Time is on Microsoft’s side

Associated Press

SEATTLE — With the U.S. Supreme Court opting Tuesday not to immediately hear Microsoft’s appeal of its antitrust case, the final say on whether the company will be broken up could be years away.

Microsoft couldn’t be happier.

The case will now be heard by the U.S. Circuit Court of Appeals for the District of Columbia, which in the past has overturned lower court decisions in Microsoft’s favor. And although that court has promised to expedite the case, Microsoft has successfully bought itself time — perhaps up to two years.

Why is time important?

Consider how the high-tech industry has changed since May 18, 1998, when the U.S. Justice Department filed this antitrust suit against Microsoft. Back then, Netscape Communications Corp. was still battling Microsoft for dominance in Web browsing software and Microsoft’s grip on the market for computer operating systems was ironclad.

Two years later, U.S. District Judge Thomas Penfield Jackson ruled that Microsoft, having broken federal antitrust law, should be split into two companies and have its behavior strictly regulated.

Microsoft, in the meantime, had won the browser war, with the vanquished Netscape acquired by America Online Inc. Microsoft still rules the market for personal computer operating systems and office productivity suites, but faces stiffer competition for computer server systems and other complex software.

"It’s a different Microsoft and a different industry environment," said Bill Kovacic, antitrust expert at the George Washington University School of Law. "That’s a powerful argument against the remedy Judge Jackson imposed."

The Internet has become the primary computing tool for both individuals and businesses.

With the advent of cell phones and personal organizers that connect wirelessly to the Internet, the need to be tethered to a Windows-operated desktop computer is rapidly waning. And in fact Palm Inc. currently dominates the handheld computer market.

As it shifted gears in December 1995 to embrace the Internet, so did Microsoft smartly recognize the dawning wireless world.

The company Bill Gates built plans to take its most popular software, such as its Office products and Windows Media Player, and make them available to all devices through the Internet.

Instead of keeping the software on a computer, it will be lodged on large computers at Microsoft or elsewhere, available at a moment’s notice to people through the Internet, from any device imaginable.

On Tuesday, it launched a family of software called Microsoft.NET Enterprise Servers, which will run on the massive computers needed by electronic commerce and other Internet companies and will handle e-mail, Web sites, databases and other business functions. Microsoft trumpeted the server software as the basis for its Microsoft.NET strategy.

Microsoft chief executive Steve Ballmer on Tuesday called the launch of Microsoft.Net "a big milestone" in the company’s 25-year history.

In addition to worrying about the antitrust case, Microsoft will also have to focus on maintaining its bottom line as a mature company, while at the same time developing and promoting .NET.

Of course, Microsoft’s whole new strategy could simply fail — requiring it to utterly change direction once again.

Microsoft’s desktop operating systems, its biggest cash cow, will probably represent just a small part of the overall computing industry — something Microsoft has repeatedly pointed out to counter antitrust arguments. There are already indications. Analysts say Microsoft has not met expectations in sales volume on its business-targeted Windows 2000 operating systems.