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Technology Stocks : How high will Microsoft fly?
MSFT 478.04-1.1%3:59 PM EST

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To: Al Bearse who started this subject7/11/2000 7:41:55 AM
From: Frederick Smart   of 74651
 
Fighting Monopolies: The Black Hole Wars....

I'm sure you guys already picked this one apart.

It's interesting to see how black holes actually compete against each other. The more fingers they point the more light and power they suck in, the more opposing monopoly-like forces will do the same.

Microsoft vs. U.S. Goverment and China.

How ironic that the fear and paranoia of a communist state should help the open source movement which relies on freedom, openness and trust.

Sort of how the net was born in the middle of the cold war as a method for freeing up data/information from the control
of mainframes so communication would not be restricted/limited during a nuclear attack.

Transformation catalysts come from the most unlikely of places.

Peace.

GO!!
>>New York Times
Business Section

July 7, 2000

Fearing Control by Microsoft , China Backs the Linux
System

By CRAIG S. SMITH

SHANGHAI, July 6 -- Janet Reno is not the only one
worried about Bill Gates's software monopoly. China's
leaders are, too.

They are concerned that the country is growing overly
dependent on the Windows operating system, which
controls computers running everything from banks to
President Jiang Zemin's e-mail box. But the Chinese
government, itself a master at monopoly, is taking its
case against Microsoft not to the courtroom but to the
marketplace, albeit with a bit of administrative fiat.
It is backing the Linux operating system, which was
created by a Finnish university student in 1991 and is
distributed free to anyone.

"We don't want one company to monopolize the software
market," said Chen Chong, a deputy minister of
information industries who oversees the computer
industry in China. With Linux, "we can control the
security," he added, so "we can control our own
destiny."

A growing number of Chinese have likened dependence on
Microsoft to leaving the keys to the country's
increasingly computerized economy in the hands of a
potential enemy. Some warn that secret holes in
Microsoft's computer code might allow the United
States access to Chinese networks or even enable it,
in time of war, to shut those networks down.

Such concerns were only heightened last year when a
cryptographer for a Canadian software firm working in
the United States said he had found a feature in
Windows called an NSAKey -- as in National Security
Agency, the United States government agency that
gathers electronic signal intelligence worldwide.
Though Microsoft said the key was innocuous and no
support has been found for any sinister explanation,
"no one can guarantee that Windows does not have back
doors," said Liu Bo, a former Microsoft executive who
is now chief executive of Red Flag, a
government-backed company set up to create software
based on Linux and to encourage a homegrown software
industry.

In addition, various arms of the government have been
warning of the security risk posed by the country's
reliance on Microsoft. "Without information security,
there is no national security in politics, economics
and military affairs," declared an editorial in
People's Liberation Army Daily earlier this year.

Microsoft calls such fears nonsense and says it
continues to enjoy a strong working relationship with
the government. "We have shared product information
with them," said Michael Rawding, Microsoft's regional
director in China, "and I believe that their comfort
with our product information led them to allow the
launch" of Windows 2000, Microsoft's new
business-oriented operating system, in China last
spring.

Unlike the Windows source code, which Microsoft keeps
secret, the Linux code is open for all to see and is
freely distributed with the stipulation that anybody
can improve it as long as any modifications are shared
with the rest of the world. The almost communistic
"from each according to his ability, to each according
to his need" approach appeals to China's Marxist
leaders.

Despite the government's stand, no one is suggesting
that Microsoft is finished in China. Though it will
not provide specific sales figures, the company says
its software sales in China surged 80 percent last
year and
continue to grow. But the government's move to
diversify reflects a broader dissatisfaction with the
company and its founder, Mr. Gates, who just a few
years ago was hailed as a hero by China's young
technology enthusiasts.

The turning point in Microsoft's image was the
introduction of its Chinese-language Windows 95
operating system, which was programmed to display
references to "Communist bandits" and to exhort
users to "take back the mainland." Beijing, infuriated
to learn that Microsoft had used computer programmers
in Taiwan to write the software, demanded that the
company hire mainland programmers to fix it.

Chief among the company's critics is its former
general manager for China, Juliet Wu, who has become a
national celebrity with her withering, best-selling
exposé, "Up Against the Wind: Microsoft, I.B.M.
and Me." The picture she paints of Microsoft as an
arrogant Goliath feeds into the irritation many
Chinese computer users feel toward the company.

