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By | Gavin Clarke 12th June 2009 23:21

Behind Microsoft's IE-free, Windows-for-Europe ploy

The slacker Euroreaucrat offensive, reworked

Microsoft's offering what it's called the best solution to shipping Windows 7 in Europe while staying within European regulatory law.

The answer? For European Union (EU) member states to get 12 versions of the forthcoming Windows 7, each without the browser. IE will be available to Windows 7 customers "separately and on an easy-to-install basis."

The EU has quickly rejected Microsoft's answer as inadequate, while Opera Software, who brought the original complaint against Microsoft to regulators, has fulminated.

Microsoft's legal history suggests this a tactical move against regulators and competitors, not a genuine offer of peace. The move is designed to put pressure on one and outmaneuver the other while maintaining as much of IE's declining market as possible.

The company's legal and business teams are used to playing hardball, mixed with a strong dose of theatrics, to put regulators and competitors on the back foot.

Play the man, not the ball

In February 2006 Microsoft took the unprecedented step of publishing confidential documents in a previous case with the European Commission. Microsoft claimed it was not getting a fair hearing in that case, saying officials were not reading documents and ignoring complexities.

But the company went further. It impugned officials by suggesting they'd rushed the case simply to wrap up in time for the approaching Christmas holidays. In other words: they were being unprofessional.

At the time, Microsoft was under a cloud of a daily fine of $2.4m for not complying with the earlier ruling it was appealing. That ruling had said Microsoft must provide technical documentation to competitors at an affordable price on Windows server protocols.

With the legal process running on and avenues running out, Microsoft tried to shake up the game by shaming commissioners into a hasty and favorable decision.

but the Commission was not moved, and a month later, Microsoft reverted to working through the legal process by using negotiation: It offered free support to licensees signing up to see server code to settle.

This also failed, and 19-months later, Microsoft agreed to abide by 2004 ruling. For the record, Microsoft was fighting against a program it was already offering across The Pond. That program resulted from the settlement of US government and state's antitrust prosecution of Microsoft.

Coming up to date, Microsoft's latest move on IE in Windows is clearly premature. It comes ahead of a final ruling by the body investigating the bundling of IE and Windows and the body empowered to mandate the official resolution. That body is the EU's Directorate General for Competition of the European Commission.

Making Windows 7 available in Europe minus IE should be seen as more judicial and extra judicial maneuvering to achieve a favorable outcome. Microsoft is trying to outflank the legal system by presenting a fait accompli: a solution the EU will be forced to accept.

This is from Microsoft's legal playbook: During the long-running settlement phase of Microsoft's US antitrust case, Microsoft kicked out Windows XP Service Pack 1 to hide Windows Media Player (WMP) and IE from the end user ahead of a settlement that came two months later.

Start the pips squeaking

Microsoft is also attempting to exert pressure on regulators as it did in 2006 by enlisting the court of public opinion. This time, rather than expose internal documents, it probably hopes to bring pressure from those making and selling PCs by scaring them with the prospect of Windows without the browser.

According to deputy general counsel Dave Heiner, Microsoft had already begun telling OEMs and retailers of its plans before the story broke this week. That's phase one. OEM and retailer alarm should be phase two. That alarm is related to why Opera Software and the EU are not buying Microsoft's offer.

That reason? This is not an deal based in reality. In fact, it's potentially harmful to OEM business, it won't redress the imbalance in browser market share, and it can potentially rebound on Opera. And Microsoft knows that, which is why Microsoft made it.

It is extremely unlikely that a version of Windows without a browser will be wanted by customers or OEMs. Sales of Windows XP N represented just 0.005 per cent or 1/20,000th of one per cent of overall XP sales in Europe by April 2006 - the last time Microsoft released figures. Windows XP N was Microsoft's last attempt to appease European regulators by removing one of its applications from Windows - WMP.

"By comparison, 35.5 million copies of the fully functional version of Windows XP were sold in Europe during the same nine-month period," Microsoft said.

Helpfully, Microsoft provided some insight into OEM thinking on the subject.

"I cannot foresee circumstances under which OEMs would choose to market PCs using a version of Windows without Windows Media Player," former senior vice president of Dell Computer Corporation's Personal Systems Group Carl Everett said in a statement at the time.

The former executive vice president for Toshiba America Information Systems' Computer Systems Group Rod Keller also noted in a statement: "It would not make business sense to market a PC on the basis that it did not include Windows Media Player."

You can read what was clearly designed by Microsoft as an "F-U, told-you-so" to regulators here.

As ever with product, the question is what came first: were people, retailers, and OEMs just not interested in Windows minus WMP or did Microsoft, retailers and OEMs not sufficiently promote Windows XP N? With the channel sales and marketing process what it is, there's good reason to believe it was the latter. Why, after all, would Microsoft not want to promote the "fully functional" version of Windows?

Windows XP N's poorer relation

Windows 7 without IE is likely to see the same problems. The browser is not WMP. It's more important than that. The browser, unlike the media player, has become become integral to many peoples' PC experience.

OEMs and those selling PCs will be alarmed at the potential impact on their business of not having IE on machines loaded with Windows - a fact cleverly hinted at in the opening of Heiner's blog. "Microsoft had sent a memo to computer manufacturers and retailers about our plans for Windows 7 in Europe. We're getting quite a few calls on this, so we thought it would be helpful to explain our plans," Heiner wrote.

Heiner did not say how IE would be delivered, but given you'd need a browser to get online in the first place the likelihood is IE will be delivered via Microsoft's Automatic Update service.

Regulators are right to maintain the pressure on Microsoft and competitors are justified in feeling shortchanged.

Based on Microsoft's sales figures for Windows XP N, the facts strongly suggest that OEMs, retailers, and customers will not be interested in Windows without IE and neither Microsoft or its partners will be interested in promoting this bastard operating system. Microsoft knows this and is betting it can offer a solution it knows will not only fail but that will keep browser competitors out of the mainstream Windows SKUs.

In offering an IE-free Windows, Microsoft clearly hopes it can preempt the legal outcome it fears - one of two options regulators have been discussing. Those options? Microsoft must either ship rival browsers with Windows or make them available for download from Automatic Update.

That would take competition against IE to a whole new level. No more Firefox slowly nibbling at the edges through downloads along with Opera or Chrome, but now presented on an equal basis out of the box as an alternative to IE.

The success of IE has been not just that it simplified the web browsing experience for many, but that it's easy for the ordinary user to find. They don't have to go to download sites. Making Opera, Firefox, or Chrome available in Windows or through Automatic Update would cede that advantage to rivals. ®

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