Is it time to bust up Microsoft?

As the Microsoft antitrust lawsuits move closer to trial, why isn't anyone calling for the traditional trustbuster remedy--breaking up Microsoft?

In the early part of this century, the oil monopoly was broken by splitting up a monopoly. More recently, IBM was simply barred from tying mainframe hardware to its own software.

The most famous recent case was Ma Bell in 1982, when AT&T agreed to be divided into a long distance company, a phone equipment manufacturer, and the Baby Bells for local service.

What if Microsoft were broken up? What would the parts be? Is it a good idea?

The most obvious way would split Microsoft into three companies: First, an operating system company, called MSOS, that might play on Wall Street, for its Windows, Windows NT, and Windows CE business. Second, an applications firm called OfficePlus for its Office suite (word processing, spreadsheet, database) plus utilities and a few leftovers. Finally, a media company called Stumble for its MSN online service, MSNBC cable-online news joint venture, consumer-oriented content software, (Encarta, Microsoft Money, and the Microsoft Home line), and future media operations.

Busting up Microsoft would give Steve Ballmer the job he deserves--CEO of OfficePlus--since Bill would stick with the power at MSOS. Ballmer may still qualify as the only billionaire who works for somebody else.

Stumble could bring in a real media executive to run a business in which Microsoft is faltering. She'd probably want to rename the company ReBound or OnTop or ComeBack or something, but name changes would, naturally, require court approval.

Some think breaking up Microsoft is even more dangerous than keeping it together--do we really want a bunch of mini-Microsofts running around, all acting as predators? It's like herding cattle--it's easier to have them together in a herd than running loose.

What happens if Microsoft is busted up?

First, spending on research and development would probably decline. Though Microsoft has made "stifle innovation" its mantra in the PR battle with antimonopoly forces at the Department of Justice and elsewhere, MSOS, OfficePlus, and Stumble would presumably face tougher competition than today's Microsoft. Part of today's R&D spending (nearly $3 billion this year) would probably be diverted into marketing.