Classic Systems Emulated: Windows 95 (Part 4)
Microsoft shows no mercy on IBM or the OEM's!
Windows 95 succeeded beyond Microsoft's wildest expectations. Customers demanded Windows 95. Anyone with Win95 were left in the dust. As a result, Microsoft now had much more leverage in making excessive demands from the OEM's on their terms. These companies felt compelled to comply because if they didn't, Microsoft was going to lock them out of Windows. They wouldn't have a business without them. Microsoft was going to strong-arm even their loyalist of customers. These abuses are covered in Finding The Facts - The United States of America Vs. Microsoft Corp which goes into great detail about Microsoft's abusive practices. This is definitely a worthwhile read. This is where the vast majority of this information comes from.
Desktop Icons
Compaq started to remove the Internet Explorer icon from the Windows desktop on their shipping Presario PC's. Compaq entered into an agreement with AOL to promote their online services above everybody else. The Presario PC's also had a desktop icon for the Spry ISP and the web-browser promoted by Spry: Netscape Navigator.
Netscape Navigator was taking the WWW by storm. The new startup already dominated the vast majority of the browser market. While Microsoft realized the importance of the Internet, they failed to realize the importance that the web browser would play on the Internet. Microsoft quickly licensed the source code of the Mosaic browser, made modification to it, and released Internet Explorer as part of the Windows 95 Plus! pack. The browser flopped. IE 2.0 was better received, but was still a minor player to the juggernaut that was Netscape. While IE 1 and 2 were being worked on, Microsoft was working on the new version of IE which was entirely made by the Redmond giant. The Trident web engine made its way into IE 3.0, released on 1997.
When Microsoft learned of what Compaq was doing, it told the Houston company that removing the IE icon was in violation of the agreement that Microsoft and Compaq signed in regards to Windows 95. Compaq ignored Microsoft until May of 1996 when the OEM got a letter from the Redmond giant stating that the license agreement for Windows 95 was going to be terminated unless Compaq restored the MSN and IE shortcuts to their original position. Compaq wouldn't have lasted that long without Windows 95. The icons were restored on June 1996.
The very fact that Microsoft was willing to terminate a license agreement for something as trivial as internet shortcuts showed how far Microsoft was willing to go in order to enforce its demands on others, especially with their largest client at the time; Compaq. Microsoft was on the verge of loosing sales with it's largest customers. However, Microsoft knew that they could get away with it because they knew that Compaq's customers demanded Windows. They could make outrageous demands because they knew that they could get away with it. Things didn't stop with desktop icons though.
IBM Again
Microsoft also
knew that IBM's customers demanded Windows on their PC's as well. Their
was blood between Microsoft and IBM. As part of the 1990 "divorce"
settlement, Microsoft had to give IBM the source code of Windows
3.0/3.1. While the reasons for this was never disclosed, it was
speculated that IBM suspected that their was code sharing between
Microsoft's OS/2 and Windows teams, and OS/2 code found it's way into
Windows. This would have been revealed in a code audit. One could
speculate that IBM's army of lawyers "convinced" Bill Gates and Steve
Ballmer that giving Big Blue the source code for Windows 3.0/3.1 was in
their best interest. (if you know what I mean). Given that Microsoft was
no spring chicken themselves and could probably taken on Big Blue if
the allegations were false, the fact that they agreed implies guilt.
(Again, this is only speculation) Since Windows NT was written from
scratch without any IBM code whatsoever, it was exempt from the
settlement, along with Windows Chicago.
Knowing that this
was their big chance at getting back at IBM, Microsoft was going to hype
the living Hell out of Windows 95. To make Win95 the must own Windows,
the major OEM's like Compaq, Packard Bell, and Dell were given special
special discounts. Microsoft was willing to give IBM that special
discount as well if they discontinued OS/2 and Lotus SmartSuite. IBM
rejected Microsoft's offer. It didn't help IBM though as their customers
demanded 95 and their competition were getting a leg-up over Big Blue.
