Although Bill Gates said the Court of Appeal ruling "lifts the
cloud of break-up over the company," analyst group Gartner believes
there is a strong business case for Microsoft splitting in two
anyway.
Gartner vice president Andy Butler told CW360.com, "Over the past
months, we have increasingly been coming to the opinion that it
might not be a bad thing for Microsoft if it was two companies - an
applications company and an operating system company."
Butler said the software giant had been making structural changes
in preparation for a legal break-up, but "just because the heat
dies off from government intervention, we believe [the company]
will continue to evaluate the option of existing as two highly
autonomous units".
Butler outlined the business case, pointing out "a single Microsoft
will have to continue to be cautious about unfair practice, but a
separate operating-system company could have a strategy to broaden
its device support across many emerging technologies such as PDA
technologies. It could also leverage development in chip
technologies such as Itanium.
"Likewise, an applications company not beholden to support one
operating system could look favourably at Linux, Solaris and Unix.
That way it could become a lot more competitive with other
applications vendors."
According to Butler, Microsoft has become "a lot more pragmatic and
mature in the way it engages with the software industry," thanks to
the legal proceedings. "It realises it has to learn to live with
other operating systems and has greater acceptance of
heterogeneity. If I was Microsoft, the appeal to move products to
other operating systems would be very strong."
Butler believes that two separate companies could be more dangerous
for competitors. "The battle lines have been built on the
assumption that Microsoft is one large company. If it becomes two,
then companies like Sun Microsystems will have to rethink their
strategies."
He added, "What started off as an anti-trust measure could work
very much in Microsoft's favour. Microsoft has played off the
industry and the legal system, but now the genie is out of the
bottle. It is a clear winner either way."
Lisa Kelly