A federal district court and the FTC are considering whether both Microsoft and Intel are abusing their monopoly position in the operating system software and processor business, respectively. Their conclusions could have serious consequences for the computer industry as we know it.
How the parallel cases turn out is for the judicial system to determine. But it's interesting to note the eerily similar business and strategic paths Microsoft and Intel have taken to achieve dominance.
The two companies may not be formal partners, but there's a reason why when one talks about the PC industry the term "Wintel" is inevitably part of the mix. Parallelisms abound when you look at the business and technology history of the two companies.
To begin, there's the cause-and-effect nature of their relationship. The joke is that Intel giveth and Microsoft taketh away, meaning Intel keeps building bigger and faster chips only to have Microsoft consume all that horsepower by designing memory- and processor-hogging applications and operating systems.
But the one thing that they have both done is bundling. Everyone is aware of Microsoft's practice of incorporating more and more bells and whistles into the operating system, from memory managers and disk compression technologies to the browser. But not many realize that Intel's hold on the industry began when it too started down the bundling road.
Until the early '90s, Intel was mostly a chipmaker, but then it started to make chipsets that were competitive enough to take on market leaders like Opti and VLSI. The company began to offer bundling deals to PC makers: Take the chips but also take our chipsets. Its ace in the hole was that if a PC maker--say, Compaq--wanted to be first to market with a Pentium box, then it was only prudent that it buy the chipset from Intel as opposed to a third-party chipset maker like VLSI.
Why? Because Intel knew what the technology behind the next-generation processor would be and it could have the head start on making a suitable chipset. Given the choice of waiting for the chipset from VLSI or getting it from Intel now, which one would Compaq go with?
Intel, of course, continues to bundle more than just the processor and chipset. It's already adding graphics processors and down the road will add audio and modems to the bundle.
Now, just like Microsoft's bundling of utilities hasn't killed Symantec, so Intel's strategy of bundling has not resulted in VLSI's having to shut its doors. Instead, both have had to "fine-tune" their businesses once Wintel moved into their spaces.
The Wintel camp believes this strategy is good for consumers. Many pundits too believe this to be the case. Either way, the bundling strategy sure has played a big hand in Microsoft and Intel's attaining dominance. The question now is whether bundling is going to become the bane of their existence?
Jai Singh is editor of NEWS.COM.
As editor in chief of CNET News.com, Jai Singh is responsible for overseeing all the news efforts of CNET Networks.
Before joining CNET in January 1996, Singh headed the news operation at InfoWorld, one of the leading technology newsweeklies. He also spent nearly four years with PC Week--first as the software editor and later as assistant news editor.
During the mid-1980s, Singh spearheaded a 20-hour-a-day news operation for one of the pioneering online services, The Source, later acquired by CompuServe.
Singh holds a bachelor's degree in journalism from American University.