On June 7th in San Francisco, Microsoft President Steve Ballmer finally introduced the long-delayed Office 2000 to a large crowd of reporters and executives. The newest version of Microsoft's cash cow includes the usual suspects, Access, Excel, Powerpoint, Outlook and Word, along with applications not included with earlier versions - FrontPage and PhotoDraw. It uses XML and HTML extensively, allowing documents made with any application to be turned into Web pages and back again. That technology meshes with the included Digital Dashboard "feature" Bill Gates displayed during his CEO Summit last month [see NewsSource, May 24]. It also uses a laughably insecure new collaboration technology that saves files in a central location on the Internet so anyone working on a project can make modifications to it. Each of the five flavors of Office 2000 - Standard, Small Business, Professional, Premium and Developer - have three different prices (Upgrade, Non-Ms Upgrade and Full), resulting in a grand total of 15 different price levels ranging from $430 to $860. Talk about simplified computing...
Even Ballmer admitted that sales of Office2K will be slow for a while because of fears about the Y2K bug and people waiting on the ever-impending release of Windows 2000, but he said they expect sales to snowball in the first half of next year, eventually surpassing Office 97's 100 million licenses. Microsoft has, so far, sold some 15 million licenses for Office 2000 since retailers began taking preorders in May. But most of those sales have been to corporate customers upgrading from previous versions of Office - strangely the average consumer doesn't seem that interested in buying software for creating presentations and spreadsheets.

COURT NOTES: On Monday June 7, IBM's Garry Norris took the witness stand to testify against Microsoft. The former software strategies program director for IBM's PC division testified that during his tenure, Microsoft used its market weight to force IBM into paying outrageous prices for Windows 3.11, 95 and NT 4. He said that negotiations for a Windows 95 contract were difficult, with Microsoft demanding that IBM stop using and marketing its own competing operating system, OS/2. However, the negotiations went from bad to worse after IBM acquired Lotus Development and announced that they would bundle Lotus products with their PCs. Microsoft suddenly remembered some $50 million of unpaid royalties IBM owed and refused to work out the contract until an extensive audit had been performed. IBM finally settled the royalties issue with a lump sum exceeding the amount owed, and Microsoft agreed to give them contract for Windows 95 literally hours before the product was released, but at a cost of 800% more than originally promised because IBM had refused to wait six months before bundling any Lotus software.
On his second day of testimony, Norris said that the pressure from Microsoft continued into 1997, with executives telling IBM they could reduce the licensing fees by dropping competitive software like Lotus Notes, Lotus SmartSuite and WorldBook Encyclopedia. They also promised deep price cuts if IBM would stop supporting Netscape Navigator and promote Internet Explorer. Norris provided notes from a meeting where a Microsoft executive told him Bill Gates and Steve Ballmer had demanded that they stop working with IBM because of the competing deals. At one point Microsoft even offered IBM access to NT 4 source code and the ability to self-certify its computers as Windows-compatible if they would bundle only Microsoft products. The self certification was especially important to IBM because Microsoft habitually took three months to certify their systems, while IBM competitors received approval in as little as two weeks. IBM did eventually sign the agreements, but refused to ship Microsoft products exclusively.
It was Microsoft's turn to grill Norris on Wednesday, but they made the mistake of sending in a poorly qualified lawyer to do the job. The attorney in question, Rick Pepperman, tried to prove that IBM's relationship with Microsoft collapsed not because of the Lotus buyout, but rather due to a "smear campaign" the company waged against Windows 95. Pepperman at one point tried to use evidence that he hadn't submitted to the court, however Judge Jackson - paying more attention than usual - would have none of the inexperienced lawyer's stumbling and bumbling. One document that Pepperman did manage to introduce supposedly showed a proposed agreement allowing IBM to promote and install software from its own divisions, but Norris said he couldn't verify the documents because he had never seen them before. The evidence was eventually discounted since it had been prepared by Microsoft itself and Pepperman was unable to link them directly to anyone who ever worked for IBM.
Thursday the government called its last witness, Princeton computer expert Edward Felten, to the stand. Felten, who also testified earlier in the trial, was called up to show that Microsoft's "integration" of Internet Explorer was unnecessary. He argued that Microsoft can give users "the choice they want" similarly to how users can decide whether to install Microsoft Word or Excel as separate programs or part of Microsoft Office. "The same is true with IE and Windows," said Felten. He also testified that tests of Windows 98, with and without the browser, showed a significant speed increase without a browser. The government also introduced several e-mails from Microsoft executives debating whether or not to include IE with 'Memphis', the code name for Windows 98.
While the government was questioning Felten, Judge Thomas Penfield Jackson stepped in with a few questions of his own, asking if browser integration could increase security risks, like a higher possibility of virus infection. The witness answered that it does cause problems, particularly for administrators in large organizations may prefer not to have an integrated browser to reduce possible security problems. The judge then asked if other integrated browsers like the one included with Caldera's version of Linux pose possible security risks. Felten replied that there isn't any one standard to judge security, so it would be difficult for him to make that judgment. Jackson's comments could mean that he is trying to decide if Microsoft's decision to integrate Explorer was truly a benefit to the general public or simply a way to extend its monopoly.
During their cross-examination, Microsoft attorneys asked Felten if a computer with an integrated browser would be secure if not connected to the Internet. Felten agreed, but pointed out that there would be no reason to even include a browser in the first place on a PC without an Internet connection. A Microsoft lawyer then asked him to run an improved version the IE removal program used during his previous testimony. Felten protested the test, pointing out that the computer he was using had several other programs installed on it, including another browser that relies on IE technology. Judge Jackson allowed the tests to be run anyway, and the program successfully removed Internet Explorer icons from the desktop, but - just like the previous test - failed to completely uninstall the program. Felten said that the failure could be caused by bugs in his removal program, since bugs are common in software. The witness, who had examined the Windows 98 source code under a court order, said that he found some 30,000 marked bugs in the source, and that was just in the 1/7th of Windows 98 he had examined. He offered no explanation why Microsoft's own programmers had marked - but not corrected - those 30,000 bugs.

