When when Australian Linuxer Geoffrey Bennett purchased a new Toshiba laptop last February, part of the price included Windows 95. Bennett noticed the fine print in Microsoft's end-user license agreement that reads "If you do not agree to the terms of this EULA, PC Manufacturer and Microsoft are unwilling to license the SOFTWARE PRODUCT to you. In such event, you may not use or copy the SOFTWARE PRODUCT, and you should promptly contact PC Manufacturer for instructions on return of the unused products(s) for a refund" and wrote Toshiba to get his money back. Toshiba's Laurence White replied that the company was "unwilling to refund the cost of the operating system" and explained that "Toshiba must pay Microsoft at point of manufacture and cannot get a refund from Microsoft, so we can't refund you." Bennett kept pressing for his refund, and nearly four months later Toshiba's General Affairs Division agreed to refund him AUS$110 for not using Windows 95.
Bennett's saga inspired several groups to launch Windows refund center web sites, dedicated to getting refunds of the Microsoft tax. The groups have reserved February 15th as Windows Refund Day, when people using Linux, BSD, BeOS, OS/2 or NetWare will send in letters asking their computer manufacturers for a refund on unused copies of Windows 95 and 98. The web sites contain detailed instructions on the legalities of obtaining a refund, and even Ralph Nader's Consumer Project On Technology has gotten involved, meaning big headaches or a possible class-action lawsuit if Microsoft and the manufacturers refuse to comply with their own licensing agreement.
Microsoft spokesman Adam Sohn downplayed the movement, saying that the company considers it "a bit of a PR stunt by some Unix guys." He explained that "OEMs are completely free today to ship any OS they choose. There is no provision in any of our contracts telling OEMs they can't ship something else." Sohn then quickly added that computer manufacturers will have to handle the problem themselves since Microsoft won't be giving anyone any money back. "OEMs will have to make their own decisions. They are 'adults.' They don't need Microsoft to tell them how to deal with their customers." PR stunt that it may be, Microsoft has quietly removed the return policy from current versions of its End User License Agreement.

Details of Geoffrey Bennett's attmepts to get a refund from Toshiba may be found at netcraft.com.au/geoffrey/toshiba.html

COURT NOTES: Beginning the week on Tuesday because of a US holiday, lead government attorney David Boies finished up his cross-examination of Microsoft's first witness, Richard Schmalensee. Boies used an analogy to illustrate the integration of Internet Explorer into Windows, inquiring if consumers would benefit if Word was integrated in the operating system similarly to the way Explorer has been. Schmalensee said there could be benefits, but admitted under questioning that consumer harm could result if the integration caused other word processors to not work as well.
Boies asked the economist if Microsoft considered bundling the number one way to get computers users to try IE, then showed him a chart from Microsoft saying computer makers "are the best vehicle to gain browser share." Schmalensee claimed not to understand parts of the chart and denied Boies' suggestion that "Microsoft has taken the position that Internet Explorer was not really part of the operating system." The attorney then reminded Schmalensee of testimony in the ongoing Bristol antitrust trial where he described Microsoft's operating system and web browser as separate products. After further questioning he admitted that Microsoft spent money to induce Internet service providers to use Explorer over Netscape Navigator and bought out their contracts with Netscape.
Then on Wednesday, his 4th day on the witness stand, Schmalensee was questioned about Microsoft's latest earnings and if the massive profits could indicate some type of monopoly power. The witness replied that "you can't infer monopoly power from quarterly profits," which pushed Boies to ask if similar profits over time might indicate monopoly power. Schmalensee admitted that a "valuable piece of intellectual property" like Windows could indeed produce long periods of profitability. (The witness had testified earlier that Windows is far from being the "world's most valuable real estate" and has almost no value because consumers remain free to use any software they choose). In the written portions of his testimony, Schmalensee had claimed that if Microsoft has the monopoly power the government alleges, it would be charging 40 times what it currently charges for Windows - about $2000 per OEM copy.
During rebuttal questioning by Microsoft's own Richard Urowsky, Judge Jackson asked Schmalensee why he always assumes "that the monopolist maximizes price" and wondered if there could be reasons why a monopolist might not maximize prices, "in quest of some greater glory at some latter time." The witness agreed, answering that "most firms think about the consequences" of today's prices on tomorrow. Jackson went on, saying he "can think of a model of a cigarette company that would price at the low end of the scale, even if it is the only source of the product." Schmalensee responded that Windows doesn't cause an addiction like tobacco can. The judge then smiled and asked the economist if he had any children.
So far, Microsoft's own witness has done the company more harm than the government witnesses have...

