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Microsoft To Tough It Out In Virtualization Space

As Microsoft continues to gain traction in the hot virtualization space, it calls to mind other markets that the software giant has coveted and its hits and misses.

"It all starts with the operating space," says Joe Clabby, president of Clabby Analytics. When Microsoft began in the mid-1970s as a personal computing operating system company, its biggest competitor was IBM and OS/2. "What Microsoft did really well was go out and capture tons and tons of apps to run on their operating environment," including MS-DOS and Windows, he says. "That’s how they won that battle."

But then came the company's foray into the browser space with Internet Explorer. Microsoft didn’t make it easy for other browsers to be featured as prominently, by bundling IE with Windows. That changed in 1998, when the U.S. Department of Justice (DOJ) filed an antitrust lawsuit: The company’s dominance in the PC OS market was declared a monopoly, and the court ordered a breakup. Microsoft appealed, and the rulings were overturned. A settlement was reached after the DOJ decided to seek a lesser antitrust penalty, with Microsoft agreeing to allow PC manufacturers to use non-Microsoft software and to share its APIs with third-party companies.

But that wasn’t the end of the company's legal troubles. There was also an anticompetitive complaint filed by Novell in the mid-1990s. "It was trying to capture apps for its operating environment, and [Novell went] head to head with Microsoft in the PC environment and file server marketplace," says Clabby. "Microsoft came out with NT OS and it kept getting stronger and stronger and moving into the file server space, which Novell owned. ... Microsoft persisted and persisted, and eventually drove Novell out of business with their NT LAN manager. That was another example of a market [Microsoft] wanted and eventually conquered the competition."

Novell filed a complaint with the European Commission of the European Union, which ordered Microsoft to pay 497 million Euros, the largest fine ever handed out by the EU at the time.

The cell phone market is one in which Microsoft has yet to prove successful. "You have a new generation of phones coming out with [Windows 8], and its PC counterpart feels like the phone, too," says Clabby. It has been a struggle for Microsoft to find an operating system that people like on a phone, he adds.

Tablets is "where the real competition starts to show up," he notes, given the battle between Apple and Google, which is gaining market share, and the fact that "Microsoft has been late to the game. They were running Windows operating systems on tablets eight to 10 years ago, but they never really have taken off on tablets, per se." Clabby says it will be interesting to watch whether Microsoft will be able to go up against Apple and Google.

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