Microsoft trial win means price war looms

The settlement imposed as part of Microsoft's US antitrust case could spark a price war in the mid-tier business software market, analysts have warned.

While some technical restrictions have been imposed on Microsoft, they do little to affect its market dominance, according to Philip Carnelly, software research director at analyst firm Ovum.

"To meet growth targets for its business software markets, Microsoft would have to flatten the competition," he said.

The software giant's current earnings from its enterprise software, including the Navision and Great Plains offerings, amount to roughly $500m a year.

But Microsoft has announced its intention to grow this to $10bn over the next decade.

Mid-sized firms, or branch offices considering updating their accounting software, should be aware of a possible price war before committing themselves to a product, warned Carnelly.

"Changing your financial software is a big decision, and one that you want to get right. In the past, Microsoft has used aggressive pricing strategies to build market share," he explained.

Despite Judge Kollar-Kotelly's decision that the initial agreement between Microsoft and nine US states that objected to the original settlement was in the public interest, Microsoft's days in court are not over.

The nine states have until 8 November to lodge an appeal against the decision.

Meanwhile the European Commission is still to reach a decision over its own antitrust case involving Microsoft's actions in promoting its server business, and the bundling of Media Player with the Windows operating system.

The Commission is in the final stages of assessing the case, according to a spokeswoman. "It is different from a factual point of view to the case in the US," she said. "We have our own rules to uphold."

Microsoft said in a statement that the "tough but fair" agreement brokered with the US federal government would ensure "that we will be closely scrutinised by the government and our competitors".