WinInfo Short Takes: Week of May 6

An irreverent look at some of the week's other news...

Microsoft Remedy Hearings: Media Player Followed the IE Way
Let me get this straight: Microsoft commingled Windows and Windows Media Player (WMP) code to thwart rivals and not for any valid technical reason. Microsoft? But seriously folks, we're not talking about some backroom rumor; oh no, this information came directly from an email message that an unnamed Microsoft executive sent to Chairman and Chief Software Architect Bill Gates. Lawyers for the nonsettling states and the District of Columbia revealed the message this week at the company's remedy hearings. "We position streaming \[media\] as a natural and native feature of our client and server \[OSs\]," the executive wrote in a January 1999 email. "This is a standard feature of our platform, not an added cost item." And sure enough, just months later Microsoft made WMP an integral part of the Windows code base. Hey, it worked for Internet Explorer (IE). I guess you have to stick with what works, eh?

Microsoft Remedy Hearings: On the Other Hand...
Actually, maybe using the commingled-code strategy with WMP wasn't such a great idea. Looking back 3 years later, RealNetworks still has a commanding lead in the streaming media market, despite the fact that its server products are overpriced and its client products spam users with unwanted ads and service offers. Microsoft executive Will Poole said this week that RealNetworks has more than 250 million customers, most of whom run the company's client products on Windows. Furthermore, removing WMP from Windows, Poole said, would cause RealNetworks' RealONE player to stop functioning in some ways. Baloney, said RealNetworks Vice President Dan Sheeran. "\[Microsoft\] is clearly trying to mislead the court," he said. "We'd be happy to teach Microsoft how to remove \[WMP\] from Windows if they need to."

Microsoft Remedy Hearings: The Genius of Microsoft's Legal Strategy
I'm not sure whether you caught the significance of this news blurb, but when Microsoft dropped several people from its pool of potential witnesses this week, the company executed a deft legal maneuver that left lawyers for the nonsettling states with that dazed, deer-in-the-headlamps look. Here's why: Some of the witnesses Microsoft dropped were PC-maker executives, and the states were waiting for their cross-examination to bring up problems PC makers have with the new Windows licensing restrictions that Microsoft's proposed settlement with the US Department of Justice (DOJ) requires. Dropping the witnesses, however, prevents the states' lawyers from cross-examining those executives and from entering their concerns--in the form of email messages from Dell and other PC makers--into evidence. Good stuff, and kudos to the Microsoft legal team for pulling a fast one.

Microsoft Remedy Hearings: No Linux for You!
And speaking of Windows licensing restrictions, an interesting related topic came to light this week: Microsoft bans PC makers from installing Linux on PCs that also run Windows. And yes, this restriction is still in effect, despite efforts by the DOJ and its obviously ineffectual proposed settlement with the company. What's funny (and I mean funny-weird, not funny-humorous) about this practice is that Microsoft executive Chris Jones actually defended it on the stand this week, stating that such an option would only confuse consumers. I'm happy to see Jones sticking up for the little guy. But seriously, you don't really think choice is better than restriction?

Microsoft, NVIDIA in Bizarre Fight
I'm not sure why I haven't covered this topic yet, but Microsoft and 3-D video-card maker NVIDIA are in a bizarre legal spat over the price of an NVIDIA graphics controller that Microsoft uses in the its Xbox gaming console. It seems that the companies disagree over the chip's agreed-on price, which NVIDIA says is much higher than Microsoft is currently paying. NVIDIA Vice President Mike Hara nicely summarized the situation, stating that NVIDIA will realize at least $13 million in deferred revenue if it wins the case, but that the company must sell the chips at a loss if it loses the case. Microsoft has forced NVIDIA into a binding arbitration process that could take as long as 6 months to settle. Microsoft coming down hard on one of its partners? What has this world come to?

