Business as usual called likely

Industry watchers say lengthy appeals could hurt rival technologies

Microsoft ruling

April 04, 2000|By William Patalon III | William Patalon III,SUN STAFF

Don't expect to see a huge shake-up in the computer industry -- or even any changes on store shelves -- just because a federal judge ruled yesterday that Microsoft Corp. broke antitrust laws by illegally extending its PC software dominance into the market for Internet browsers, industry insiders said yesterday.

Microsoft has earned its reputation as a dogged rival and a bare-fisted street brawler: About 90 percent of the world's PCs run on the company's Windows operating system.

In view of that corporate culture, the Redmond, Wash., software giant is likely to draw out its fight with the government with "one appeal after another," said John Robb, a director of Gomez Advisors Inc., a technology-consulting firm in Lincoln, Mass.

That delaying tactic is likely to slow any big strategy shifts by Microsoft or its rivals, and may even permit Microsoft to increase its market power at the expense of rival companies and technologies, according to industry observers.

"In one fascinating twist, since the government put this case on the table -- Microsoft's earnings have grown 60 percent," said Tim Bajarin, president of Creative Strategies Inc., a technology consulting firm in Campbell, Calif.

In other words, he said, Microsoft clearly never changed its practices.

In recent months, even the anti-Microsoft rhetoric that has traditionally gushed from the executive ranks of such cantankerous rivals as Sun Microsystems Inc. has slowed to a trickle, some industry watchers insist.

"They've changed their tune -- they don't want to ruin the gravy train," said Gomez Advisors' Robb. "Their markets are as solid as a rock and everybody's making so much money -- petty jealousies have pretty much fallen by the wayside."

Because yesterday's ruling contains no penalties -- that stage of the case has not been reached -- experts contend that it may be business as usual for Microsoft, which bodes poorly for some competing technologies. Among them: Linux and Unix, two popular operating systems that run on corporate "servers," the powerful computers that can store -- and speedily access -- important company data or the thousands of pages of images and text that make up Web sites.

Linux and Unix have risen in popularity because they're available at low cost or free, are easily customized, and are simple programs that are said to be less prone than rival offerings to "crashing" computer systems. But, since it's not shackled, Microsoft can move to contain the proliferation of these operating systems -- even by refusing to design "applications" software such as spreadsheets or word-processing programs that would give commercial customers more of a reason to buy these programs.

Microsoft controls 95 percent of the market for spreadsheet- and word-processing software, meaning any new technology needs the software giant's imprimatur to gain big shares of the market.

Then there is the Web browser, another market Microsoft dominates, since its actions allegedly helped bring about the demise of Netscape Communications Corp., a former industry leader that had to sell out to America Online Inc. when its leaders realized they couldn't compete with Microsoft.

One of the things Microsoft did to attract the government's ire was to tie its browser, Internet Explorer, into the Windows operating system, which made it tough for rivals to get their own browsers onto Windows-based PCs.

The judge ruled that this combination was illegal, since it helped thwart competition in this important emerging market for Internet software.

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