You'd think that giant Intel Corp. would have nothing to fear from big, allegedly bad Microsoft Corp. After all, Intel is as dominant in the microprocessor hardware industry as Microsoft is in operating systems software. Their grip on the personal computer industry is so tight that, together, Intel and Microsoft are often referred to as "Wintel."

But on Nov. 9, Steven D. McGeady, vice-president of Intel's content group, testified that the colossus of Redmond threatened repercussions in the PC computer marketplace if Intel didn't drop technologies that Microsoft deemed to be potential threats. Because of Intel's close working relationship with Microsoft, McGeady's testimony provided some of the most damaging evidence so far in the government's antitrust trial.

McGeady testified that at an Aug. 2, 1995, meeting, Microsoft CEO Bill Gates ordered Intel Chairman Andrew Grove to shut down the laboratory that was developing a technology called native signal processing. NSP software improved performance of audio, video, and three-dimensional graphics in applications.

McGeady said Gates "made it clear to everyone" that if Intel didn't pull back on NSP, Microsoft would make sure that the Windows operating system wouldn't work with a new microprocessor that Intel was about to put on the market. "The threat was both credible and fairly terrifying," McGeady said.

POACHING. McGeady was questioned by David Boies, the chief trial counsel for the Justice Dept. Unlike other government witnesses, Intel refused to provide its direct testimony in writing. Given Intel's ties to Microsoft, government and Intel officials said the company didn't want to be perceived as siding with the government suit against the software company.

Gates believed, according to McGeady, that Intel was poaching on Microsoft's turf by developing software. "Gates felt that anything we did in software...would harm Microsoft." McGeady also testified that Gates was "livid" about Intel's investment in the Internet.

The government also released a July 7, 1995, E-mail from Gates to other Microsoft officials about Intel in which he said, "The main problem between us right now is NSP. We are trying to convince them to basically not ship NSP." He also wrote, "I told Andy that I think he should cut down the number of software people that Intel has. I got the feeling he doesn't plan on doing that." Later he wrote, "One point I kept pushing to Andy is that we are a software company here and we will not have any kind of equal relationship with Intel on software."

On Oct. 18, 1995, Gates wrote internally that "Intel feels we have all the OEMs on hold with our NSP chill." He noted that Hewlett-Packard "is unwilling to do anything" regarding Intel's new chip "unless we say it's okay."

FIRST-RATE EFFORT. This evidence served as a counterpoint to new portions of videotaped testimony by Microsoft's Chairman Bill Gates that the government played earlier on Monday. In the video, Gates says he wasn't aware of any effort by Microsoft to keep Intel from entering the software side of the industry. He acknowledged that Microsoft may have complained when what he derided as Intel's "low quality" software interfered with Windows products. The result, he said, was a bad experience for personal computer customers, something neither company wanted.

In frustration, Gates added, some Microsoft officials may have told Intel it should leave the software business to Microsoft. But the government hopes to show that Microsoft feared Intel's software efforts not because they were poor but because they were first-rate -- and posed a competitive threat to the industry leader.

The morning session of Nov. 9 also saw the end of Avadis "Avie" Tevanian Jr.'s testimony. The Apple Computer senior vice-president for software engineering testified that Microsoft put a top priority in 1997 negotiations with Apple on replacing Netscape with Microsoft's Internet Explorer as the default Web browser on Apple computers.

An accord to do just that was part of a broader pact under which Microsoft invested $150 million in the ailing Apple, the two companies settled intellectual property disputes, and Microsoft agreed to continue to develop a key software package, Office for Macintosh. An internal Microsoft memo presented during the trial showed that Microsoft officials felt they would have a "huge advantage" if Internet Explorer were the default browser. "It was a deal-breaker," Tevanian said.

He added that Microsoft went so far as to threaten to stop supporting its version of Office for the Macintosh if Apple didn't bow to the software giant's demand. Apple did so, he said, because continued support for Office was critical to Apple's survival. If Apple couldn't offer Office, customers would go elsewhere. And other programmers might have been discouraged from writing for Apple because it would look as if Microsoft had lost confidence in the computer maker. The testimony was intended to bolster Justice's contention that Microsoft has played hardball by throwing around its clout in software development.

But Microsoft tried to show that the browser issue was a small part of the negotiations and that a settlement of patent disputes was at the heart of the deal the two companies cut. Microsoft lawyer Theodore Edelman played a tape of a Mac World meeting in August, 1997, showing Apple's Steve Jobs announcing the partnership between the two companies and focusing first on the patent issue. However, in the end, today's tale of the tapes went to Justice.

By Susan Garland and Stan Crock in Washington