Microsoft: The Cost of Doing BusinessMicrosoft is still locking horns with EU over the company's failure to provide adequate documentation for third party developers. Developers need this to produce sophisticated products that work with Microsoft's operating systems. But even as the EU granted an extension until February 15 to produce the documentation, the US Department of Justice (DoJ) was articulating very similar criticism. If Microsoft doesn't come through with the documentation the EU will be fining it US$2.45 million a day, backdated to when the documentation was originally due, last December. The documentation it has so far produced was judged to be 'totally unfit for its intended purpose' by the neutral arbiter approved by both Microsoft and the EU. Microsoft has cited an inability to find qualified employees able to construct adequate documentation from the documentation they have available. This is totally believable and says a lot about the quality of Microsoft's internal documentation, and the quality of its code. The question is however, how much of the lack of quality is deliberate? And what are they going to do about it? Microsoft have offered an alternative. Third party developers can sign a non-disclosure agreement (NDA) and pay to look at the source code. Pay for something that was supposed to be provided free as part of the anti-trust settlement! But even without the NDA and the payment, the code base is a poison chalice. Anyone who looked at the code would automatically be prevented from working on competing products. Why? Because they would be liable to accusations that they had used copyrighted code they had seen in Microsoft's source. Fortunately, the EU are not taking the offer at face value and have already declared that it's not good enough. Lets hope they stick to that position. A lot of people have asked me how it is that Microsoft can mess around when they have a fine of US$2.45 million per day hanging over their heads? Well there are two possible answers to that question. The first is that the cultural gulf between the US and the EU is such that Microsoft simply do not believe that the EU will actually impose the fine. They could be right, but I don't think that's really what is behind it. To find out what is behind Microsoft's arrogance you have to look at the numbers and do some sums. This week Microsoft published its accounts for the last quarter of 2005. On a record revenue of US$11.84 billion (up 9 percent and the best quarter ever) it made a net income of US$3.65 billion (that's over 30 percent, by the way). Ok - now US$3.65 billion is US$3,650 million, and that is for three months - or 90 days. Now, 90 days worth of fines at US$2.45 million per day is US$220 million. Divide the net income by the total fine and we find that Microsoft is earning 16.5 times more that it is being fined. And Microsoft is predicting that the current quarter's income is going to rise to US$4.5 billion. (Note: the figures have been rounded out for the arithmetic.) Even on last quarter's figures the fine represents only six per cent of Microsoft's income. The fact is that these fines are like the parking tickets that plumbers get - part of the cost of doing business! So now you know why Microsoft would rather risk the fine than provide the documentation... http://www.physorg.com/news10326.html
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