Adobe Wins Patent Suit Against Macromedia
And they say Microsoft steals ideas from other companies. This week, Macromedia lost a court battle in which Adobe charged Macromedia with patent infringement. Macromedia must pay Adobe $2.8 million in damages and will probably need to temporarily remove its Flash editing tools from the market--all because of a curiously familiar "tabbed palette" feature. Curiously familiar, that is, if you use Adobe products such as Photoshop, in which the feature originated. Adobe launched the suit in August 2000 after Macromedia began touting the feature in advertisements. Maybe Macromedia could hire Microsoft's legal team for an appeal.

Report: Microsoft Hoarding Cash, But Why?
A front-page article in the most recent issue of Money Magazine predictably discusses Microsoft's financial health, but the report raises some interesting questions. For example, Microsoft currently has a whopping $40 billion in cash or liquid assets and adds more than $1 billion a month to its cash stockpile. To put these numbers into perspective, the report states, that's "more cash than Ford, ExxonMobil, and Wal-Mart have combined and nearly four times as much as Intel, the tech company with the next largest cash balance. It is enough to buy the entire airline industry--twice. Or all the gold in Fort Knox, four times over. It is enough to buy 23 space shuttles or every major professional baseball, basketball, football, and hockey team in America." But here's the article's most amazing disclosure: Microsoft handles its investments with an inhouse software application called--seriously--the Catastrophe Hedging Program 2.5, which derives as much financial return on investments as possible while limiting exposure to changing interest rates. The result, says Money Magazine, is that Microsoft earned a remarkable 9.42 percent on its cash and short-term investments in fiscal 2001, despite that period being one of the worst financial environments in recent memory. The article contains a lot more information, but this report is a short take, not a financial dissertation. If you're interested in the truth behind Microsoft's success, you must read this fascinating report.

Apple Introduces Educational eMac
So much for that all-LCD bravado, eh? Apple Computer unveiled a new iMac-like computer with a 17" high-resolution screen, an all-in-one snow-white body, and a palatably small price tag. The problem? You probably can't buy the computer because it will be available only to schools, students, and educators. Dubbed the eMac (where e stands for education), this new device also features a CRT (rather than LCD) screen and doesn't offer the DVD-burning capabilities of the high-end iMac. But the price is right: Educators and students can buy certain versions for as little as $999, giving Apple a viable product in the cash-poor education market. I love the new eMac's look and, in fact, prefer it to the new iMac, primarily because Apple doesn't offer a 17" iMac--yet. When it does, I'll be the first person in line.

Xbox Sales Rise in Japan
By now you should be familiar with the Xbox's lack of success in Japan, but get ready for a stunner. With the recent Japanese release of best-selling Xbox title Halo, Xbox sales have surged into the realm of Sony and Nintendo, with Microsoft selling more than 4700 Xbox units last week, up from 2800 units the previous week. So far, Microsoft has sold more than 177,000 Xbox consoles in Japan, but that number is lower than the 250,000 units the company hoped to sell by April. Halo, meanwhile, continued its torrid sales pace by selling 44,000 copies last week. That number might sound good, but check this out: Japan's number-one selling game title, a soccer title for the PlayStation 2, sold more than 441,000 units--in one week.

Melissa Author Heads to the Big House
If you can't do the time, don't do the crime. This week, the author of the infamous Melissa virus was sentenced to 20 months of quality time in a federal prison for causing more than $80 million in damages when he disrupted email systems around the world 3 years ago. David Smith, a 33-year-old computer programmer, pleaded guilty to federal charges of computer theft and distributing a damaging computer program. Although he could have faced as many as 5 years in jail, prosecutors noted that Smith had been enormously cooperative in the intervening years by helping the government thwart other virus writers.

Sun Executives Drop Like Flies
Is there something in the water at Sun Microsystems? Sun has seen several of its high-level executives exit the company in the past few months, including (most recently) Vice President Stephen DeWitt and Chief Operating Officer (COO) Ed Zander. Maybe Sun could find a way to blame Microsoft for the exodus and sue the company again..

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