsystems. In fact, Corel has already publicly acknowledged that a breakup of Microsoft would be worse than the existing structure.

Another part of Judge Jackson's order is that Microsoft not penalize partners who choose to also endorse competitive technologies. This order would have a positive impact on PC and Intel architecture server partnerships created between Linux distribution vendors and hardware OEMs to pre-load Linux on new systems.

"This order coming when it does with the growing interest in Linux is certain to give this open source phenomenon a major boost," Kusnetzky said. "On the other hand, freeing heavy hitters such as Dell and Compaq to go after Linux system sales without fear of backlash from Microsoft is likely to be bad news for Linux hardware startups."

While Microsoft's application software presence on other operating systems might increase as a result of Judge Jackson's orders, its dominance on Windows might suffer as well. "The separation of the operating systems business from applications, middleware, and the browser business slices deeply into Microsoft's strategy of tightly integrating applications into the operating environment and using client applications to leverage the sale of server software. This could make it more difficult for the company to maintain its current dominance on the Windows platform," said Al Gillen, research manager for IDC's Server Infrastructure Software program. "However, organizations committed to using Microsoft products are likely to continue using them, and Microsoft's existing products – regardless of the name of the company that owns them – will continue to do very well."

IDC's report, An Analysis of the Antitrust Remedies Placed on Microsoft (IDC #B22525), looks at the impact of Judge Jackson's remedies on Microsoft and the overall IT industry. To purchase this report, contact Cheryl Toffel at 1-800-343-4952, extension 4389.

About IDC

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