Microsoft figures in top computer stories of 1997

Click here to visit a guide to hundreds of financial links!

Microsoft figures in top computer stories of 1997

By Richard Morochove

First published January 1, 1998

Microsoft isn't the biggest company in the computer industry. That honour still belongs to IBM. But by many measures the software developer is the most influential.

By my reckoning, Microsoft figured in three of the top computer-related stories last year: the reorganization of Apple Computer, the legal battles with the U.S. Department of Justice and the continuing controversy over the Java programming language.

My most memorable moment of 1997 came in August. I sat in a converted church in downtown Boston during Macworld and saw Apple director Steve Jobs announce a détente with Microsoft. As Bill Gates' smiling face glowed behind him on the big video screen, Jobs outlined how Microsoft would invest $150 million in the faltering computer maker. Apple, in turn, would support Microsoft's Internet efforts by making MS Internet Explorer the standard browser used by the Macintosh.

Steve Jobs is probably the only person who could have announced such an alliance with Apple's erstwhile enemy without being tarred and feathered by the Mac faithful before he left the stage.

Gates really won the battle between the Windows and Macintosh operating systems years earlier. He could afford to be conciliatory in what amounted to his victory speech.

Jobs later took on the role of acting CEO at Apple Computer and proceeded to shake things up. Yet Apple's market share continues to slide and the computer maker continues to lose money and sink lower in the water.

There's a slim possibility that the good ship Apple may be rescued by a strong partner however, Apple's board of directors spurned such offers in the past.

The Mac faithful blame not management, but unflattering media coverage for Apple's troubles. Yet I feel as much of a spoiler as if I revealed the ending of the movie, Titanic.

Microsoft's renewed its legal gunfight with the U.S. Department of Justice last year. The DOJ charged that bundling Internet Explorer with Windows 95 violated the terms of the pact the company signed to resolve an earlier wrangle.

The initial ruling went against Microsoft. While the company will appeal, it's obvious that Microsoft is bumping up against its limits to growth.

Microsoft's hardball tactics went unnoticed by those outside the computer industry when it was smaller. Now its every move is closely scrutinized, drawing fire from those outside the industry, including U.S. consumer advocate Ralph Nader.

Microsoft must either change its business practices or be changed. Since I can't see Gates asking his people to throttle back on their efforts, I think a showdown with U.S. government officials is inevitable.

I foresee a legislated breakup of Microsoft into smaller competing companies, similar to earlier bust-ups of Standard Oil and AT&T. High noon won't come in 1998, but I expect to see it within five years.

Microsoft VP Steve Ballmer is amazed and probably somewhat envious of the mileage Sun Microsystems has wrung from its Java programming language. The software represents just a tiny proportion of Sun's revenues, yet it garnered more interest last year than Sun's mainstay computer workstation and server businesses.

Java doesn't require Windows. Therefore, it's a rallying point for anti-Microsoft forces from companies such as Oracle, Netscape and IBM.

IBM-owned Lotus Development released its Java eSuite late last year. However, mainstream Java applications are still scarce. I see 1998 as a make or break year for the language. If there aren't far more Java applications available by yearend, it will be hard for Sun to continue to hold it out as a viable alternative to Windows programs.

Last year saw continuing troubles in the online services business, leading to consolidation as the big got bigger. America Online took over CompuServe, for many years the largest online service. AOL trumped CompuServe with smarter marketing. AOL flooded mailboxes with trial use diskettes and paid hardware manufacturers to pre-load its software on millions of new computers.

HookUp and iStar, two large Canadian-owned Internet service providers, bleeding red ink, finally bit the dust. HookUp sold a big chunk of its customer accounts to Netcom Canada while iStar was purchased by Psinet. Aside from Sympatico, run by major telephone companies in the Stentor group, there's no Canadian-owned national Internet service provider.

Microsoft Network (MSN) announced it would abandon the Internet service provider business in Europe. I predict MSN Canada will depart this business in 1998, focussing its efforts on producing content for the Web.

What else do I see in my crystal ball?

By year's end Intel's Pentium II processor, introduced just last spring, will be much less expensive and become the mainstream processor used in most PCs priced at $1,800 or more. We'll see brand-name PCs priced for less than $1,000 in Canadian retailers, but they won't have Intel inside.

The biggest software release will be Windows 98. However, it won't be accompanied by the same frenetic hoopla of the Windows 95 launch. The big question at this time: will it include Internet Explorer 4.0? It all depends upon Microsoft's legal battle with the DOJ. CW

Richard Morochove, FCA, is a Toronto-based computer consultant.

Click here to read the latest computer news and views!

Visit the ComputerWatch Archive to see more columns

Post any questions or comments about this article to Computer Watch WriteBack.