BELLEVUE, WASH. -- If Microsoft senior executives are worried that the judge in the government's antitrust case has declared their company a monopoly, it didn't show during the annual shareholders meeting here Wednesday.
Microsoft will be happy to settle the landmark case outside of court, said Bill Gates, chairman and chief executive officer, repeating the party line. But he insists Microsoft will only agree to a settlement that does not restrict what the company can and cannot include in the operating system.
"We're willing to go a long way [towards settling the case] but if we can't add Internet [capabilities-such as the browser] then we can't add anything," Gates said.
"No company should accept these kinds of limits on innovation," he added. "We must retain our ability to listen to our customers and add new features."
And as Yogi Berra put it, it ain't over until it's over. Answering a shareholder's question about possible settlements, Microsoft Chief Operating Officer Bob Herbold hinted that the software vendor will appeal the case all the way to the U.S. Supreme Court.
"We're in the third inning of a nine inning game and we're certain we'll come to the same result as in the first suit," Herbold added, referring to the government's suit regarding the browser included with Windows 95.
The U.S. Department of Justice let the Windows 95 case go limp after the U.S. Court of Appeals ruled that Judge Thomas Penfield Jackson was wrong to order Microsoft to remove the browser from Windows. In that appeals ruling, the judges also rebuked Jackson, saying that judges "should not be in the business of designing software."
Not surprisingly, shareholders greeted executives' pointed but low-key comments about the antitrust suit with strong applause each time the subject arose.
Microsoft won't get bogged down in legal troubles but will instead continue to focus on new challenges, Gates and Microsoft President Steve Ballmer emphasized at the annual meeting.
Priorities include transitioning the company's Office productivity application suite to run off the Web so customers can "rent" applications, Ballmer said. People would run the applications they need off the Web, paying a small fee for each usage rather than buying the entire package and installing it on their local PCs.
"Software [eventually] becomes a service so we don't just deliver something and walk away," Ballmer said. Microsoft plans to move even closer toward a service business model, going as far as to store users' data for them as well.
"We will be hosting customers' applications and their data," Ballmer said. "We will be running large data centers for people."
That approach constitutes an important shift in focus for a company that has been known primarily for its shrink-wrapped software, observed one analyst in attendance.
"It brings up a lot of new issues. It's a recognition that the PC is not the center of the universe any longer," said Warren Wilson, industry analyst for Boston-based research firm Summit Strategies.
Both Ballmer and Gates noted that the PC remains dominant, but they also recognize the rise of information appliances. Indeed, last summer Microsoft changed its 25-year-old charter from "a computer on every desk and in any home" to "information anywhere, anytime, on any device." The switch shows the company's acknowledgment of the growing importance of non-PC devices for accessing information.
Microsoft faces two major hurdles in its attempt to, as Gates said, "reinvent" itself, analyst Wilson noted.
Office comprises about half of the company's annual sales. Microsoft must figure out how to make money on the Web-based lease model that is sufficient to offset any lost sales of boxed software. It may take a new revenue model, Wilson said. And how will Microsoft's long-standing software resellers react to the company renting its applications?
"The software services model is going to take some time for Microsoft to figure out," Wilson observed.
In the shorter term, Microsoft has a handful of important products in the queue for shipment. Its focus includes Windows 2000, due out early next year. The company is also preparing a new version of the Exchange messaging server and an update to SQL Server in the next 12 months, according to Ballmer.
Microsoft Corp., in Redmond, Wash., is at www.microsoft.com.
For more PC news, visit PC World Online. Story copyright PC World Communications.
RELATED LINKS