Microsoft only needed to play the waiting game. Microsoft knew that
those who didn't carry Windows 95 at launch were going to be left
behind. IBM didn't sign the agreement with Microsoft until 15 minutes
before Windows 95 officially went on sale. Because IBM held out so long,
they wouldn't have any new computers preloaded with the new OS at time
of launch. Also, because IBM would continued to support both OS/2 and
Lotus SmartSuite, the company would be pay much more for that Windows 95
license compared to everybody else.
Desktop Customization
During the Windows 3.1 days, it was typical for many OEM's to include their own desktop shells in place of the Windows Program Manager. The most well know of these shells was the Packard Bell Navigator (not to be confused with Netscape Navigator). This shell employed an house metaphor for the computer desktop. OEM's like AST , Tandy, and Compaq had their own alternate shell programs as well. Many other OEM's included their own tutorial programs that were bundled on their computers. This was typical with computers like the IBM Aptiva's and those shipped by Gateway 2000.
Several of the major OEM's started to customize the boot sequence of Windows 95 by changing the splash screen to show the PC brand and run certain tutorial and registration programs after bootup. Microsoft wasn't going to have any of it though. The intention of these tutorials was to teach people how to use their new computers. This was done to reduce support calls and returns. According to the court document, three service calls from a customer could wipe out the entire profit margin that an OEM made from that PC sell. Also, many of these OEM simply wanted to make the computer easier to use for new users by including these alternate shell programs. As revolutionary as Windows Explorer was, it could still be intimidating for a new user.
Microsoft started to impose restrictions preventing OEM's from modifying the boot sequence. They couldn't modify the desktop shell, demanding the OEM's that the PC's had to boot up to Windows Explorer with the Start menu by default. No alternate shell programs were permitted. The OEM's weren't even allowed to to change the size of certain icons. When Microsoft introduced Active Desktop, which allowed web pages to be rendered as the desktop background, Microsoft prohibited the OEM's to promoting third-party services using Active Desktop.
Microsoft knew that they could make these demands because the OEM's had no alternatives. It was either Microsoft or the highway, and the highway was Chapter 11 bankruptcy. The actions that Microsoft imposed were anti-consumer because Microsoft was preventing the OEM's from improving the Windows experience of including software that helped their customers.
These actions were even more outrageous considering that these tutorial programs didn't promote non-Microsoft services. Thus Microsoft didn't have anything to loose by their presence. Due to the PC price war a few years earlier, millions were purchasing computers for the very first time. As such, many people were still not familiar with PC's or Windows. As such, tutorials and alternate shell programs were necessary to ease people with their new product while reducing support calls and returns. Microsoft's policies placed the burdens of support on the OEM's. When one's computer messes up and call Microsoft, the Redmond giant will simply redirect to the OEM that sold them that PC. That computer isn't Microsoft's responsibility. Microsoft didn't have to deal with the support calls or the returns. The OEM's were livid as many have already spent millions on such programs. However, Microsoft was very "generous" in giving volume discounts as a way to compensate for their losses.
Goodbye "No OS" option
As covered in previous
articles. Microsoft bullied many OEM's not to adopt OS/2. They mainly
accomplished this by threatening to increase the price-per-copy of
Windows that an OEM payed. Compaq executives told IBM that they did want
to pre-load OS/2 onto their computers, but received threats from
Microsoft. It was a similar situation from HP. However, the actions just
didn't affect OS/2. The OEM's became so afraid to upset Microsoft that
they didn't except any OS, even if it was offered for free.
After leaving Apple, Jean-Louis Gassée founded his own company, Be. BeOS came into being which was eventually ported to the x86 platform. This OS gained a reputation for it's multimedia capabilities and seamless multitasking despite running demanding CPU processes. Jean envisioned the OS of being a multimedia powerhouse. However, he had no luck persuading the OEM's of adopting it as an option. In fact, he even tried to give his OS away for free, and they still wouldn't touch it, as they were very afraid of upsetting Microsoft.
