WordPerfect Will Get Its Day in Court
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News Analysis. It's called competition by litigation for a reason. |
Today, the U.S. Supreme Court cleared the way for Novell to get something it couldn't in the mid-1990s: Real revenue from its March 1994 WordPerfect acquisition. Novell acquired WordPerfect in a $1.4 billion stock deal and, separately, the Quattro Pro database for about $145 million. Less than two years later, Novell sold WordPerfect and related suite products, including Quattro Pro, to Corel for about $11 million cash, plus stock.
The Supreme Court issued no proactive ruling; rather, the high court refused Microsoft's request to dismiss the Novell antitrust lawsuit. From the court: "The petition for a writ of certiorari is denied. The Chief Justice took no part in the consideration or decision of this petition."
By rejecting Microsoft's request, the Supreme Court cleared the way for Novell's private antitrust lawsuit to continue. The case is sure to call out Microsoft development tactics in the mid-1990s: Did Microsoft selectively disclose information to third-party developers, while favoring its own teams working on Office?
The case could get ugly, and Novell seems mightily attached to it. In November 2004, Microsoft and Novell settled a private antitrust lawsuit regarding NetWare, but WordPerfect remained in litigation. Two years later, Microsoft and Novell entered into a broad interoperability deal that the maker of Office repeatedly touted for PR purposes. But for all the hugging and kissing over interoperability, Microsoft-Novell intimacy stopped with WordPerfect. The case continued.
The nuances are complicated, which is why I'm surprised Novell has persisted. Novell's obvious story: Microsoft favored its own developers, providing them better informational and programming interface access. WordPerfect never had a chance on Windows 95, which made a platform shift to 32-bit computing from 16-bit. Microsoft's obvious rebuttal: The Novell's merger execution had more to do with WordPerfect competitive problems than any perceived Microsoft anticompetitive tactics.
In cases like this, the winner often tells the more believable story.
Money for Nothing
I heard about the WordPerfect acquisition during the FOSE trade show in Washington, DC; again, March 1994. WordPerfect had a massive booth, and the booth employees made frequent announcements about the deal.
In 1994, WordPerfect had enormous word processor market share but struggled to make a successful transition to Windows. WordPerfect 5.0/5.1 for DOS was a hugely popular release. I met with some Corel folks earlier this month and asked about WP 5.1. The install base is still measurable; Corel caters to some of these customers by offering a WP 5.1 skin for new WordPerfect versions.
WP 5.1's success clearly contributed to WordPerfect's demise. For many customers, the word processor had reached a "good enough" threshold. Microsoft sees this problem today with Windows, and I predict the company will encounter it more severely with Office 2007; the successor will be a tougher sell.
The large number of satisfied DOS users was only one problem. WordPerfect-Novell didn't offer customers enough reason to switch to a Windows product. The first truly Windows version, 6.0—there had been a 5.2—was notoriously buggy. My first home PC, purchased in January 1994, came with WordPerfect 6.0 preinstalled. Being a long-time WordPerfect user, I was thrilled about the Windows version. But, three weeks later, following a series of repeated crashes, I bought the Word 6.0 competitive upgrade from Staples for $130. I knew other people making the same switch because of similar problems. WordPerfect 6.1 squashed the worst bugs.
Microsoft could tell a good and perhaps convincing story about mismanagement—that Novell's acquisition came at a critical transition to office productivity suites. Novell's execution was the problem. The company failed to deliver a compelling Windows version of WordPerfect. Any acquisition requires time to absorb, and WordPerfect was unlike Novell's other products.
Selective Disclosure
Novell could tell a very different story, and one that would put more of the blame on Microsoft. For years, developer complaints have dogged Microsoft—that the company selectively disclosed crucial information to outsiders but gave full access to internal product teams.
Strangely, Ray Ozzie, Microsoft's chief software architect, seemingly acknowledged selective disclosure last month. In describing the company's so-called "Interoperability Principles":
"Developers using these published specs to connect their own products to our products will be doing so using the same means that Microsoft's own products use for such interoperability. We already make a lot of documentation available today to developers, but this principle reflects our commitment to an open and level playing field in interoperating with all of these high volume products."
