Hewlett-Packard announced Wednesday that it will begin producing servers and providing customer support for Red Hat Linux as soon as the newest version of the operating system is released. Shortly after HP's announcement, sources said Dell has a similar agreement planned, this one involving not only servers but workstations as well. The Texas-based computer manufacturer currenty offers Linux as an option on its servers, but does not encourage the practice and charges an additional $249 for it.
This is a big blow to Microsoft since HP and Dell are two of its top hardware partners. Now not only has Toshiba started offering the BeOS in Japan, Dell and HP are making Linux a real option to their customers. And considering the $810 pricetag attached to 5-client Windows NT Server, Linux's free-to-$50 price structure could put a serious dent into Microsoft's server sales.

COURT NOTES: When called as Microsoft's second witness Monday, company vice president Paul Maritz repeated what was released the previous week in his written testimony. In his testimony and in the written document Maritz contradicted the testimony of almost every witness so far, from Netscape executive James Barksdale to Apple's Avadis Tevanian. The witness also denied that he ever threatened to "cut off Netscape's air supply," as was alleged by Intel vice president Steven McGeady. Justice Department attorney David Boies noted that the Microsoft vice president wasn't so sure of himself during a deposition back in October, choosing at the time to answer questions with "It's possible, but I just don't recall." Maritz replied that since then he has reviewed testimony from three Intel executives and now feels that he did not make the comment.
On Tuesday Boies produced a deposition from another Intel executive, Russell Barck, claiming Maritz was the author of the term "embrace and smother" to describe Microsoft's internet policy. The witness was then asked if he felt that limiting other companies' ability to use Netscape was a good way to increase Internet Explorer's market share. He replied that "Yes, in certain specific situations ... we did." He was then asked him if Microsoft kept track of IE's market share in comparison to Netscape's. Maritz responded that the company does actually track market share, but in general terms not compared to Netscape. Boies then asked why, if Internet Explorer is a part of Windows, would the company need to track its standalone market reach.
To back his point, the lawyer produced a 22-page document Maritz wrote back in 1996 entitled 'Internet Browsers.' The front page of the Maritz-authored document included graphs that directly compared what Maritz had labeled the "browser market share" of Netscape and Microsoft. Boies kept going, asking Maritz if Microsoft wanted to see Netscape's stock price drop. The witness replied that he couldn't recall that as a &qupt;specific objective." To help Mr. Maritz's memory, he was then shown a story from the Seattle Times. That report detailed a lunch in 1995 where Maritz gave a very positive response to being alerted by an employee of significant Netscape stock declines.
On Wednesday Maritz let his defenses slip, admitting that in 1995 Microsoft did indeed press Intel to stop work on its Native Signal Processing internet software and eventually to back away from the adoption of Java. But he said they opposed the software not because it would compete with Microsoft products but because it was poorly designed and would only work in Windows 3.x. That claim was destroyed with the showing of an e-mail from Bill Gates. The message explained how Intel was feeling pressure because computer manufacturers were forbidden by Microsoft from supporting Intel technology like MMX unless Intel agreed to drop development of Native Signal processing. Other messages from Gates described a "show stopper" for the chip company: Microsoft would support AMD's 3DX CPU extensions unless Intel backed off from its work on Java.
Thursday began with debate over a critical piece of evidence, a spreadsheet file showing which functions in certain DLL files were shared between Windows and Internet Explorer. Judge Jackson forced Microsoft to give the file to its opponents, boosting several areas of the government case. The spreadsheet will show that Microsoft does, contrary to earlier testimony, know how much of the browser code is shared by the operating system. It would also underscore the government's claim that Microsoft "had no plausible reason to weld the entire Internet Explorer into the operating system."
After that was cleared up, attorney Boies rounded out the week with the rest of his Maritz cross examination. The witness again argued that Microsoft faces upstart competition in the high-tech industry, and that the company is actually under siege by Linux, OS/2 and other competing operating systems. Maritz then made the outrageous claim that his college-age son downloaded Linux in less than two hours and had the operating system set up in less than a day.
On Friday after court had recessed for the week, a three-judge panel Court of Appealshanded Microsoft a defeat, affirming an earlier decision by Judge Jackson to release all 20 hours of the Bill Gates video deposition. Microsoft has fought the release for months because of how bad BillG looks on the tape; sources that have seen large portions of it say that the Microsoft CEO appeared extremely unintelligent, forgetful and combative.

