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Breakup of Microsoft would be a big gamble

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For Microsoft Corp., what was once unthinkable may now be possible.

Federal and state officials are said to be seeking a breakup of the software giant as an antitrust remedy, splitting it into separate companies to foster competition.

For the users of Microsoft products, from corporations to individuals, the implications of a breakup are far from clear.

Just as industry experts were divided over whether Microsoft violated antitrust laws, they now are split on whether customers would be helped or harmed by carving up the company.

One big concern is how well different software programs work together without crashing. Many customers now choose Microsoft applications programs, such as the popular Office suite, in the belief that they will run better than rivals' products on Microsoft's Windows operating systems.

This sort of argument goes to the very heart of the antitrust case against Microsoft. The Justice Department accused the company of using its monopoly with the Windows operating system - which performs the basic functions for nearly all personal computers - to create barriers for makers of other types of programs, notably Internet browsers.

If Microsoft's Excel crashes less often than competing spreadsheet programs, the company's critics say, it's because Microsoft doesn't give competitors the details needed to link a program with Windows and make it more stable. Microsoft says it gives software developers everything they need to create Windows-compatible programs.

Will these interoperability issues go away if two separate companies sell what are now Microsoft's Windows and Office products?

Absolutely, says Dr. Leon Kappelman, associate professor of business computer information systems at the University of North Texas in Denton.

"The two biggest problems facing the software industry are that quality is too low and complexity is too high," Dr. Kappelman says. "I think a breakup raises quality and reduces complexity, because Microsoft is more motivated to create programs that are interoperable.

"We would all have fewer problems with Windows and applications that are interfering with one another."

But Michael Gartenberg, an analyst who follows Microsoft for the Gartner Group in Stamford, Conn., reaches a different conclusion.

Microsoft would be hampered to compete effectively if it were broken up, and customers could be affected, he says. "As it is now, Microsoft customers are not happy when Microsoft products don't work well with one another."

Moreover, Mr. Gartenberg says, if the justification for breaking up Microsoft is to ensure that rival operating systems have access to programs such as Office, then the government's thinking is flawed.

Microsoft makes a version of Office for the Macintosh operating system because there is a big enough market, he says. If the company saw a sizable enough business providing Office for the upstart Linux operating system, that product would already exist.

Office includes such programs as Word for word processing, Excel for spreadsheets, Outlook for calendar and contact management and PowerPoint for presentations.

It remains unclear exactly how Microsoft would be divided. Some reports have indicated that the Office suite could be spun off into its own business. Other speculation has centered on dividing Microsoft into a Windows business and another company that would be composed of the remaining units, including the Office and Internet-related divisions.

Dr. Kappelman says it would be simple to split the Redmond, Wash.-based company because it is already divided by specific product lines. Mr. Gartenberg counters that no one has yet suggested logical division points for Microsoft.

"Which government panel will sit down and decide what goes into Office?" he asks.

Of course, the greatest issue of customer compatibility may simply be the value in everyone working with the same tools, even if the financial benefits of standardized software flow so heavily into one company's coffers.

"If I send you a text file, it will be in Word, a spreadsheet will be in Excel and a presentation will be in PowerPoint," says David Goldstein, president of Dallas-based Channel Marketing Corp.

"Without that kind of compatibility, we would be taking a huge step backwards."

Breaking up Microsoft would be a high-stakes gamble not just for the software industry, but for everyone who has grown dependent on its products.

Indeed, Mr. Gartenberg thinks the government isn't really willing to take the risk.

All the talk this week of splitting up Microsoft, he says, could be a negotiating ploy to get the company to budge from its hard stance and reach an agreement.

Technology editor Alan Goldstein writes about the Internet and electronic commerce for The Dallas Morning News. His e-mail address is agoldstein@dallasnews.com.
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