US Justice Department Nears Anti-Trust Lawsuit Against Microsoft

Strategic Insights -

The US Justice Department is poised to file an anti-trust lawsuit against Microsoft Corporation, following a 37-month investigation by the Federal Trade Commission, which had reached a deadlocked decision on whether to take action against the software company. The case centers around allegations of anti-competitive practices, including offering discounts to PC manufacturers and using undocumented code in Windows software to give Microsoft's applications an advantage. Microsoft disputes these claims, citing a discount for volume business and insisting that its actions do not unfairly harm competitors. Meanwhile, Compaq Computer has implemented a new product forecasting strategy to combat its backlog problem, and Intel plans to cut the price of Pentium chips by up to 50% over the next nine months to boost sales and make it the corporate standard.

Key Takeaways:

  • The US Justice Department is reportedly close to filing an anti-trust lawsuit against Microsoft Corporation over allegations of anti-competitive practices.
  • The Federal Trade Commission had investigated Microsoft for 37 months before deadlocking on whether to take action.
  • Critics charge that Microsoft's discount pricing for MS-DOS to PC manufacturers closes the market to competitors, while also using undocumented code to give its applications an advantage.
  • Compaq Computer has implemented a new product forecasting strategy, making each product division responsible for its own forecasts, to combat its backlog problem.
  • The new strategy has already shown success with the ProSignia VS line, which is in demand and not suffering backlogs.
  • Intel plans to cut the price of Pentium chips by up to 50% over the next nine months to boost sales and make it the corporate standard.
  • Intel officials declined to comment on future pricing plans, but documents indicate that prices for 90MHz Pentium desktops will fall to $US2000 this spring, and 75MHz Pentium notebooks will cost less than $US5000.
  • By 1995, 75MHz Pentium desktops will be selling for around $US1200 and 100MHz Pentium desktops will sell in volume at about $US2500.

Statistics:

  • 970,000 PCs were shipped in the first quarter of 1994 by Compaq, exceeding customer demand (IDC).
  • Prices for 90MHz Pentium desktops will fall to $US2000 this spring.
  • 75MHz Pentium notebooks will cost less than $US5000.
  • By mid-1995, 75MHz Pentium desktops will be selling for around $US1200 and 100MHz Pentium desktops will sell in volume at about $US2500.
  • Street prices of name brand 60MHz Pentium machines with 8MB of memory and 120MB to 200MB hard disks are around $5500.
  • A similarly configured 66MHz Pentium model on the street is around $7645.
  • The average price of 26 Pentiums in the clone market is $4598, including tax.
  • The average name brand 486 DX4 machine configured with 6MB of memory and a hard disk between 120MB to 200MB is selling on the street for around $3772.

Sources:

  • PC Week
  • IDC
  • International Research Bureau
  • Computer Daily News
  • Federal Trade Commission
  • US Justice Department
  • Microsoft Corporation
  • Compaq Computer
  • Intel Corporation