Marketplace as Final Judge

By Rob Fixmer  |  Posted 2001-05-14 Print this article Print

It's always dangerous to predict the logic or reasoning of federal courts, but based on activity in the appeals panel hearing the Microsoft antitrust case, the possibility that the company will be split up by judicial edict seems virtually nil.

Its always dangerous to predict the logic or reasoning of federal courts, but based on activity in the appeals panel hearing the Microsoft antitrust case, the possibility that the company will be split up by judicial edict seems virtually nil. Still, Bill Gates and company have little reason to celebrate.

Nor should Microsoft be taking solace in the Bush administrations more laissez-faire attitude toward antitrust, because the challenges Microsoft faces in the future as a single diverse company are not from the government, but from the marketplace — and that courts decisions cannot be appealed.

Our cover story this week examines a growing acceptance of open source software within large enterprises. Its happening primarily in limited portions of the corporate network right now, but the trend clearly points to an increased role for open source products in database and applications software as well. I-managers, whether they are based in the information technology or business development areas of the corporation, are realizing enormous benefits to open source, from the platform on up.

Microsoft is reacting defensively, and with good reason. While popular wisdom has it that Linux operating system (OS), the open source poster child, poses no real threat to the installed and still-growing Windows NT/2000 base, the increasing popularity of open source platforms and solutions clearly represents lost opportunities to the worlds largest software developer.

As Robert Shimp, Oracles senior director of product marketing, told Interactive Week recently: "Each Linux server sold is one less NT server sold." Shimp may be looking for a silver lining when he positions open source databases as a natural step toward Oracles more sophisticated and scalable products, but its clear that open source is becoming a more important factor in developers strategies — with the exception of Microsoft.

For example, as developers of popular OSes of their own, IBM and Sun Microsystems could have aped Microsofts hard-line stance against Linux. Instead, they have adopted a strategy of . . . well, lets call it "embrace and extend." IBM is shipping Linux with its servers. Sun is hedging its bets with an entire division of Pentium machines loaded with Linux. Both offer enterprise customers the service and performance guarantees that used to be available only with proprietary software.

Now, Microsoft appears to be alarming equipment makers and third-party developers — the very allies it most needs — with its .Net strategy and the design and marketing of its forthcoming Windows XP OS. But market forces are positioned not only to fight back, but to win.

Last week, the Web was abuzz with rumors that Windows XP would do away with third-party desktop icons and the ability for original equipment manufacturers to personalize — and monetize — the desktop, two issues that contributed to Microsofts antitrust problems. I doubt Microsoft would do something that dumb; its far more likely the rumors spring from the fact that beta testers are seeing an incomplete version of XP. Its hardly crucial to test icon placement and OEM branding features in a product as challenging as a new OS.

But .Net is another issue altogether. This isnt 1996, and Microsofts main competitor in the online marketplace is no longer a start-up Netscape Communications.

Today, Microsofts online strategy challenges AOL Time Warner, the 800-pound media gorilla that not only owns Netscape, and thus a potentially competing platform, but controls major conduits through which Microsoft has to pass to realize its .Net strategy. America Online, after all, is not only the worlds largest Internet service provider; its also the largest electronic commerce platform. Its chairman, Steve Case, has beaten Microsoft at its own game consistently, outflanking The Microsoft Network and building AOLs instant messaging technology into a de facto industry standard that Microsoft has been desperate to match. Surely, when Case looks at .Net, he sees less opportunity than threat.

The courts may save Microsoft from dissolution. The market is not likely to be as accommodating.


Rob joined Interactive Week from The New York Times, where he was the paper's technology news editor. Rob also was the founding editor of CyberTimes, The New York Times' technology news site on the Web. Under his guidance, the section grew from a one-man operation to an award-winning, full-time venture.

His earlier New York Times assignments were as national weekend editor, national backfield editor and national desk copy editor. Before joining The New York Times in 1992, Rob held key editorial positions at the Dallas Times Herald and The Madison (Wisc.) Capital Times.

A highly regarded technology journalist, he recently was appointed to the University of Wisconsin School of Journalism's board of visitors. Rob lectures yearly on new media at Columbia University's School of Journalism, and has made presentations at the Massachusetts Institute of Technology's Media Lab and Princeton University's New Technologies Symposium.

In addition to overseeing all of Interactive Week's print and online coverage of interactive business and technology, his responsibilities include development of new sections and design elements to ensure that Interactive Week's coverage and presentation are at the forefront of a fast-paced and fast-changing industry.


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