Ozzie's statement means one of two things: Either the information was already available or it wasn't. If it was, then Microsoft announced nothing new. The principles only have real meaning if Microsoft hadn't been fully sharing with developers, which would be my interpretation of the statement.
Trustbusters on two continents demanded more information disclosure from Microsoft. About two weeks ago, the European Union fined Microsoft a record $1.35 billion for failure to disclose interoperability information.
The present is context for looking at the past. Novell could reasonably argue that Microsoft withheld information that ensured Word, and later Office, would work better with Windows 3.11 and, more importantly, Windows 95 than would WordPerfect. Novell could claim that persistent WordPerfect 6.0 bugs and crashes resulted from Microsoft's selective disclosure.
Within this context: Microsoft's simultaneous Windows 95 and Office 95 releases. Microsoft certainly benefited from the move to Windows 95 and being able to sync its major applications release with the operating system. Was this anticompetitive behavior, given Microsoft's dominance in Intel-based operating systems? Surely, Novell would make an affirmative claim.
A Bundle of Trouble
One contentious area could be bundling and whether or not the tactic is anticompetitive. Already the EU ruled against Microsoft's bundling of the media player into Windows. Novell's situation is arguably different, because WordPerfect was the market share leader and not Microsoft software.
Back in its heyday, WordPerfect cost about $500 per copy. Microsoft packaged together the Office suite—with word processor, spreadsheet and presentation program—for about the same price. Three for the cost of one is a compelling alternative. Novell assembled its own suite, but didn't have the advantage of releasing a suite concurrently with Windows 95. Novell could claim Microsoft has unfair, first-to-market advantage because of selective disclosure.
In context of selective Microsoft disclosure and shipping the bundle with a monopoly product, Novell could tell quite the story about anticompetitive behavior. I'm skeptical the story would be really legally convincing. But it would be opportunity for Novell to air Microsoft's laundry about current Office bundling and past licensing tactics.
Licensing is another area where, with the right evidence, Novell could claim anticompetitive behavior. U.S. trustbusters went after Microsoft twice, in the early and late 1990s, over Windows licensing tactics. U.S. courts rapped Microsoft for exclusive arrangements. No case touched Office. But what Office licensing practices might the Novell case expose? Hypothetical scenarios: OEM deals for taking Office 95 and Windows 95 or arrangements for Office only.
In the earlier U.S. case, trustbusters faulted Microsoft for making deals where OEMs paid for DOS or Windows on every PC, even those shipping with other operating systems. Later, Microsoft got dinged for exclusive arrangements that leveraged its monopoly position against Netscape and Java. If Microsoft took similar tact with Office, and evidence showed it, Novell could make a compelling case for anticompetitive monopolistic tactics.
Comments (12)
Joe,
The bundling of Office with Windows 9x, is going be a major problem for MS in this lawsuit, and rightly so. People got the idea that they got Office for free, because when they bought a new computer, it came with it. And in some cases, it might be agued, that they did, as MS dumped Office, in order to take market share away from Wordperfect.
And of course, MS changing the Windows api's right before releasing a new version of Windows, and not giving all the data, to Wordperfect, would not help the so called "bugs" in Wordperfect. MS PR would of course just say that their competiton (Wordperfect) just somehow could not make a good product.
MS should try to settle this case out of court. As it could be very expensive, and cause more companies to come forward, on MS's dirty dealing in the past and present.
Posted by chips | March 17, 2008 5:48 PM
Chips, be careful of what you say, Office or any of the components of Office were never bundled with Windows. They either came with the PC as a special offering depending on choices made during that purchase, whether it was upgrading to a better model or adding more features to an existing model such as more memory or faster processor. So, users choosing Microsoft Word over Novell WordPerfect is more attributed to OEM's bundling strategy than Microsoft's so called hand twisting.
I personally believe Novell is just being a bad sport with this unnecessary lawsuit and is building on the momentum over their win in the SCO lawsuit which saw them turning the tables. WordPerfect pretty much doomed itself from the Windows 3.0 release when they decided not to support that release when they were given the chance. They chose instead to stick with development for DOS, while Microsoft bet on their own technology.
