Confusion, Anger, Cheers Greet Microsoft Ruling

"Now we have a good idea of what it would be like to have the government run the computer industry," said Jonathan Zuck, president of the Association for Competitive Technology, which represents computer software and hardware companies. "Not surprisingly, the conclusions made by Judge (Thomas Penfield) Jackson reveal a fundamental lack of understanding of the IT industry."

Sun Microsystems, meanwhile, a key Microsoft competitor, welcomed Monday's decision, saying Jackson's verdict "exposed the wealth of evidence supporting his determination that Microsoft has monopoly power in the market for PC operating systems and has abused its power in very significant ways."

"Today's important decision confirms what almost everybody in the world knows – Microsoft is a monopoly that has acted illegally," said Sun chief executive Scott McNealy. "The Justice Department and the states deserve immense credit for putting together a case that so clearly showed Microsoft's true colors. Now is the time to move on to the important stage of this trial – determining how to prevent Microsoft from continuing its use of monopoly power to stifle innovation and harm consumers."

Jim Barksdale, former CEO of Netscape Communications and a key witness in the trial, praised the judge's decision and said a breakup of Microsoft is now the next logical step. "As I have testified, the most effective way to restore competition is through a structural remedy or 'breakup' of Microsoft," Barksdale said in a statement. "Once Microsoft's stranglehold is lifted and competition is restored, consumers will benefit through lower prices and better products."

However, an analyst with Bank of America Capital Management in New York expressed skepticism about an eventual break-up and optimism about Microsoft's long-term prospects. "In the worse case scenario, if the company is broken up, which we don't think is likely, it wouldn't be a bad thing. Instead of having a great company, you may have three great companies," said David Presson, an associate director of equity research at the brokerage firm.

"We are still quite optimistic on the long term future with Microsoft. They have a strong competitive position," Presson said. "They have 400 million users around the world, these people will still need Microsoft, their operating system, their application software and other related Internet business," he added.

Bob Scheier, technology editor for the weekly technology newspaper Computerworld, called the decision "an extremely scathing attack on Microsoft," and said there were likely to be mixed feelings in the computer industry.

"I think there are probably a lot of quiet cheers in many companies which have competed with Microsoft," Scheier said. "On the other hand there are many software companies and individuals whose very livelihood depends on a healthy Microsoft that keeps out pumping out new products. They're saying 'Good, the bully finally got his due,' but on the other hand they can't live without Microsoft."

Scheier said there is apprehension in some quarters that a breakup of Microsoft could lead to a multiplication of standards that will cause confusion. "There's kind of a schizophrenia in how people view Microsoft," he said. "On the one hand, they'll condemn it for not producing the finest products, on the other, it's hard to imagine today's computer industry without someone setting key standards."

Scheier said he sees a long period of stalemate in which the legal challenges will be played out, but predicted that Microsoft chairman Bill Gates would likely break up the company if it appeared to be the inevitable outcome. "Bill Gates would be smart enough to see that coming and would break the company up on his own terms rather than have the government do it for him," said Scheier.