COURT NOTES: Justice Department lawyers started up another week of the trial by playing a section of Bill Gates' videotaped testimony where he was asked if Microsoft made any effort to keep Intel from helping Sun on Java. Gates paused for 30 seconds, rocking, before answering "Not that I know of." Justice then produced Intel executive Steven McGeady, who testified how Microsoft did just that "repeatedly and on multiple occasions." He went on to explain how Ms threatened to yank vital technical support for Intel's MMX processorsunless the chipmaker stopped development of Native Signal Processing, which competed with Microsoft products. "He became quite enraged at one point. ...Bill made it very clear that he would not support our next microprocessor offerings if we didn’t get alignment." Intel stopped work on the technology but refused to close the lab that had done the work, so Microsoft introduced support for DEC's Alpha processor.
Following a short break, McGeady testified Microsoft tried to exterminate open standards like HTML by embracing, extending and exterminating. According to notes McGeady took, one Microsoft executive said during a 1995 meeting that the company wanted to "cut off Netscape's air supply" by giving browsers away and "kill HTML by extending it." Other plans "would have made Java applications written for Windows incompatible [with] other platforms," he said. Government lawyers then introduced more of McGeady's notes on the meeting, most notably of Gates's statements to Intel executives: "this antitrust thing will blow over," referring to the 1995 government actions against Microsoft. Gates then said that Microsoft should be more careful in the future about destroying incriminating e-mail like the type government lawyers have been producing for the last 6 weeks.
For its rebuttal, Microsoft said McGeady is just trying to get even with them because his job was reshuffled. Microsoft lawyers claimed that company executives told Intel that their software was poor quality, causing Intel to drop some software divisions and move some employees - including McGeady - to other jobs. Microsoft then produced memos written by McGeady calling then-Intel CEO Andy Grove a "mad dog" and one about Microsoft entitled "Sympathy for the Devil." They also showed e-mail from other Intel employees calling McGeady a "prima donna" who had "fucked things up."

Killing all that remained of Intel's relationship with Microsoft after the previous story, last week the chip maker purchased a small share of Microsoft competitor Be Inc. Be, mostly known for its media-centric BeOS, said that Intel and four California venture capital firms invested a total of $25 million in financing. Adding insult to Microsoft's injury, the next day Hitachi said that in December it will begin pre-installing the Japanese version of BeOS 4 along with Windows 98 on three of new multiboot desktop PCs (only in Japan, sadly).
The Intel announcement threw Microsoft's stock for a surprising, albeit short lived, downward loop and left many analysts wondering about Intel's strategy. Is Intel trying to distance itself from Microsoft, fearing that it could be brought down if Ms loses the antitrust case? Or is Intel simply trying to make sure that other systems like BeOS and Unix will remain firmly seated on the x86 platform? After the testimony given recently by Intel execs, they could be preparing for retaliation from The Behemoth in the form of Windows that doesn't support new Intel CPU features. And Intel has had some management changes in the last year, perhaps the new bosses want to make things right and get away from the Wintel duopoly. What ever their reasons, we like the direction Intel has apparently decided to take.

Pete Higgins, Microsoft's Interactive Media Group (IMG) VP, is stepping down at the end of 1998 to take an "extended leave of absence" for 6 months, returning sometime in 1999 to a different position on the company roster. Until a replacement is named, Ms President Steve Ballmer will take Higgins' place and perform his duties. The IMG group has been in charge of many MS flops like the greatly overestimated MSN project, so he has been under a lot of stress lately to pull the company's internet strategy together. As one Microsoft employee said, "He'd overseen a lot of nasty failures." Higgins is leaving at a critical point in the company's expansion and refocus on the internet, particularly the gathering of resources into what Higgins called "a single, very focused, very rich portal site" to compete with internet leaders like Yahoo and Netscape. This will have unforseeable results in the future of Microsoft's interactive media projects.
Higgins has held various positions at microsoft - ranging from president of desktop applications to vice president of the applications and content group - and is currently in charge of MSN, MSNBC, multimedia games, CD-ROM titles, hardware, and desktop finance applications. He is the second person to step down from an executive interactive division position in the last year, following Peter Neupert's resignation from News and Publishing to run Drugstore.com. The defections are likely because of high pressure stemming from Microsoft's $1 billion loss in the highly competitive internet arena.

According to a report by Electronic Mail & Messaging Systems (EMMS), Lotus Notes outsold Microsoft Exchange in the third business quarter of this year. EMMS reported that IBM's Lotus subsidiary sold 3.4 million licenses for its Notes software during the quarter ended Sept. 30, compared with 3.2 million licenses for Microsoft Exchange. The sales give Exchange a 600,000 license lead over Notes' sales of 9.2 million licenses for the year. The main reason for Exchange's lead is bundling. Microsoft bundles the product with Windows NT Server and Backoffice, cutting Lotus Notes' total seat lead in half in about a year. The inclusion of Exchange with other products makes it hard to figure exactly how many people with the software actually use it. IBM says the growth in Notes sales for last quarter is because of deep price cuts and a new advertising campaign.

On the flip side of that coin, a new survey by Forrester Research says that one third of companies that use streaming media now use Microsoft NetShow. This time last year that product had yet to make an impact on the market and most businesses were using RealNetworks' RealMedia or Apple QuickTime products. The survey did show however that two thirds of the companies using NetShow still also use RealMedia, and ten percent of them have hung on to Apple's product. Most of NetShow's increase is due, as usual, to software bundling.

Bill Gates appeared for an interview on the TV talker Good Morning America last week. Dring the interview, Gates gave reporters the usual line about how the Justice Department is just setting his company up, taking e-mail out of context, etc. His only notable quote: "The fact that there's some e-mail here at MS that says, 'let's go up and beat this guy' ...there's nothing wrong with that. That is capitalism at work for consumers."
According to an SEC filing, Microsoft cofounder Paul Allen intended to sell about 2 million shares of Microsoft stock. The proposed sale would have taken place around November 5th, but the SEC filing only indicates his intent, not if he followed through on the sale. The document did show that between August 3 and October 30 Allen sold some 12,380,000 shares worth about $1.4 billion.
Even while sticking to their story that the problem is Apple's fault, last week Microsoft released a patch for the Internet Explorer QuickTime bug. The previous week Apple execs had testified that Microsoft deliberately broke the QuickTime software so people would switch to Microsoft's own video technology.
Last Wednesday Microsoft released a new standalone graphics application called PhotoDraw 2000. The software, which will be included with Office 2000 Premium Edition, is aimed at business users. According to product manager Kirsty Ellison, "they [business users] don't understand all the file formats and have trouble sharing. Most existing applications are targeted at designers and graphics professionals, not business users." Once again, Microsoft has saved us from having to use software with any real power.

_{The Windows crack'd?: Product ills exposed
Sun-Microsoft rivalry one of dislike
Lining up for Linux
China's Speech Pioneer To Head Microsoft Lab
Microsoft hit by DirectDraw bug}