IBM Rights to Future Windows Code Expire '93

IBM Rights to Future Windows Code Expire '93

By Therese Poletti
Reuters News

New York -- May 22, 1992 -- International Business Machines Corp's rights to future versions of Microsoft Corp's best-selling software program, Windows, expire sometime in 1993, unless the two rival companies strike a deal beforehand.

IBM currently has a licensing agreement with Microsoft for the source code, which enables IBM's new operating system OS/2 to run the popular Windows 3.0 and 3.1 software and compatible programs. If a deal is not reached, IBM would be locked out of any future changes in Windows software, after version 3.1.

But IBM said it has everything it needs for the future.

Infoworld, a trade publication, will report on Monday that IBM's rights to future versions of Windows expire in 1993.

While IBM declined to comment specifically on its confidential agreement with Microsoft, an IBM spokesman emphasized that the computer giant's rights to Windows 3.0 and 3.1 code continue on "forever."

"We have all the intellectual property we require.. we have everything we need to be successful in the future," said Scott Brooks, an IBM spokesman. He declined to speculate on the company's future plans with Microsoft.

"Anything beyond (Windows) 3.1 is nothing more than a brochure at this point," he said. "For the future, what we think is important is OS/2."

A Microsoft executive confirmed that IBM's rights to future code expire in 1993.

"At some point, they will not be able to include that code into OS/2, they will no longer be able to track the changes that we make (in Windows)," said Jonathan Lazurus, vice president of systems strategy at Microsoft. He declined to speculate on whether IBM and Microsoft would strike a new deal. The two are enmeshed in a fierce rivalry over software.

The two firms, once partners in developing the MS-DOS (Disk Operating System) software standard for personal computers, are feuding over the future direction of software and now have become fierce competitors with their rival products, Microsoft's big-selling Windows and IBM'S underdog and less popular OS/2 program.

Analysts said the end result could be damaging for IBM, if Windows keeps its dominant role among personal computer users in the future. "It's trump card that Microsoft may hold if OS/2 is no longer able to stay in step with enhancements that are made with Windows," said Rick Sherlund of Goldman Sachs.

"It's clearly not material today, but in the long run if they don't have another solution it could become material," said Rick Martin, a Chicago Corp analyst.

IBM recently unveiled OS/2 2.0, an improved and much anticipated version of the original OS/2. IBM's Brooks said that the upgrade is selling better than expected. Since its unveiling, over 400,000 copies were sold to first time users.

Not to be outdone, earlier this week, Microsoft said that three million copies of Windows 3.1 were shipped during its first six weeks on the market, adding that Windows 3.1 is "the software equivalent of Madonna or Prince," the pop music stars.