Blue Mountain Arts has won another round in its lawsuit against Microsoft. In a hearing Thursday, Judge Robert Baines issued a preliminary injunction requiring the company to stop Outlook Express from placing Blue Mountain electronic greeting cards in the program's spam folder. Microsoft has 30 days to comply with the ruling, otherwise Baines will prevent it from selling any more copies of Outlook Express until the case has been resolved.
Blue Mountain sued Microsoft back in December [see NewsSource, Dec. 14 '98], charging that several of the company's programs mark Blue Mountain e-mail greeting cards as spam. Since then Microsoft has been ordered to help them get the cards through e-mail filters and set up a user warning on the MSN.com portal. Publicity surrounding the case pushed bluemountain.com to the top of the charts, making it the most-visited e-commerce web site in December, beating even world-famous Amazon.com.

Acording to a Mac OS Rumors report Wednesday, Qualcomm has plans to sell or shut down its Eudora software division in favor of the more profitable telecommunications business. A followup report said that since Eudora programs directly compete with Microsoft programs, the shutdown plans may be partially due to Microsoftian pressure. Microsoft and Qualcomm have agreements ranging from Wince-enabled cell phones to the Wireless Knowledge joint-venture [see NewsSource, Nov. 23 '98]. Sources told MOSR that the Eudora unit has been for sale quite a while with no interested buyers and that most of the group's programmers have been idled. Thursday a Qualcomm spokeswoman said that the company remains comitted to the Eudora group, but wouldn't comment on the future of specific products like Eudora Planner or the Eudora Lite e-mail client.

U.S. District Judge Ronald Whyte gave Microsoft an extension on the 90-day Java compliance deadline he set back in November [see NewsSource, Nov. 23 '98]. The extension ranges from 30 to 180 days, depending on the product. Microsoft requested the extension because it was unable to bring every version of every product in every language into compliance by February 15 deadline. However most English-language products have already been updated.

During a hearing on the 26th, Microsoft lawyers told Judge John Coughenour that it has dropped some of the controversial language in its temporary worker contracts [see NewsSource, Jan. 11]. The revised contract still says that agency-placed workers are "not to be considered a regular employee of Microsoft for any purpose," but it no longer prevents the 'permatemps' from claiming any court winnings against the company. The workers' attorney, Brian Waid, objected to that part of the contract, but the judge said he would rule on the validity of new contracts at a later date. Coughenour then requested that Microsoft send a letter to all of its temporary employees alerting them of the changes.

The latest plan to make a profit from MSN's series of web sites is licensing them out to other companies. Microsoft started its new strategy by licensing Hotmail to the AltaVista search portal, which currently uses iName to provide free e-mail. Hotmail will reportedly become part of AV's "communications platform" along with other services and a competitor for AOL Instant Messenger. In return, AltaVista will become the primary searcher for MSN, replacing Inktomi.
Earlier in the week AltaVista's parent company, Compaq, announced that it intends to create a separate company for AltaVista and eventually spin it off with a stock offering. But with AV listed as one of the top ten web destinations, could it become a potential Microsoft takeover target? Considering Compaq's relationship with The Behemoth, it's a very big possibility.

This Monday Microsoft is scheduled to release a new version of Windows CE, the handheld computer operating system created to compete with the PalmPilot. Introduced are a few new features, most notably color screens. But with every new release, users are complaining that the CE system is designed too much like a desktop operating system and doesn't utilize the handheld environment optimally. Prices are also incredibly high for a handheld. While it does hold some users with the view that WinCE has what it takes to compete with the PalmPilot, 3Com's PalmPilot unit has scheduled release of a color screen handheld of its own later this year.

Microsoft has recalled versions of Money 99, Money 99 Plus and Money 99 Plus Update designed for the German market. This move is apparently due to euro-compatible bank scripts inside the programs that are unable to access German bank servers and stock quotes. Two service packs for Money 99 have already been released but both failed to correct the euro problem, leaving tech support to deal with more than 500 calls concerning it each day. Microsoft promises that reprogrammed versions of Money 99 will be avilable for free in April. The problem doesn't affect German-language versions of the program sold in Switzerland and Austria.

Microsoft announced Monday it will invest $500 million in Britain's NTL telecommunications company. The investment will reportedly speed up NTL's rollout of high speed voice and data service. The companies will also jointly develop new services based around NTL's fiberoptic networks.
Microsoft has a Great Lakes Events section on its Web site that provides local convention dates and other information for three states from the Great Lakes area. In theory anyway. The states covered on the site are lake-touching Michigan and Ohio, along with land-locked Kentucky. Its no wonder Microsoft's localized web guides are a flop, they can't even find states on a map.

_{Still waiting for Windows 2000
MS plans new fees for server apps
Linux hits Microsoft where it hurts
Linux Up Close: Time To Switch
How tightly linked are Windows, IE?}