According to figures released Tuesday, Microsoft earned just shy of $2 billion in the second quarter of its fiscal year 1999 with earnings hitting 73 cents per share, beating Wall Street expectations. Company officials accredited the earnings to increased demand for personal computers, along with strong sales for big-money products like NT Workstation and Office 97. Analysts had predicted earnings of 59 cents per share. Microsoft stock jumped to a record high, bringing Bill Gates within $15 billion of becoming the world's first 100-billionaire. But as Chief Financial Officer Greg Maffei admitted, the second half of fiscal 1999 isn't looking so cheery. On top of the constant delays for upgrades to big-ticket items like Windows 2000, Microsoft is facing pressure from Asia's economic crisis and the Y2K problem.

Tuesday Microsoft and 3Com jointly confirmed a month-old rumor that the two companies have entered into a development/product alliance. As a result of the agreement, 3Com will open a 25,000-foot development center near the Microsoft campus in Redmond, Washington by mid-1999, and the companies will share network-related technology. 3Com will also produce switches, network interface cards and other products that run an embedded version of Windows NT 4 and tap Windows 2000 services like the long-delayed Active Directory. The new switches will handle TCP/IP processing and some types of encryption, tasks previously dealt with by the operating system. 3Com's press release claims that the network hardware could ship as soon as this summer, even though the first editions of Windows 2000 and Active Directory aren't expected until at least October of this year. Pricing for the switches and NICs has not yet been announced. Coincidentally, 3Com owns USRobotics - the first hardware manufacturer to produce those lovely little Winmodems.

In California last week, Judge Robert Baines modified his ruling that ordered Microsoft to give Blue Mountain Arts information so greeting cards could get through filters in Microsoft e-mail programs [see NewsSource, Jan. 11] and warn users of Outlook and WebTV about the problem. This week Baines, citing Microsoft's failure to post a warning in the proper place, ordered the company to put the notice in a prominent position on the MSN.com portal site. Both the previous decision and the addendum are temporary restraining orders, and a hearing is planned for later this week to decide if the order should be made permanant while the case is pending.

Microsoft quietly brought Visual J++ into compliance with a court order on Thursday by releasing Service Pack 2 for Visual Studio 6.0 The service pack includes a new Java Virtual Machine for Visual J++ 6.0 that Microsoft says makes it compliant with the preliminary ruling issued in November by Judge Ronald H. Whyte [see NewsSource, Nov. 23 '98]. Service Pack 2 also includes the updates and fixes released in Service Pack 1 along with patches for a Visual C++ bug.

Last week the company also released fixes for Word 97 and an ActiveX control (remember those?) known as Forms 2.0 present in Office 97, Outlook 98 and Visual Basic. The Word patch warns users if e-mail attachments contain macros, while the Forms patch prevents text on the Windows clipboard from being copied over the Internet without someone's knowledge.
For the fourth or fifth time (by our count) since Microsoft purchased the company back in December 1997, Hotmail has left many of its 30 million customers without e-mail. The latest trouble is apparently due to a downed server, causing hour-long delays for people trying to retrieve their messages from the free service.
On the 2nd, Microsoft acknowledged a security hole in a utility that accompanies FrontPage 98. The hole exposes the user's hard drive to intruders who visiting a user's Web page. According to FrontPage program manager Mike Angiulo, the exact configuration that exposes users is rare, and said Microsoft programmers were working to post a fix soon.

_{Auditor’s Suit Alleges Misreporting by Microsoft
Death by 1,000 cuts
Microsoft releases TCP/IP clustering software
MS drops Terminal Server prices}