Even the Office team had to request technical access to certain APIs to make their products work properly on Windows. You must understand, Microsoft was a different company back then, the product teams we have today weren't as close as they are now. Microsoft was the first Company to come up with strategy of the Office suite which bundled desperate products such as Word, Excel, PPT and Access into a suite. Although, Access was new to market, it was a great move that offered consumers/businesses value and help to build the strength of the products and platform itself.
The fact that Novell, had to enter into an agreement with Borland to achieve the parity in what is an office suite with licensing of Quattro to be bundled with WP showed that the Company was only trying to compete on market share and not even technical merits like Office did back then. The unification of Word, Excel, PPT and Access is what also help to kill WP and Quattro Pro.
People appreciated the look and feel between the products, the growing integration, the way they acted alike, the ability to use the new OLE technology back then, these are things that made users choose Office over Word and the fact that WordPerfect was just plain buggy to begin with made matters worst for them.
Posted by Andre Da Costa | March 17, 2008 6:31 PM
WordPerfect 5.1 was a great product provided you had invested blood sweat and tears learning keyboard shortcuts. Keyboard shortcuts are always more efficient than menus ONCE YOU have invested the time to learn them. However, not operating in preview mode efficiently, having to write your own printer drivers etc. got pretty very quickly, and new users probably found it way to hard to learn word processing the old fashined way. WP 5.1 was a love-hate relationship.
With Windows taking care of printer drivers, actual interworking with sister programs, and a more visual experience the choice was easy. While initial version of Word were not as good as WP 5.1 did not seem to matter much because MS were heavily investing in enhancements of both Windows AND Office. WP for Windows was way worse than Word and newer versions took way to long to come out, and Word was simple to use back then.
I believed then and still believe that the problem was with the product and those who took product decisions had invested so much time learing how to use WP 5.1 for DOS that they failed to understand that most of the market were ready for something a bit easier to use.
Lotus 1-2-3 lived a bit longer but when a suite of non-interworking applications cost $1500-2000 and you could get interworking for a fraction of that the choice was easy even for die-hard WP 5.1 users such as myself. How could the owners of WP 5.1 fail to capitalize on a product I still think fondly of - and I even remember more WP 5.1 keyboard shortcuts to this day than I do Office 2007 keyboard shortcuts!
Posted by Petter | March 17, 2008 7:18 PM
I do seem to remember that Windows did used to be bundled in some way on some OEM sales of new laptops back in the days before the antitrust hearings. My recollection was MS Office was not bundled on all OEM machines, but not on the cheap machines. What deal the OEM's had with MSFT I do not know, but it must have been a deeply discounted deal, and did hurt the competition. Those were the days of rebates, and giving 1 to 3 years of dialup service as well along with a new computer sales. AOL and MSN were two of the main companies doing the "free" dialup with the purchase of some OEM computers. Another possible lawsuit here?
Posted by The Hand | March 17, 2008 8:18 PM
Andre: "I personally believe Novell is just being a bad sport"
Sure. What's a couple billion dollars and years of lost opportunity among friends?
Would you or would you not argue Microsoft would take the same tack were they in the position Novell finds itself today?
Novell is getting to see more and more of what Microsoft is supposed to have had and they smell blood and a weakness. This is precisely the behaviour Microsoft management would take, so, please save us the halo buffing.
I'm sure it's easy for a "defendant" to justify their own actions because they believe they simply worked "business" better than everyone else. But, you can always tell when a crook gets gigged; they always appeal to honor.
Stolen currency is always stolen, no matter how much currency was stolen.
Posted by portuno | March 18, 2008 12:24 AM
This lawsuit is just the old classic example of "what you do will come back to you." And Microsoft has done so many dirty deeds in its lifetime. The way it wiped out competing products like Wordperfect is just another story like Netscape.
