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Is this the end of Wintel?

By Richard Morochove

First published November 19, 1998

Don't call the divorce attorneys yet, but the long-lasting relationship between software giant Microsoft and Intel, the world's largest chip-maker, is clearly showing signs of strain.

Internal squabbles in the mutually-beneficial Wintel (Windows-Intel) business partnership became public knowledge last week during Microsoft's continuing anti-trust trial in Washington, D.C.

The rift between Microsoft and Intel developed in early 1995 over some multimedia enhancement software developed by Intel known as NSP, native signal processing.

Intel publicly declared that NSP would boost the popularity of PCs by improving their video and audio performance. Microsoft believed NSP intruded into its very own operating system domain.

In an e-mail on May 25, 1995, Microsoft CEO Bill Gates wrote to Intel's chief Andy Grove, "I don't understand why Intel funds a group that is against Windows 95."

While Grove defended NSP as good for the PC industry, Microsoft wasn't buying that argument. Microsoft advised PC makers not to use Intel's NSP.

According to the trial testimony of Intel vice-president Steven McGeady, Microsoft's pressure tactics won the day by the time Microsoft released Windows 95 in August of that year. Intel's NSP software had been "shot in the head."

In the trial, Microsoft painted NSP as bad software and portrayed McGeady as a disgruntled employee, unhappy his pet project was cancelled. Microsoft implied that Intel would have terminated the NSP project anyway, once it learned of its faults.

Is this a case of Microsoft using its position and power to eliminate competition in multimedia software? By most standards, Intel isn't a computer industry weakling. If the chip-maker can be intimidated by Microsoft, which competitor cannot? Intel's story of cancellation of the NSP project clearly helps the U.S. government make its case against Microsoft.

Intel dominates the microprocessor market in much the same way Microsoft commands the operating systems market for personal computers. And Intel has also been accused of bully-boy tactics, such as threatening to refuse to license Intel patents to competitor Intergraph unless it agreed, in turn, to license its patents back to Intel.

The U.S. Federal Trade Commission started investigating whether Intel crossed the line that separates allowable from illegal behaviour shortly after the Justice Department launched its latest action against Microsoft. Was this mere coincidence or did Microsoft's highly-publicized actions lead to unwelcome regulatory attention for its Wintel partner?

Intel has long been aware that the trust-busters might come calling some day. The chip-maker runs its own anti-trust compliance program to help prevent employees from saying things that could later lead to trouble. It's designed to avoid just the sort of trouble that snippets culled from Microsoft's e-mail messages have created in the software giant's trial.

Microsoft, on the other hand, has no such anti-trust program and sometimes appears to operate as if anti-trust laws do not exist.

Was Intel's NSP project a battle of the high-tech bullies, where Andy Grove blinked before Bill Gates? Or is Intel portraying Microsoft as a goon for its own reasons? Could the Federal Trade Commission prosecute Intel as a lawbreaking monopolist if it shows it was forced to back down in the face of Microsoft's actions?

Intel's NSP initiative is ancient history in the computer business, but there are indications the Wintel family feud continues. For example, Intel is publicly supporting Linux, a UNIX-based operating system that's a rival to Microsoft's Windows NT. Andy Grove has praised the innovations in Apple Computer's iMac home computer, even though it isn't based on an Intel chip and doesn't use Windows software.

The bickering between Intel and Microsoft is reminiscent of the strains in an earlier relationship that went sour. Microsoft and IBM were once partners in the development of popular PC operating systems like DOS and Windows. But disagreements over the future of the OS/2 operating system eventually led to the breakup of that partnership.

Does this herald the future of the Wintel relationship? Will the continuing tensions between Microsoft and Intel lead to a messy divorce of this long-running business relationship?

I think each company would love to go its own way, but they're staying together for the sake of the children, the hundreds of millions of PCs based on Intel chips that run Microsoft software. It's hard to imagine either partner walking away from its profitable progeny.

Microsoft is clearly the dominant partner in this relationship. The testimony of Intel's McGeady didn't strengthen the ties that bind the Wintel partners, but it may reduce Microsoft's influence, leading to a more equal relationship. CW

Richard Morochove, FCA, is a Toronto-based computer consultant.

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