News

Report Recommends Unbundling Windows From Computers

A European think tank is recommending to the European Commission that computers sold abroad come without any operating system pre-loaded.

• By Keith Ward
• 09/24/2007

The Globalisation Institute is a Brussels, Belgium-based group that favors free-market policies. Institute President Alex Singleton wrote the report, which is titled "Unbundling Microsoft Windows."

Singleton states that "The vast majority of computers sold are commodity products." But the buyers of those products don't have a choice of OS, which harms consumers. "There is no meaningful competition between operating systems for commodity computers. Microsoft's dominant position is not in the public interest," Singleton writes.

The paper argues that prices of computers would drop with meaningful OS competition, and the best way to do that is not to have OEMs offer customers a choice in OSes with a purchase, but to simply sell the OS separate from the computer.

Such a move, the report says, would be good for everyone -- except, of course, Microsoft. "Price conscious consumers, including many students, would opt for cheaper operating systems."

The Institute's report comes a week after Microsoft lost its appeal of the EC's antitrust decision against the software Goliath, a defeat that resulted in a fine of more than $600 million and the unbundling of Windows Media Player from Windows.

The report has been sent to the European Commissioner for Competition, Neelie Kroes. The report's summary was written with Kroes in mind: "The Competition Commissioner has signalled the desire to see more competition in this sector. Unbundling would foster a competitive market, increase consumer choice and reduce prices."

Not everyone agrees with the report's reasoning, however. Jupiter Research analyst Michael Gartenberg wrote in a blog entry today that "there's value associated with the Windows eco-system. There are plenty of PCs that are available without any OS, it's just that very few people buy them. Would Apple be allowed to sell Macintosh computers with Mac OS? That differentiation is a core part of their business model."

He went further. The report, he stated, "shows a total lack of understanding of the PC market, the value current systems have for consumers and positive feedback loop of the PC eco system that keeps selling more PCs."

Gartenberg thinks unbundling Windows would not have the effects the report claims. "Overall, this was both naive and silly at the same time. Unbundling would not reduce costs (and less than 10% of the cost of software over the life of a PC comes from software acquisition costs) and choice is a bit of a myth. Users want choice when what they have is lacking. Users can choose to use Linux or Mac OS, many do and many more don't."