Kodak Hits "Speed Bump" in Microsoft's New Operating System
The following excerpts are from a Wall Street Journal story published July 2 entitled, "New Digital Camera Deals Kodak a Lesson in Microsoft's Methods" reported by John R. Wilke and James Bandler.
ROCHESTER, N.Y. -- Shortly after Thanksgiving last year, Philip Gerskovich, who was deep into the design of a new digital camera for Eastman Kodak Co. discovered his company was headed for a collision with Microsoft Corp.
His team was developing new software to manipulate digital photos and needed to make sure it was compatible with Microsoft's latest version of Windows, the basic software that runs most new computers. An early version of Microsoft's newest software, code-named Whistler, had just arrived at Kodak's software labs. When Mr. Gerskovich and his team loaded it onto their computers, they were shocked by what they saw.
When Kodak cameras were plugged into a PC loaded with Kodaksoftware, it was Microsoft's own photo software that popped up -- not Kodak's. Camera customers would have to go through a cumbersome process to get Kodak's software to pop up every time, and most would probably just use Microsoft's.
More troubling, the team found that the new program steered orders for picture prints to companies that would have to pay to be listed in Windows, and that these companies also would be asked to pay Microsoft a fee on every photo sent through Windows.
"We were being frozen out," says Mr. Gerskovich, a 44-year-old vice president. "Consumers were effectively being denied a choice of which photo software they could use. More important, they should be able to send photos to any Internet printing service they choose -- without paying a tax to Microsoft."
The confrontation hints of antitrust battles to come, as other companies grasp the reach of Microsoft's plans for the coming new version of its operating system, Windows XP, and its ambitions on the Internet.
Kodak launched Mr. Gerskovich's new camera, EasyShare, at a splashy event this spring at the fashionable W Hotel in New York's Union Square. Chief Executive Daniel Carp opened the affair by observing that digital cameras hadn't caughtfire with the mass market because they were too complicated.
Most galling for engineers, it seemed that Microsoft had effectively hijacked the camera industry's new picture-transport standard, its common technical means of moving images from camera to PC. "Together, we built a highway that everyone could travel, and Microsoft put up a tollbooth," Mr. Gerskovich says.
Microsoft responds that its photo software, like Windows XP itself, is still being fine-tuned. In any case, the company says, it isn't intended to replacefully featured programs such as those made by Kodak, Hewlett-Packard Co. or Adobe Systems Inc.
In April and May, Kodak lobbyists made the rounds in Washington alleging that Microsoft was again trying to abuse its Windows monopoly. The message was heard on Capitol Hill. It was one thing for Microsoft to attack another software firm, says a Senate staffer, but muscling a household name such as Kodak could change the debate." Word quickly got back to Microsoft, as well, and by last month its public-relations firms were working to counter Kodak's claims.
Microsoft continued to send out versions of Windows XP. Three weeks ago, Kodak got the latest, numbered "build 2481." Kodak engineers say this version has a new, simpler way to launch photo software after a camera is plugged in. Instead of a nine-click process of setting non-Microsoft photo software as the default, it lists competitors' programs alphabetically in a pop-up box, along with Microsoft's. It isn't all they want, engineers say, but it's a big improvement. Instead of a roadblock, "it's just a speed bump," Mr. Gerskovich says.
Microsoft, trying to ease tensions between the companies, says much of the flap with is a result of "miscommunication." Any change in the latest version of Windows XP, Microsoft adds, had nothing to do with Kodak's complaints. "I wish we could say we did this in response to Kodak, but the fact is we always had a design goal of making the experience easy for consumers and fair to all of our camera partners," Microsoft's Mr. Varma says.
In a letter to Microsoft after tensions began to ease last month, Mr. Gerskovich sought assurances that the pop-up box allowing users to choose their photo software will be in the final version Windows XP. "Our business plans depend on this, and its absence would wreak havoc on our digital camera strategy," he wrote. Microsoft says the box will be there, and that Kodak's software will launch easily, just as it has in past versions of Windows.