Earlier this month, Microsoft announced a $125 million investment in Inprise Corp, one of Microsoft's last development software competitor. Microsoft reportedly paid Inprise, formerly Borland, $100 million to settle some old patent infringement fights and gain legal access to some Inprise technology. The Behemoth also bought an additional $25 million of Inprise stock, equal to about 10% of the company. Inprise now has access to proprietary Microsoft technology like COM+ and DNA, while Microsoft gains the right to use the Inprise Java and CORBA tools it has no interest in. Sources close to Microsoft said the company wants to include those with Windows 2000 to make it more competitive with Unix and other OSes that already offer Java and CORBA features.
Microsoft and Inprise have been competitors until recently, especially in the area of employees - Microsoft has helped itself to top Inprise executives, most notably VP of server applications Paul Gross and Java engineer Anders Hejlsberg. The deal was apparently proposed a year ago and caused fighting inside Inprise, resulting in the resignations of CEO Dale Fuller and CFO Kathleen Fisher earlier this year. The tool maker has since posted several consecutive quarters of profit loss and recently played with the idea of splitting into two separate companies.

On June 7th, the third day of its own antitrust trial against Microsoft, Bristol started out with a videotaped deposition of Microsoft CEO Bill Gates. In the video, a relaxed-looking Gates testified that he has always supported the idea of making certain Microsoft technology available for platforms other than Windows. He went on to say that it was never anyone's intention to free Bristol out of the Microsoft WISE (Windows Interface Source Environment) program, and that the only thing keeping Bristol from accessing the Windows NT source code is its refusal to sign a new agreement with his company. Microsoft is accused of treating Bristol like a "Trojan horse" to infiltrate the Unix market, then force Unix software vendors to jump over to Windows NT by pushing Bristol out once NT had established itself. Further testimony in the Bristol case has been conducted inside closed court.

Microsoft's WebTV subsidiary has introduced the next generation of its TV-top boxes, adding new baubles but still lacking the features most customers have asked for. The new versions of WebTV's Classic and Plus boxes - as manufactured by partners Philips and Sony - now have faster modems and more RAM, but the units now lack hard drives. Microsoft says that the move reduces the cost of WebTV devices (something manufacturers aren't expected to pass on to their customers) and allows them to be made smaller. They are also optimized to work with Windows CE as soon as Microsoft finishes a WebTv version of that product.
Beyond the removal of hard storage, WebTV is also lacking something that its users have requested for years - the ability to run Java and RealMedia files. Shortly before Microsoft purchased WebTV in 1997, the company promised to add Java and an updated RealAudio player to its service. Since then they've consistently said that adding those features would add too much to the cost of the boxes and would be hard to implement because of limited memory. But now that the boxes cost less and have more memory, WebTV president Steve Perlman has been forced out of the company [see below], and the plans have apparently been abandoned for good. The most obvious reason for excluding such popular technologies would, of course, be the fact that Java and RealMedia both compete directly against Microsoft products. A Microsoft spokesman said politics have nothing to do with the decision and that development of WebTV RealAudio and Java will "continue as planned."

As mentioned above, WebTV president Steve Perlman has stepped down from running the company he cofounded with two friends in 1995. Perlman denies being forced out, saying that he has chosen to take an extended vacation and do some photography before moving on to start a new company. He has joined the WebTV Networks "advisory board" and is succeeded by another cofounder, Bruce Leak. Third cofounder Phil Goldman will also remain in the company as vice president of engineering.
Wink Communications Inc. is the latest beneficiary of Microsoft's television buying spree, receiving some $30 million in exchange for ten percent of itself. Wink provides software to broadcasters allowing them to display text on TV signals to homes that have an advanced cable decoder. Users can respond to on-screen messages with their remote control and respond to advertisements or order up bonus information about programs. Microsoft said they intend to eventually roll Wink's service into future versions of WebTV.
Also adding to the ranks of high-level Microsoft executives who have recently quit, MSN Access group vice president John Ludwig confirmed that he has taken an extended leave of absence. While Microsoft insists the leave is only for three months, a source close to Ludwig said he does not intend to return. Last year Ludwig took over the Interactive Media Group, but the Microsoft reorganization put him under the newly created consumer and commerce group led by vice presidents Brad Chase and Jon DeVaan.

_{Did MS collude to ambush DoJ witness?
MS: The Saga Continues
Microsoft touts Windows CE enhancements
MSN: From content to software sales}