Yep, the sharks are circling, they smell the lifeblood of Microsoft (CASH). When you go legal, you need to go after the companies that have the cash, and have already a proven track record of doing wrong in court. Makes the legal job that much easier. There's one shark, Novel. There's another, Opera and the EU. And over there, is the Shark, Class Action Vista Capable!
Posted by sam | March 18, 2008 12:45 AM
MSFT will get what they're due for years of flouting the law.
btw, Andre, Al's first pc, a Gateway running windoze 98 came bundled with Office 2k small business for free. you mean to tell everyone MSFT simply gave the program away because of their generous nature?
bullsquat.
Posted by Al | March 18, 2008 10:23 AM
@The Hand: MSN came out after Windows 95 was released, in fact it was provided separately from the operating system, or you had to install it separately through Ad/Remove Programs. Internet Explorer 1.0 was not even included with the initial release of Windows 95.
As for Al, Office 2000 Small Business may seem free to you but its not, the OEM made it look that way, but it came at an additional cost simply added to the machine to give you the illusion you are paying for less and getting more. Anyway, this complaint dates back to WordPerfect 7 vs. Office 95 (circa 1994 to 1995), which is way before Office 2000 came to market (circa March 1999) - Microsoft had long one the Office wars. Trust, me I know this, I have my receipts.
I agree that Microsoft used various strategies to gain an advantage in the market which in my opinion is just simply honest. More value for money Microsoft Office (Word, Excel, Schedule+, PowerPoint, Access), lower prices compared to the competition, competitive upgrade pricing, cross upgrade pricing, better marketing, more choice (Word, Excel, PowerPoint sold individually) features/integration and works better on Windows 95.
These are things WordPerfect lacked and tried to make up for through ridiculous means.
Posted by Andre Da Costa | March 18, 2008 2:37 PM
Andre is the defender of all things MS. Who runs a cheer leading "just the facts" type of website, linked with his name, on Live.com, owned of course, by Microsoft. Most MS employees/partners/shills do blog and run their websites on Live.com. Coincidence? I think not, no question, he works for MS.
The bundling of Office and as a poster pointed out as well, MSN dialup service, went on for some time. It becomes a question of semantics, wheither the OEM who was giving the special deal from MS, or MS directly themselves asked the OEM, to include the Office Bundle (or for that matter the MSN dialup) with earlier versions of windows on new computers sold back then. Either way, Novell product, Wordperfect, has a valid court case.
Posted by chips | March 18, 2008 4:22 PM
Andre: You wrote, "the Office suite which bundled desperate products such as Word, Excel, PPT and Access." I think you meant "disparate," but I did get a chuckle out of the mental image of the products as "desperate."
Posted by Pinball | March 18, 2008 5:05 PM
Another way the MS unfairly competed, was back at least before the US antitrust cases, it was rumored that MS made OEM's commit to not installing other operating systems on the same computers, or a dual boot setup. This was of course a further method used to kill off IBM OS/2 back then. And of course it used to stop any operating system from gaining market share, such as Linux or BSD today.
Not sure if the US Antitrust courts ever looked into this situation, and I doubt it very much. Its anticompetitive, and should be illegal, if not already. Since not one OEM has ever released a computer, desktop or laptop with a dual boot system, say Windows and Linux on it, its probably that MS is still blocking this with its monopoly powers. A dual boot system, OEM, new off the shelf, could be seen as a better system from the standpoint of consumers, as you don't have to choose, and you would get the best of both worlds.
Really, the EU needs to look into this type of monopolistic behavior on the part of MS.
Posted by chips | March 18, 2008 8:28 PM
I remember this period well... WordPerfect was king, it was a fantastic word processor. The problem was WordPerfect didn't recognise early enough that the market was changing i.e. moving from DOS to Windows. I remember thinking, at the much heralded lauch of WordPerfect 6.0 (for DOS), that this would be their swan song... Windows was the future, not DOS. I have no doubt that MS withheld information from 3rd party developers so their own products could take advantage of unpublished APIs etc. but I don't think this was ultimately the downfall of WordPerfect, not moving to the Windows platform in a timely fashion was their real mistake...
Posted by Pete | March 25, 2008 12:18 AM