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A Rapidly Changing Landscape
Will Microsoft fall victim to its own alleged restraint of trade practices?

I recently moved to another office in my building. It was one of those semi-cathartic moves that forces you to seriously examine the contents of those drawers, shelves, and boxes with an eye towards deciding which parts of your past you can comfortably jettison. As I sifted through the contents of a long-neglected cardboard box, I came across an article I clipped for a class I was teaching in the spring of 1993. The title of the article was "The New Rockefeller." The subhead read: "Bill Gates is creating the software that will become the power source of the 21st century. Will Washington short-circuit his success?"

At the time the article was written in February 1993, the Federal Trade Commission had been combing through Microsoft's records for two and a half years trying to decide whether or not to take Microsoft to court for engaging in restraint of trade and monopolistic practices. Now, the process that began in 1990 is finally drawing to a close in the waning days of the 20th century, and could be over by the time you read this column. In the opinion of the authors of the U.S. News and World Report piece, the prognosis for Microsoft was good, and indeed, Microsoft has dominated the software industry throughout the 1990s.

But on the eve of the century that USN&WR predicted would be powered by Microsoft, the computing landscape is changing so rapidly and in so many different ways that even Microsoft can't keep up. Ironically, Microsoft may become the victim of one its own alleged restraint of trade practices. One of the reasons Microsoft has been in court was the free distribution of its Internet Explorer browser software in an effort to run Netscape out of business. Now the free distribution of Linux, a Unix-based desktop operating system, is making (limited) inroads in the desktop market. Of course, the difference between the two situations is the fact that Linux is not the subsidized product of the dominant software company in the world, but is instead the result of collaboration among thousands of programmers searching for an alternative to the various Windows products.

Though Linux gets the lion's share of the publicity, there are other free Unix-based server operating systems that have achieved even greater levels of penetration. Approximately 15% of the web servers connected to the Internet worldwide are running one of three systems called FreeBSD, NetBSD, and OpenBSD. Even Microsoft uses FreeBSD rather than its own Windows NT to run its Hotmail e-mail service. Speaking of Windows NT, the U.S. Army revealed in early September that it has scrapped all its Windows NT web servers in favor of Mac OS servers running WebStar server software. The Army has been plagued with a number of attacks on its websites by hackers exploiting security flaws in NT.

Perhaps the most significant change now taking place is the shift to server-based application programs. Sun Microsystems is offering an office suite of software called Star Office as a free Internet service. BellSouth and US West are already lined up to offer the software on their corporate websites. The CEO of Portera, a business applications company that is also hosting the service, says that business users "will increasingly demand that all core business applications be offered as a hosted service." Meanwhile, a Gartner Group study finds that the costs for corporations to migrate to Windows 2000 (about $3100 per PC) are so high that it will take three years to see a return on the investment. The news will certainly send many companies searching for a more reasonable alternative.