To: pgerassi who wrote (138493 ) 7/1/2001 8:28:09 PM From: puborectalis Respond to of 186894 Red Hat CEO: Microsoft 'Most Vicious Competitor' By Daniel F. DeLong NewsFactor Network June 29, 2001 Matthew Szulik, CEO of Linux developer Red Hat, calls Microsoft 'the most vicious competitor of the last 30 years in technology.' Microsoft's (Nasdaq: MSFT) march toward controlling the next generation of the Internet is back on track, as the verdict in the government's antitrust suit against it appears to have freed the company to move full speed ahead, say analysts and rivals. The Redmond, Washington-based company, which supplies software operating systems to 92 percent of the personal computers in the world, avoided being broken up when a U.S. appeals court voted unanimously Thursday to send the case back to a lower court and a new judge. Although the panel upheld the lower court's ruling that Microsoft improperly used its monopoly position in the computer operating systems market, all seven judges threw out the June 2000 decision by district court Judge Thomas Penfield Jackson that Microsoft should be broken up as a penalty for its actions. Bundling Is Okay Key to the ruling was that there is nothing inherently wrong with bundling features in operating systems -- something that Microsoft does better than any other firm. What this means in practice is that the coast is clear for Microsoft to launch its Windows XP operating system and the firm's X-Box, two technologies that will certainly turn up the heat on competitors. "There's no stopping them now," Matthew Szulik, chief executive officer of Red Hat (Nasdaq: RHAT), told NewsFactor Network. 'Most Vicious Competitor' Szulik, whose North Carolina company is the leading developer of open-source Linux software, added, "I think they [Microsoft] are the most vicious competitor of the last 30 years in technology, and they're only getting stronger." Other critics were just as vocal about the court decision. "If Microsoft is not somehow constrained, it will be very difficult for competitors in the next phase of computing," Tom Lenard, vice president of research of the Progress & Freedom Foundation, told NewsFactor. "They have all the answers, and the momentum." Carl Howe, an analyst at Forrester Research, says, "Windows XP is going to be more interesting because one of the things the court said is that the bundling of a product isn't, by its nature, a bad thing." Ruling Didn't Matter Neil MacDonald, an analyst with the Gartner Group, told NewsFactor that the decision not to break up Microsoft will speed the company's domination of the Web, something he says would have happened even if the appeals court had upheld the original verdict. For its part, Microsoft tried hard to play down its glee after studying the court's 100-page decision. Microsoft Chairman Bill Gates said a cloud has begun to lift from his company, adding that the work done at his firm over the past year ranks among the best ever. Settlement In Offing It would appear now that Microsoft will enter into negotiations to settle the case, something that Gates said he wanted from the start. Although there has been talk of a second suit by the 19 states and the District of Columbia -- this time over Windows XP -- the appeals court decision seems to have put a damper on any such plans. Even Iowa attorney general Tom Miller, one of the prime movers in the original suit, says he will support a settlement "if it brings about changes in the way Microsoft does business." Saving Face Everyone involved in the case seems to be trying to save face, though Microsoft is clearly in the driver's seat. The government seemed to be claiming victory based on the fact that as part of the verdict, Microsoft was seen to have improperly used its monopoly power. There are still a few clouds hanging over Microsoft. One of them is the European Commission, which has its own bone to pick with the company. Its ruling last week against a merger of General Electric (NYSE: GE) and Honeywell International (NYSE: HON) showed that it is very protective of European interests. And as for settlement negotiations, they could go on for years. "I think this will drag out for some time," said Greg Vogel, a Bank of America analyst.