"Redmond Justice" has just closed out the fifth week of its new fall season, and much of the high drama seems to have left the show. Early confrontations between Microsoft lawyers and the government's star witnesses-- Netscape's Jim Barksdale, AOL's David Colburn, and even Apple's Avie Tevanian-- were occasionally acidic, often spiteful, and always just plain entertaining. Now that we've moved into the bottom half of the batting order, though, the witnesses are more likely to be economists and antitrust theorists than celebrities of the high-tech world. Still, they serve an important purpose: one point that the government must prove if its lawsuit against Microsoft is to succeed is that Microsoft's actions hurt consumers. That's why economist Frederic Warren-Boulton is testifying on behalf of the government-- and, thankfully, Fred's a pretty colorful witness after all. CNET has the story.

In essence, Fred charges that Microsoft is "keeping prices for its operating systems above market levels." As evidence, he points to internal Microsoft email messages which indicate that the company was very aware that their operating system prices kept rising while the prices on all other computer components were dropping. Those email messages indicate that Microsoft considered the possibility that eventually some PC companies might be pushed too far by exhorbitant prices, and they might try to go elsewhere for their operating system needs-- but Microsoft wasn't worried, because their customers had such an investment in Microsoft's platform that alternatives wouldn't sell due to "inertia." That, Fred says, is a monopoly: Microsoft can charge whatever it wants to, because customers are so dependent on them that they have no choice but to pay. And according to the story, he held his ground under cross-examination.

Now, we're fully aware that when Fred talks about Microsoft charging more than they should for Windows, he's talking about OEM prices to PC manufacturers. (For instance, Compaq alone apparently had to pay three quarters of a billion dollars for Windows licenses one year.) But just for fun, let's consider the costs of off-the-shelf shrinkwrapped operating systems, shall we? Average selling price of the Windows 98 upgrade: $87. Average selling price of Mac OS 8.5: $87. Uh-oh. Suppose Apple should gear up for another lawsuit? Granted, one's an upgrade and one's a full OS, but still, you never know what could happen these days...