Ms. Wu and other critics say Microsoft's pricing -- a
software program can cost as much as an average office
worker's monthly salary -- forces users to buy pirated
copies of the company's software. (The Business
Software Alliance, a nonprofit trade group, estimates
that as much as 95 percent of all software in China is
pirated, though the industry hopes China's expected
admission to the World Trade Organization will change
that.)

Liu Dongli, an Internet entrepreneur in the southern
province of Fujian, was so enraged by having to pay
$241 for Windows 98 that he sued the company for
unfair pricing. The suit was withdrawn when Mr. Liu
realized that Microsoft charges no more for its
products in China than it does elsewhere. "But that
doesn't mean we lost the case," he fumed, vowing to
bring suit again when he has more evidence. "Monopoly
is not a good thing."

The news media, meanwhile, have criticized Microsoft
for suing a company last year over the sale of pirated
software. Microsoft, which was asking for $200,000 in
damages, lost the case because the Chinese court ruled
that it had sued the wrong company. The defeat only
darkened Microsoft's ominous silhouette in the eyes of
many Chinese.

"Microsoft is a bully," said Hua Yuqing, a young
Internet entrepreneur, who complains that Microsoft's
high prices and proprietary computer code squelch
creativity. He is building a business creating
software programs that run on Linux. "I don't want to
feel that I'm subconsciously controlled," Mr. Hua
said, referring to the dependence on Microsoft that
comes with using its products.

Mr. Hua and a half-dozen computer programmers peck
away at their keyboards here in a drab office empty
except for computers, desks, chairs and a shelf
stocked with bottles of orange soda and boxes of
chocolate milk. He and his colleagues are using Linux
to start a company
that provides services to subscribers over the
Internet -- in this case, the use of accounting
software and sales-tracking software. The software
stays on Mr. Hua's server computer, and customers rent
it rather than buy their own.

Microsoft's public relations disaster has been a boon
for Linux. So far, several companies -- including Red
Flag, which is backed by President Jiang's son, Jiang
Mianhang, and TurboLinux, based in San Francisco --
have introduced Chinese-language versions of the Linux
operating system in China. Many other companies have
started to provide software and services for China's
Linux users.

The Chinese government tried for more than a decade to
develop an operating system of its own, but was unable
to keep up with the fast-changing industry. Linux
gives the country the tools to build that system now
-- and, in the Chinese view, the fact that the Linux
code is
not privately held assures that any security it wants
to build into its computer systems will not have
undetectable vulnerabilities.

But even Linux enthusiasts profess ambivalence about
the government's interest. Linux developers in China
say some overseas colleagues worry that China may not
play by the rules for collaborating and sharing and
may adapt Linux to create a proprietary system
instead.

In any case, China represents a market potential of
such size, and government influence over the market is
still so strong, that Beijing's support can turn
almost any product into an industry standard
domestically. By the end of next year, the country may
well be the third-largest PC market in the world, and
software sales are expected to grow more than 30
percent a year for the foreseeable future.

As China's economy becomes increasingly integrated
with that of the region and the world, much of Asia is
likely to follow its lead.

Mr. Liu, the chief executive of Red Flag, says a third
of the country's Internet servers -- the computers
that power Web sites -- are already using Linux
operating systems. He estimates that by the end of
next year
Linux will run half of all servers in China and as
much as a third of the country's desktop computers.

Those estimates may be overblown; the technology
research firm IDC Asia-Pacific says its data shows
less than 3 percent of all servers shipped to China
last year were loaded with Linux. But IDC expects the
number to more than double this year, and Linux's real
market share is most certainly higher because the
operating system can be downloaded free from the
Internet.

"Linux, without doubt, has gained some headway among
software developers in China," Mr. Rawding said.
"However, I have yet to see any mission-critical
organization deploy Linux because the truth of the
matter is that in businesses, you want the support and
service to be available to you instantly when
something does go wrong."

Nonetheless, Great Wall Computer, one of China's
biggest PC makers, has already shipped 200,000 desktop
computers loaded with the Linux operating system,
which looks much like Windows though it cannot yet
match all of Microsoft's features.

Ma Li, marketing chief at Great Wall, says his company
shifted toward Linux at Beijing's urging. "As a
leading enterprise," he said, "we should respond to
the call of the government."

end
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