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Last week, a U.S. District Court in Texas issued a permanent injunction that bans Microsoft from selling Word versions in the U.S. that use a certain type of customized XML and gave the company until Oct. 10 to comply. Microsoft on Tuesday claimed the ban would cause "irreparable harm" to Microsoft's business and also hinder Hewlett-Packard, Dell and other partners.
Todd Swank, vice president of marketing at Nor-Tech, a Burnsville, Minn.-based system builder, doesn't expect the Word sales ban to go forward and isn't making contingency plans. However, Swank admits that a ban would have a "massive impact" on Nor-Tech and other system builders' businesses by forcing them to change their PC images and make other costly business adjustments.
Other solution providers agree with this assessment. "These partners have images built and tested with Microsoft Office OEM preinstalled, and those would all be worthless," agreed Michael Cocanower, president of Phoenix-based Microsoft solution provider ITSynergy. "Not to mention the lost revenue from not being able to sell the OEM versions of Office."
Cocanower says it's even possible that a Word sales ban could cause consumers to put off new PC purchases, which would serve as another blow to an already weak PC market. "This is coming at a time when our economy desperately needs PC sales to increase, and not decrease as people wait for this to be sorted out," he said.
In May, a U.S. District Court in Texas ruled that the customized XML in Word violates the patent of Toronto-based i4i, a developer of XML-based collaborative content solutions, and ordered Microsoft to pay that firm $200 million in damages. That's pocket change for a company sitting on more than $30 billion in cash, but Microsoft's pride -- and its deep legal team -- suggests that this is fast turning into a chess game.
Of course, this battle is about more than money: Microsoft needs to make it look like it's not giving in on this case in order to discourage so-called "patent trolls" from piling on. So it's a safe bet that the legal wrangling will continue.
Nonetheless, Andy Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder, finds it impossible to envision a scenario in which Microsoft would allow the Word ban to take effect.
"There is no way Microsoft would allow for a nanosecond to pass without being able to realize the margins it gets from Office, especially when they're poised to reap significant OS and application bundle revenue gains from Windows 7," said Kretzer.
"Whether they win legally or are forced to pay -- just like the mail, Office will be delivered."
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