Analyst Opinion – Outside of Boston Legal, this litigation is one of the most twisted ones I can recall. I have had a fascination with litigation for years, particular for those lawsuits that seem kind of upside down. Recently, my emails got subpoenaed in this specific case, which prompted me to pick up this topic and provide an opinion from someone who was in a somewhat unique position when this whole Vista Capable drama unfolded.
Basically, what the Plaintiffs say is that Microsoft intentionally misled people into buying certain PCs before Vista shipped by making them believe these systems would run the operating system. Which these computers actually did, but the buyers wanted to run Aero and didn’t know that Intel’s graphics chips really sucked at the time. These folks, for some reason, clearly didn’t feel the need for speed; they had an Amour for Aero.
As a result, their lust for Aero was unfulfilled and they had only one recourse: Litigation.
What actually happened?
In what amounted to one of the nastiest failures in management I’ve ever seen, Microsoft tried to help Intel out. They wanted to include their 915 chipset in a way so that sales for Intel’s low-end graphics solutions wouldn’t tank.
Even though there was a serious disagreement inside Microsoft (according to the disclosed emails), and Microsoft and Intel were just steps away from open warfare at the time, somehow this screwy decision stood and Intel chipset-equipped PCs were labeled in a way that indicated they would run Vista. But, of course, they didn’t run Aero – which really was one of the new key features in Windows Vista.
Microsoft had created a confusing mix of Vista versions that even the OEMs struggled with. The major differences actually weren’t between the Basic and Premium versions but between the Consumer, Business and Ultimate versions, which had different core features. This actually limited the kind of things Microsoft’s partners could sell into homes and small businesses.
I believe this actually reduced the amount of additional revenue that could have come from Vista buyers in the interim years between operating system releases. I also think Apple’s approach of having one PC version of their Operating System is a better one.
Microsoft was screwed
The twist in this whole thing is that the only one who was really screwed was Microsoft. They charge less for Vista Basic then they do for Vista Premium and all of these machines could never successfully upgrade to the more lucrative product. And all of these people apparently were buyers who were willing to spend money for the premium version of the new operating system.
As most of us here know, Vista Aero is just eye candy (and many think it isn’t particularly useful eye candy). So, in the end, Microsoft is guilty of not helping sell a lot of people more hardware than they needed and apparently made less money than they would have – had they raised the Vista bar to include Aero. Let’s guess this involved 10 Million machines, then at a very conservative $20 per box, this decision cost Microsoft $200 million in extra revenue they otherwise would have made.
If the plaintiffs were gamers or otherwise needed the graphics to run Aero, they would have bought a machine with stronger graphics in the first place and the fact they didn’t should be a strong indicator they did not need the enhanced graphics for anything else. Oh, and particularly if they were gamers, they probably would have turned Aero off even if they could have run it. Articles like this one that sources a Microsoft study saying Aero doesn’t have an impact on performance but concludes you would likely be happier turning it off anyway will drive both sides of this litigation nuts.
Why I want to see this argued
So, the plaintiff’s attorney has to argue that the fact that Microsoft did not trick people into buying more expensive hardware than they needed was actually a bad thing. Why, simply because this fact denied them from running Aero, despite the fact it provided no real value and cost them more money.
What Microsoft has to argue is that Aero is not really where the value is and that people who think this are wrong. If you think about it, how many people do you know actually run Aero let alone want it so badly they would sue Microsoft to get it? Win or lose these arguments are likely going to make these Vista early adopters look stupid which isn’t what any firm typically wants to do.
Now, don’t get me wrong, I actually use and like Vista and run Aero, but I also use a lot of high-end hardware and have been around Microsoft long enough to know that, to them, a translucent interface does not make an operating system. I mean, wait until the plaintiffs see Embedded Vista. That will really freak them out.
Real life emulating TV sitcoms
Doesn’t this kind of sound like a legal situational comedy like Boston Legal? You probably never again will see Plaintiffs arguing that their clients were cheated out of their right to over spend; and the defense having to discredit a group of folks who clearly must lust after a unique part of a product that their client is trying to sell in huge volumes. It is moments like this I wish John Stewart’s Daily Show did tech.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies (including Microsoft).