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MS on Trial Dean Richard Schmalensee claimed that the threat of Linux (to Microsoft) after the AOL-Netscape merger had increased, but did not explain how this could be. Schmalensee admitted he had found it "frankly hard to keep up with all the developments in Linux", and was puzzled that "serious corporations are spending serious money on Linux" investments. He disagreed with the DoJ economist witness Franklin Fisher who had said in January that "the notion that operating systems such as Linux... [is] really going to succeed in taking away much, if any, of the business from Microsoft Windows, is a joke. Schmalensee contradicted himself about Linux: "One of the interesting issues with Linux has always been ease of use, and that issue is being increasingly addressed in two ways: first, by vendors shipping - OEMs shipping Linux pre-installed, which deals in part - which deals with Linux's traditional difficulty of installation; and second, with the development of a couple of graphical user interfaces that makes Linux more attractive on the consumer side." Later, Schmalensee controverted his "ease of use" comment about Linux and claimed it was "difficult to use". It seemed unlikely that he had used it, and for him to be put forward as an expert was ridiculous. Schmalensee said he had studied the open-source movement "a bit" in preparation for his testimony and found it "a fascinating phenomenon ... quite extraordinary" but to an economist "it is a little bit surprising that this works, frankly, but it does seem to work". He clearly could not understand why it worked, especially without capital investment. It posed long-term competitive constraints on Microsoft, he thought. Schmalensee's problem of course was that economics was the wrong discipline to bring to bear: sociology and psychology were far more relevant. Although some OEMs were offering Linux machines, "for a large OEM making a choice, choosing a single system, I believe Windows, at present, is the only viable alternative." This was an unwise statement for Microsoft's witness to have made, as it was only one step from saying that Microsoft had a monopoly. Schmalensee had no idea whatsoever about how many PCs were loaded with Linux, but he was happy to characterise Linux as a major threat to Microsoft. ® Complete Register Trial coverage

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