Microsoft Corp is facing a world of troubles.
The EU is on the verge of imposing burdensome sanctions against the company, as antitrust challenges nag the software titan at home and in Asia. Plus, stiffer competition looms from open-source products led by the Linux operating system.
Amid all that, analysts wonder what the next big revenue stream will be for a company whose next major software launch may be two years away -- and which has turned considerable attention to shoring up the security of its existing products.
"The company has a substantial amount of distraction, probably more distraction than they've ever had in their history," said Rob Enderle, principal analyst with The Enderle Group.
No one is suggesting that the distractions pose a serious, immediate threat to the Redmond, Washington, technology giant. After all, its Windows software still controls about 90 percent of the world's desktop computers, and it boasts nearly US$53 billion in cash reserves.
"I think they're a pretty resilient company and they tend to rise to the occasion," said David Smith, an analyst with Gartner. But, Smith says, serious issues exist that could end up hurting Microsoft's business.
Microsoft's inability to reach a settlement this week in its long-running antitrust case with the EU sets the stage for what is expected to be a major ruling against the company. In addition to a fine that could be hundreds of millions of dollars, the ruling could force the company to sell a version of Windows without its multimedia-player software, at least in Europe.
Microsoft has vowed to appeal, meaning the case could be tied up in legal wrangling for years.
And there are other legal challenges:
In Minneapolis, Microsoft just went to trial over allegations that it overcharged Minnesota consumers for software licenses. That case is expected to take several months. And a divided Nebraska Supreme Court has just revived a class-action lawsuit alleging the company violated the state's consumer-protection laws.
Seattle-based RealNetworks Inc, which makes a rival music and video player, has sued Microsoft for anticompetitive behavior.
Microsoft's Japanese division, meantime, was raided last month over concerns about anticompetitive behavior.
And the company still awaits a US appeals court ruling to decide whether sanctions in its landmark US antitrust settlement were adequate. One state, Massachusetts, is pressing for tougher penalties.
Still, facing antitrust allegations on several continents is taking time and attention from the company's top executives, Enderle said. Chief executive Steve Ballmer canceled a Las Vegas appearance this week because he had to fly to Brussels, Belgium, to try to broker a settlement deal with EU regulators.
That's sometimes left decision-making to the next level of executives -- who Enderle said are still consumed with a companywide initiative to make Microsoft products more secure against viruses and hackers.
The upshot is that Microsoft has sometimes been "unable to focus on the issues that are really pertinent to them," Enderle said.
The distraction comes as Microsoft has to make important decisions about its next-generation operating system. That includes how to compete with companies like Google Inc on search engine capabilities, and how to create a strong presence in the market for mobile computing software.
Meanwhile, analysts say Microsoft is in a valley between updates of some of its most popular products, which could stifle growth. A new version of Windows is not expected until at least 2006.
That could upset customers who have signed long-term agreements with Microsoft expecting more frequent Windows versions.
Another challenge is Linux, the open-source operating system whose blueprints are freely distributed on the Internet. Analysts say Microsoft is losing server business to Linux systems, and open source could someday threaten its Windows desktop dominance.
Hewlett-Packard Co announced this week that it would begin shipping Linux-based computers within several months to nearly a dozen Asian countries, including China and India. Another big Linux backer, IBM Corp, is using it to replace Windows on thousands of its employees' PCs.
Taiwan yesterday denied Chinese allegations that its military was behind a cyberattack on a technology company in Guangzhou, after city authorities issued warrants for 20 suspects. The Guangzhou Municipal Public Security Bureau earlier yesterday issued warrants for 20 people it identified as members of the Information, Communications and Electronic Force Command (ICEFCOM). The bureau alleged they were behind a May 20 cyberattack targeting the backend system of a self-service facility at the company. “ICEFCOM, under Taiwan’s ruling Democratic Progressive Party, directed the illegal attack,” the warrant says. The bureau placed a bounty of 10,000 yuan (US$1,392) on each of the 20 people named in
A Chinese aircraft carrier group entered Japan’s economic waters over the weekend, before exiting to conduct drills involving fighter jets, the Japanese Ministry of Defense said yesterday. The Liaoning aircraft carrier, two missile destroyers and one fast combat supply ship sailed about 300km southwest of Japan’s easternmost island of Minamitori on Saturday, a ministry statement said. It was the first time a Chinese aircraft carrier had entered that part of Japan’s exclusive economic zone (EEZ), a ministry spokesman said. “We think the Chinese military is trying to improve its operational capability and ability to conduct operations in distant areas,” the spokesman said. China’s growing
The High Court yesterday found a New Taipei City woman guilty of charges related to helping Beijing secure surrender agreements from military service members. Lee Huei-hsin (李慧馨) was sentenced to six years and eight months in prison for breaching the National Security Act (國家安全法), making illegal compacts with government employees and bribery, the court said. The verdict is final. Lee, the manager of a temple in the city’s Lujhou District (蘆洲), was accused of arranging for eight service members to make surrender pledges to the Chinese People’s Liberation Army in exchange for money, the court said. The pledges, which required them to provide identification
Nine retired generals from Taiwan, Japan and the US have been invited to participate in a tabletop exercise hosted by the Taipei School of Economics and Political Science Foundation tomorrow and Wednesday that simulates a potential Chinese invasion of Taiwan in 2030, the foundation said yesterday. The five retired Taiwanese generals would include retired admiral Lee Hsi-min (李喜明), joined by retired US Navy admiral Michael Mullen and former chief of staff of the Japan Self-Defense Forces general Shigeru Iwasaki, it said. The simulation aims to offer strategic insights into regional security and peace in the Taiwan Strait, it added. Foundation chair Huang Huang-hsiung
RSS