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Technology Stocks : Microsoft - The Evil empire -- Ignore unavailable to you. Want to Upgrade?

To: Kal who wrote (1272)	6/20/1998 4:13:00 PM
From: Rusty Johnson	1 Recommendation Read Replies (1) \| Respond to of 1600

Barron's Online - Microsoft And Intel Must Face the Music By John C. Dvorak Since our last column ("So Far, Microsoft Is Winning the PR War," May 20), things have quieted down between Microsoft and the federal government -- at least for the summer. But they've begun to heat up for Intel, which many people believe is better equipped to handle the onslaught of government scrutiny. I believe that the opposite is true. Remember, Bill Gates was raised in a family headed by a high-profile lawyer (his dad), and eventually Bill's boundless stubbornness will give way to a more realistic approach. There was a published report that when Bill was a child his mother took him to a psychologist about his stubbornness. When they were through with the interview, the psychologist told Bill's mom to give up, because she would never win with this kid. Since then he's become even more competitive and stubborn. Gates recently ran a three-page letter in his favorite magazine, The Economist, in which he continues to whine and which will only serve to annoy the government attorneys. The letter accomplishes nothing. Does Gates think that the public is going to all write to the Department of Justice to demand they get off his back? Does he think he's going to get Joel Klein fired? (Klein is no Ken Starr, that's for sure.) Worse, he addresses none of the issues raised in the complaint; all he is doing is creating an atmosphere that begs for comments and more counterarguments. But the question remains whether Bill will listen to his smart father and to his mentor, Warren Buffett, who both surely must be telling him to back off. And all he has to do is change his tune, apologize and make a few changes in the way he does business, and the whole situation will blow over before Christmas I think Gates will do just this. He's simply too old to keep acting this way. There's a different story unfolding with Intel. People say it is much more prepared than Microsoft to handle an antitrust action. There is talk about how executives have been briefed over the years as to how to act and how to say things in memos -- all designed to keep antitrust regulators at bay. Unfortunately all this has done has been to create a false sense of security. Intel has a long history with the courts, as it used litigation as a marketing tool. When you talk to lawyers involved in any Intel action, you get the same observations over and over: Intel is incredibly arrogant in a judicial setting, and the judge tends to react adversely to it. It's no surprise: The company was built around a "take no prisoners" ethos and everyone in the industry has always believed that they were much more aggressive in their approach to the business than Microsoft ever was. When Microsoft came under scrutiny, everyone knew Intel would be next and all agreed that if one of the two companies had to be punished for its business practices, it should be Intel. (Everyone has a horror story about the company.) And unlike with Microsoft and its many boosters, Intel doesn't seem to have much support from the computing community. Intel and its representatives are currently telling everyone that the Federal Trade Commission, which brought the recent antitrust action, doesn't know what it's doing, and that it's all a big mistake. This approach simply does not work--and never will. The fact that both companies are adamant and offended by these actions bodes ill for them both. Both companies should have immediately said, "We will work with the government and do whatever it takes to rectify any and all violations. We want to be good neighbors in our business community." But neither company had the presence of mind to make that simple declaration. It would have been a public relations coup and disarmed the government investigators: It's no fun to be a hunting dog if the rabbits don't run. With these rabbits running full speed, they'll have the dogs howling till the cows come home. Meanwhile, I've received many e-mails about last month's column on Microsoft. Here are some excerpts, along with my response. "If Microsoft can use its monopoly to kill off their software competitors, why not let the airlines at their major hubs squash the smaller airlines? What is fair for Microsoft should be fair for United, American and Delta. Let the marketplace rule. "The Microsoft supporters are being shortsighted, as in both cases . . . you initially get free software (Internet Explorer 4.0) on one hand and cheaper seats on the other. After the competitors are crushed, the price of both will go up and innovation and service will go down." R. Nichols Dvorak: Anyone who has flown recently knows the problems when the competition narrows down to a few carriers, all implementing the same exact fares and policies. The summer price wars are over, and instead of paying $99 to fly from San Francisco to New York it's $900. The service has deteriorated and now you can bring only one or two pieces of luggage aboard. So much for "the market" working to help save consumers money! Will this happen with software? "Leave Bill Gates and his company alone, unless they attempt to buy up [the] competition -- let the competition compete." Carl Raskin Dvorak: Over the years Microsoft has been buying up the competition. "Microsoft winning the PR wars? Baloney. Every half-way literate computer user knows that Gates ripped off better technology to produce inelegant bug-ridden software, often shading his rise toward enormous personal wealth and monopoly status with Mafioso tactics that stifle and coopt competition and innovation. Gates now seeks to tar critics with the threadbare, right-wing ideological invective and whining that only Dittoheads love . . . . "Anybody who doesn't kowtow to Bill is open to reprisal, and maybe you pulled your punches somewhat." Ed Mainland Dvorak: We don't pull punches.