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December 5, 2002—In this issue:
1. NEWS AND VIEWS
- Judge in Java Hearings Suggests That Sun Go to Trial
- Microsoft Not Cutting Losses with Xbox
- Microsoft Sees Tech Industry Rebound
- Planning on Getting Certified? Make Sure to Pick Up Our New eBook!
- Sample Our Security Administrator Newsletter!
3. CONTACT US
See this section for a list of ways to contact us.
1. NEWS AND VIEWS
(contributed by Paul Thurrott, [email protected])
At the end of a second day of hearings in Sun Microsystems' lawsuit against Microsoft, a federal judge unexpectedly recommended that Sun consider easing its complaint against Microsoft and let the case go to trial. Although Judge J. Frederick Motz didn't explain the comments further, he suggested that Sun consider dropping its preliminary injunction to force Microsoft to bundle Java with Windows and set aside its claim for more than $1 billion in damages. Sun said it would consider the advice. If the judge had granted Sun a preliminary injunction, Microsoft would have been forced to bundle Sun's Java version with Windows immediately, but Sun would first have had to show that Java would suffer immediate and irreparable damage because of Microsoft's actions.
Because the damage claim would require lengthy hearings, legal experts believe that Judge Motz is basically offering Sun a way to fast-track its case against Microsoft. And, as Judge Motz noted in a previous decision, the US District Court for the District of Columbia already established Microsoft's liability through the Findings of Fact in the company's wider antitrust case, much of which Judge Motz ruled is applicable in the Sun case.
In 2 short days of hearings, Judge Motz has been decidedly friendly toward Sun's request that Microsoft be forced to bundle Sun Java with Windows. Tuesday, for example, Motz said the bundling plan was an "elegant solution."
In yesterday's hearing, economist Dennis Carlton, a Sun witness, said that Microsoft is overstating Java usage in the market because much of the installed base uses Microsoft's outdated, incompatible version. Interjecting at that point, Judge Motz did a decent Judge Thomas Penfield Jackson impersonation when he noted, "Not only does \[Microsoft's incompatible Java version\] overstate \[Java's installed base\], I would think that having noncompliant Java machines would be a detriment \[to Sun\]."
Microsoft argued that forcing the company to bundle Sun's Java would be prohibitively expensive for Microsoft, especially if Sun weren't limited as to the size of the bundled technology. "Let's force Microsoft to carry bad technology and burden consumers," Microsoft Attorney Michael Lacovara sarcastically suggested. "Either in economics or in law, you don't have a right to piggyback on somebody else just because they're successful."
Despite dropping into the number-three spot behind Nintendo and Sony in the video game market, Microsoft says that it isn't throwing in the towel and might instead double its investment in the Xbox video game console. Microsoft Chief Financial Officer (CFO) John Connors told analysts in Scottsdale, Arizona, yesterday that the company isn't considering an exit strategy and will instead "double down and make it successful."
Although Microsoft isn't discussing numbers, analysts predict the company will spend more than $2 billion promoting the Xbox over 5 years. Last month, Microsoft revealed that its home entertainment division, which makes the Xbox, lost more than $175 million in the last quarter alone.
To bolster the Xbox during its second holiday season, Microsoft recently unveiled the Xbox Live online service, which lets customers play certain Xbox Live-enabled games with other Xbox users over a broadband connection. Several compatible titles shipped at the launch last month and more are due by the end of the year. Nintendo and Sony are also offering hardware to connect their devices to the Internet, but both companies lack the integrated online service that Microsoft offers.
Microsoft Chief Financial Officer (CFO) John Connors told analysts yesterday that stock valuations and corporate profits are stabilizing in the tech industry, a situation that will lead to a tech stock rebound and a reversal of the current economic downturn. The unexpectedly rosy prediction from an executive at the ever-cautious software giant comes just weeks after the company revealed that Windows enjoys a stellar 85 percent profit margin. But Connors again downplayed Microsoft's record results from the previous quarter, when the company posted a 26 percent sales increase and more than doubled its year-over-year profit, calling the quarter an "anomaly."
Connors said that Microsoft is poised for great success, although the company still expects growth to fall to single digits in the coming quarters. Linux could derail Windows' success, however. Connors said that any Linux success on the desktop would have catastrophic results for Microsoft because its PC preloading business is such a "phenomenal annuity stream of cash flow and profits."
Linux hasn't yet had any measurable success on the PC desktop, although the open-source OS has been popular with small and midsized businesses that want to run inexpensive Web, file, and print servers. At the same time, more than 600 million desktop PCs are running a Windows desktop version, Connors said. That Linux, or any other desktop OS, will make a viable play in that market any time soon is unlikely.
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