Is Microsoft too BIG for its bootstraps? Should the DOJ demand lots of baby GATES? Will a split Microsoft really give the consumers better products and more choice?

Has the Gates Empire come to an end?

Just like AT&T has Microsoft become too BIG for its bootstraps?

It has a virtual monopoly on the desktop operating system and is making a strong, and ever more successful, bid for the office and departmental server. Its desktop applications are on most PCs and even the IE browser has become the defacto standard..

Does this represent too much of the market and stifle the competition?

As a single large goliath it will eventually stifle all innovation - why innovate when the idea will be superceded almost immediately. The next version of Microsoft Office, with the innovative name of 9x, will be be component-based - something the competition did in their last release. It will provide HTML as a common file format - that new (for MS). It cannot be healthy if many new start-ups, the breeding grounds for innovation, have an unwriiten objective to be bought-out by Microsoft whwn they are big enough.

What should be done about it?

The proposal is to split Microsoft into an operating system and an application company. This idea has its merits especially as the possibility to cross-subsidise is removed. It is this cross-subsidisation that fuels the deep-pockets that enable Microsoft to be very fast followers.

By creating some baby-Gates the proposed solution mirrors the AT&T split-up. The difference is that the AT&T monopoly was a barrier to telecoms deregulation. This means that a Microsoft split must be accompanied by a similar driver - maybe tax advantages to small companies to subsidise innovation. Once a company has a certain market share it no longer receives any tax advantages.

Would this generate more choice?

The only experience that we can call upon is deregulation, and this was not all good. By enforcing competition the consequences will not always be increased choice. The consumers could still choose Microsoft products (for there functionality, integration, price, look and feel, packaging, etc.) and then the baby Gates would again become a rampaging teenager.

Sometimes it is better not to artificially change the marketplace and let the normal, proven, market forces flow. Consumers will eventually vote with their money if the products become stale (no longer innovative), are too expensive (unacceptable total cost of ownership - software, hardware and support), do not meet expectations (limited functionality), etc. They will also react if it proven that a company has illegally or immorally created an unfair advantage over the competition.

These are the real reasons for the end of an commercial empire. They all add up to a feeling of distrust. As long as Microsoft is trusted it will succeed - if the trust is tarnished the slippery slope kicks in.