Uncertainty Now Microsoft's Enemy

FRAMINGHAM (04/10/2000) - Fear, uncertainty and doubt have long been reasons for corporations to stick with Microsoft Corp., rather than experiment with emerging platforms. But the uncertainty factor is now playing against Microsoft.

With possible judicial remedies including a break-up in its future, and with a bevy of lawsuits that may consume executives' time, analysts and users wonder whether Microsoft will be able to compete as effectively as it has in the past.

Most users say the Microsoft verdict will not cause them to abandon the company's products; in a Computerworld survey of 132 IT professionals last week, 95 percent said their purchasing of Microsoft products would remain the same. But in interviews, users said they are concerned that a company break-up may threaten the integration of the Windows platform.

"They made their products so they integrated well and that is what attracted companies to them," said Bill Nicholson, IS director at Catellus Development Corp., a construction company in San Francisco.

Paul Kirk, Senior vice president of MIS at United Companies Financial Corp. in Baton Rouge, Louisiana, added that the advantage of negotiating with one Microsoft would vanish if Judge Jackson breaks it up.

Michael Gartenberg of Stamford, Connecticut-based Gartner Group Inc. said that Microsoft has proven it can still be an effective competitor while fighting court battles. But his research firm is advising customers to reduce their "lock-in" on Microsoft products wherever possible.

As a result, the company's grip on the market is at risk. "They will lose market share, and they are expecting to lose market share," said Eric Klein, an analyst with Yankee Group in Boston. He said NetWare, Linux, Macintosh and even the Be operating systems "now have opportunities because of the changing dynamics of the market."

Klein said one of these changes is that more enterprises are turning to application service providers for certain applications, a market where Microsoft is considered weak.

And Microsoft also "has some catching up to do in appliances," where Linux has an edge, according to Joe Clabby, an analyst with the Boston-based Aberdeen Group.

One of the company's most anticipated announcements may be undermined by last week's verdict. Due this spring, Next Generation Windows Services, or NGWS, is a set of services that live on the Web and form a sort of virtual operating system. But the methods Microsoft intends to use to make NGWS a standard may now be considered illegal, said Chris Le Tocq, an analyst with Gartner Group.

"They are trying to leverage Windows 2000 and Internet Explorer 5," said Le Tocq, and a court-imposed remedy could outlaw it. Le Tocq also sees another familiar Microsoft theme. "What we see with NGWS is the typical FUD scheme to manipulate the developers," said Le Tocq, who expects that the initial rollout will include little more than promises, with actual products still a long way off.

(Matt Hamblen contributed to this story.)

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