BUSINESSWEEK ONLINE : MAY 15, 2000 ISSUE
NEWS: ANALYSIS & COMMENTARY Aggressiveness: 'It's Part of Their DNA' Not too many computer users have heard of Microsoft Corp.'s IntelliMirror software. It's a program in Windows 2000 that lets people move from one computer to another on a corporate network, tap in a password, and get access to the same documents they can get at their own desks. But IntelliMirror works only if customers buy one version of Windows 2000 for their desktop computer and another for the powerful computer servers that run their networks. Does that mean Microsoft (MSFT) is up to the same old tricks with Windows 2000 that got it in trouble before? Federal and state trustbusters certainly believe so. They think the giant is continuing to use its personal-computer operating-system monopoly to bully its way into other markets---and that's a key reason why they asked U.S. District Judge Thomas Penfield Jackson on Apr. 28 to split Microsoft in two. Although such alleged behavior goes beyond the government's antitrust case, which focused largely on Microsoft's efforts to corner the Internet-browser market, trustbusters believe it bolsters their argument that nothing short of breakup will alter Microsoft's ways. In an affidavit filed along with the government's breakup proposal, Massachusetts Institute of Technology economist Rebecca M. Henderson says Microsoft could use software such as IntelliMirror to shut rivals out of corporate networks and extend the giant's dominance beyond its desktop stronghold. She isn't the first to make that claim. Since Windows first emerged as a dominant PC standard in the early '90s, Microsoft's strategy has been to leverage the operating system to muscle into new markets, such as servers. ''It's part of their DNA,'' says Mitchell E. Kertzman, CEO of Liberate Technologies, a maker of TV set-top box software that competes with Microsoft's. Have such moves helped Microsoft gain ground? They haven't hurt. In 1997, Microsoft had 25% of the server-software market in revenue terms, according to researcher International Data Corp. That hit 30% last year. Unix companies, such as Santa Cruz Operation, Hewlett-Packard (HWP), and IBM (IBM), lost share, from 58% in 1997 to 53% last year. And Novell Inc.'s (NOVL) NetWare slipped from 14% in 1997 to a 12% share last year. But servers aren't the only market on the trustbusters' radar. Another government filing cites an e-mail that Microsoft Chairman William H. Gates III sent last summer ''directing that Microsoft redesign its software in order to harm competitors'' in the palm-size computing business. The e-mail was placed under seal at Microsoft's request, but sources say it focuses on a spat between Microsoft and makers of the popular Palm handheld device. The issue: Microsoft's Outlook is the only major e-mail software that doesn't synchronize with Palm unless users install additional software. That gives Outlook fans a reason to buy Microsoft's Pocket PC gizmos instead, since they connect smoothly with Outlook. Even though Palm has about four-fifths of the handheld business, the fear is that Microsoft may be able to use the popularity of Outlook to unfairly grab more share. ''The businesses are definitely not independent,'' says Michael Mace, Palm's chief competitive officer. It's just that sort of continued aggressive behavior that convinced trustbusters that a breakup was the only solution. Microsoft, not surprisingly, is unmoved. ''This is our intellectual property that we've worked hard to build over time,'' says Frank Artale, a Windows group general manager. Microsoft may find that defending that property gives its foes dangerous new weapons. By Jay Greene in Seattle, with Peter Burrows and Jim Kerstetter in San Mateo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Antitrust for the Digital Age TABLE: Reshaping Antitrust Policy Aggressiveness: ``It's Part of Their DNA'' INTERACT E-Mail to Business Week Online

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