With this new-found leverage, Microsoft made more demands still. While it wasn't possible to get a computer pre-loaded with OS/2 or BeOS, it was still typical for one to order a PC from Compaq or Dell without any OS whatsoever. For those who didn't want Windows 95, they could order a PC without anything on the hard-drive whatsoever so that the owner can install whatever they wanted. As you could image, Microsoft was not a fan of this business practice. Microsoft threatened to increase license fees if OEM's provided the "No OS" option. Not only that, Microsoft often required OEM's to buy more licenses than computers. Thus, their was a Windows license fee for every computer sold, even if that computer didn't have Windows install. As a result, many started to refer to the license fee as the "Windows tax" as one had to pay for it, even if the user didn't want Windows and purchased a computer without it. The OEM's didn't have a incentive to provide an "No OS" option anymore as they would have to buy a Windows license for that computer anyway, even if that machine didn't have Windows on it. Microsoft made the assumption that any PC that an OEM sells is automatically going to have Windows by default, regardless of whether the machine actually ships with it or not.
Monopoly Abuse
In this country, a monopoly is a business situation where a corporation controls 90% (or more) of the a given market. Monopolies are not illegal here in the U.S. (unfortunately). However the abuse of them are. Even though they are legal, they are also highly discourage because they are anti-consumer and unethical. Competition drives innovation. When their is market stagnation, then consumers are at the mercy of the company dominating the monopoly. It's for this reason why monopolies are bad, regardless of whether they are government sanctioned (AT&T pre-breakup) or a product of the free market. As such, when a company reaches monopoly status, that company should be held under intense scrutiny by the general consumers. After all, isn't the company obligated to those who made the company the market leader that it is: the general consumer. Under a monopoly, the direction of a product shouldn't be determined by the company dominating the market, but by those using that product: the general consumer.
Corporations are important and have rendered many valuable services for society. However, they are not above the law. They have to play by the rules that everybody else plays by; not rewrite them for their own advantage to prevent competition. Corporations are here to serve the people, not the other way around.
Microsoft had a OS monopoly starting around the middle 90's with the release of Windows 95. Microsoft controlled the x86 PC market for all intensive purposes. One could argue that Microsoft didn't have a monopoly because one could buy a Macintosh. It's possible for one to not use Microsoft's products and not buy into their ecosystem. However, this mindset is horrible flawed. The non-x86 home PC market made up less than 10% of the total market. When Steve Jobs came back to Apple, he needed money in order to implement his vision. Steve went to Microsoft to secure that money. The success of Apple was tied to Microsoft. People were stilling buying Macintosh's so they could run Microsoft Office or use Outlook. Apple's future was in Microsoft's hands.
Conclusion
Microsoft didn't enter into the agreement with Apple out of the kindness of their hearts. The DOJ (Department of Justice) was getting tired of their crap! With the constant market abuses, the DOJ (Department of Justice) were now much more committed than ever to deal with Microsoft's market manipulation of the industry. Microsoft was abusing it's monopoly position. Microsoft's threats made to both OEM's and ISV's due to there OS/2 support would become public knowledge, and Microsoft's abusive policies would place the company in the fight of its life. And we haven't even gotten to the first browser war, IE being integrated into Windows 98, or the collapse of Netscape yet!
Wikipedia - Bundling of Microsoft Windows : https://en.wikipedia.org/wiki/Jean-Louis_Gass%C3%A9e
Wikipedia - BeOS : https://en.wikipedia.org/wiki/BeOS
Wikipedia - Jean-Louis Gassée : https://en.wikipedia.org/wiki/Jean-Louis_Gass%C3%A9e
Kixmiller Pigeon - Classic Systems Emulated: OS/2 Warp 3 : https://rkixmiller.dudaone.com/classic-systems-emulated-os-2-warp-3
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