Warren-Boulton Cross Examination (continued, 11/23, 24, 25AM)

During cross-examination, Microsoft attempts to show a number of points about Dr. Warren-Boulton's testimony, including:

Microsoft brings into question the validity of W-Bs use of P/E ratios to determine the extent of Microsofts alleged monopoly power. W-B responds by adding additional criteria to the test specified in his testimony, but its not clear that his test works with intuitively obvious real-world examples. (23AM6) Furthermore, W-B admits that he may not have considered all the oddities of Microsofts accounting practices, so its possible that MSs P/E would have to be adjusted downwards somewhat in order to make meaningful comparisons between MS and the other companies with which W-B compared it. (24AM66-68)

Microsoft brings into question W-Bs ability to testify to the per-copy or per-user costs of various distribution mechanisms since W-B doesnt know how much Netscape spent total to distribute 200 million copies of their browser or how many new users were obtained from that distribution effort. Microsoft suggests that, without such knowledge, W-B cannot make accurate judgements about the relative costs of distribution mechanisms, and that he therefore cannot speak to the economic viability of particular mechanisms or the superiority of one over another. (23AM26)

Microsoft attempts to show a variety of inconsistencies between W-Bs testimony and that of Barksdale. In particular, Microsoft notes that Barksdale had argued that online software distribution had been helpful to Netscape, while Microsoft interprets W-Bs direct testimony to say that online software distribution was more of a handicap to Netscape since consumers find large downloads so troublesome. (23AM30)

W-B testifies that not only does Netscape have a lead in the installed base of corporate browsers, but the lead is widening. Although W-B asserts that Netscapes strong position in the corporate market is due to Microsofts inability to intervene between Netscape and its major customers (preinstallation on new computers, distribution via ISPs, and other similar techniques are allegedly less effective on big companies than on small businesses and consumers), Microsoft cites Barksdales testimony (which W-B at least partially accepts) that Netscape has always focussed on the corporate market. In this way, Microsoft draws into question W-Bs suggestion of a causal relationship between the relatively level playing field between browsers due to the structure of the corporate browser market and Netscapes apparent current victory in that market. (23AM34)

W-B is at a loss to address Microsofts claim that Netscapes international failure in international usage/sales is its own fault  due to its failure to dedicate staff to international sales, to write versions of Netscape in different languages, to establish an international distribution channel. (23AM77)

Microsoft questions W-Bs determination of the scope of the OS market, suggesting that W-B was too narrow in defining the market because he excluded, for example, the Mac OS, which at least some consumers treat as a substitute to Windows. (23PM6)

With respect to the barrier to entry into the OS market caused by the need for high-quality applications, W-B admits that the Mac has applications of each general type written for PCs, suggesting that perhaps applications dont present so great a limitation on inter-OS competition as W-B had previously suggested. W-B attempts to argue that OS/2s lack of applications was primarily responsible for the OSs failure, refusing to accept Microsofts assertion that IBMs technical and marketing mistakes (requiring too much RAM, charging too much, etc.) were at least as serious; Microsoft suggests, with W-B disagreeing, that its not appropriate to use OS/2 as an example of the need for good applications to gain acceptance for an OS since the OS was so badly flawed in other respects (23PM17-24) and since IBM has had relatively little success writing PC software programs in general (24AM9-10).

Continuing in the theme of confounding factors, Microsoft questions W-Bs assertion that IE3 and 4s increased acceptance was due to Microsofts alleged anticompetitive strategies, noting the many favorable reviews recent version of IE received. (23PM27-28)

W-B agrees that Microsofts Java implementation is superior to others in that Microsofts Jdirect technologies provide improved performance, and he agrees that some well-informed developers may choose to write to Microsofts standard because it works better for their particular application and user base. (23PM38-39)

W-B admits that there are features common to all modern OSs (the ability to store files on a LAN, for example) that he considers not to be part of operating system software. (23PM60)

W-B admits that it would be extraordinarily expensive to use workstations instead of Windows PCs, and he further acknowledges that Microsofts large market share reflects consumer preferences to at least some extent. (24AM7)

W-B agrees that, in the absence of cross-platform applications, consumers benefit from a single OS standard that runs the greatest number of applications. (24AM18) W-B also agrees that users face a tradeoff when evaluating cross-platform applications in that those applications that run on a variety of platforms have costs, impliedly in the sense that they run more slowly, provide fewer features, or are less reliable, although W-B wouldnt agree to Microsofts particular assertions re the failures of specific cross-platform programs. (24AM26-30) Finally, W-B agrees that there is little or no demand in the marketplace for alternatives to Windows. (24AM51)

W-B agrees that a valid analysis of pricing trends in OSs needs to recognize the increase over time in features included in the OS. (24AM62)

W-B is not sure whether or not there are any PC operating systems such that the current version does not include a free browser, although it is his testimony that Microsoft should be required to provide such an OS. (24PM40-41)

-- Anonymous, December 02, 1998

Answers

25AM?

The prior message should be titled "... 11/23, 11/24, and 11/30AM."

Naturally, even the MS trial stops for Thanksgiving!

Sorry for the confusion...

Ben

-- Anonymous, December 03, 1998