Barnes and Noble ITC Letter Says MS Wants Control of Nook Features

Posted by at 10:54 am on November 14, 2011

Barnes & Noble​’s complaints about Microsoft have accused the Windows developer of not just trying to be anti-competitive by discouraging Android but also trying to dictate what features Nook devices could use. Microsoft allegedly had “veto power” through prices as well as the terms of the license. It wanted control over what hardware and software features features the Nook was allowed to use, Barnes & Noble said, giving it a way to neuter a competitor by denying it any advantages.

“The proposed license would have severely limited and, in some cases, entirely eliminated Barnes & Noble’s ability to upgrade or improve the Nook or Nook Color, even though Microsoft’s asserted patents have nothing to do with such improvements,” the letter explained.

The letter also recapitulated points mentioned in April. Microsoft allegedly priced the royalty to where it wasn’t affordable, and was counting on the cost of fending off a lawsuit being too expensive for competitors to fight back. HTC and others made deals for that reason, Barnes & Noble said. Also repeated was mention that Microsoft refused to show just patents what the Nook line was infringing without signing a non-disclosure deal that would prevent any challenges to the patents’ legitimacy from getting to the public.

Microsoft’s deal with Nokia was part of a “horizontal offensive” to crush competition through lawsuits, not better products, the bookseller added. To that end, Barnes & Noble received an expert analysis from Tim Bresnahan that cites Electronista, among others, to argue that Microsoft was using lawsuits and forced royalty deals to make up for its inability to compete in smartphones and tablets. He pointed to Microsoft CEO Steve Ballmer saying that the company had “screwed up” Windows Mobile and used 6.5 as a stopgap until it had a more competitive platform.

The comments were more condemning of Microsoft’s share in tablets, where the Nook was the closest fit. Microsoft was “even less competitive” than it was in phones, having spent over a decade investing in its Tablet PC platform but being eclipsed by the iPad in a matter of months. The company was scared of tablets, because they not only showed where Microsoft was weak but challenged Windows’ control of the market for the past two decades.

“Tablet PC products based on the Windows operating system have had little marketplace success outside specific, narrow niches such as transportation and healthcare,” Bresnahan said. “Mobile devices represent a clear, if nascent, competitive threat to Microsoft’s Windows PC monopoly. This threat is currently particularly significant for individual users. Consumers who use their PCs primarily for email, Internet access and media now have increasingly good substitutes that do not rely on Microsoft operating systems.”

Microsoft hasn’t responded significantly to the letter, but it has always avoided the question of its patents’ legitimacy whenever possible, simply suggesting that the only solution possible was to get a license. If claims of setting requirements for hardware are accurate, however, it could bring Microsoft under legal fire for artificially hampering at least Barnes & Noble and possibly every Android maker by preventing them from using features that would undermine Windows Phone​ or Windows tablets.

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