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Tech Industry

The week in review: Microsoft back in the courtroom

After a three-month recess, the antitrust case against Microsoft by the Justice Department and 19 states resumed in Washington this week.

After a three-month recess, the antitrust case against Microsoft by the Justice Department and 19 states resumed in Washington this week.

The government has accused Microsoft of illegally trying to protect the monopoly enjoyed by Windows, the operating system that drives more than 90 percent of the world's personal computers. This week, the software giant produced documents at the trial to challenge the government's charge that it blocked two important distribution channels for Netscape Communications' rival Internet browser.

Microsoft defense lawyer Michael Lacovara gave witness Franklin Fisher, the government's top economics expert, papers that showed Navigator accounted for 24 percent of the browsers distributed by Internet service providers. Those figures, however, conflicted with testimony by Netscape's former president, James Barksdale.

Microsoft is also facing legal pressure on another front. Software firm Bristol Technology has charged that Microsoft manipulated access to the so-called source codes for its dominant Windows operating system to squelch competition in the market for workstations and computer server products.

Bristol is also charging that Redmond increased the licensing fees it charged the small software firm for access to the code to keep it from creating new versions of its products. The private antitrust trial is expected to last six weeks.

Networking woes
It's been a long, hard road for Cabletron Systems. In the wake of rumors the struggling networking equipment firm may be an acquisition target while its stock hits new lows, cofounder and CEO Craig Benson resigned from the company. Benson will be replaced by Piyush Patel, former CEO of Yago Systems, a company acquired by Cabletron.

Companies like Cabletron are gearing up for next week's networking blowout in Atlanta at Supercomm '99. Industry watchers are expecting news from Nortel Networks and Alcatel--as well as some strategy announcements from Cabletron--to give some indication of the direction of the business into the next millennium. The demand for Internet access technology and the push for voice capabilities across data networks are two themes that many of the major players will be talking about.

And following a Securities and Exchange Commission inquiry into its acquisition accounting, Cabletron said it has increased its intangible assets $125.7 million. The company said this amount will be amortized over the next five to ten years, adding that non-cash amortization charges will increase about $4.5 million per quarter for the period.

Open sesame
Open source software may have found an odd bedfellow in Microsoft. The software giant hired ActiveState Tool Corporation to beef up the Windows features of the Perl open-source programming language.

In the open-source movement, programming instructions may be freely shared, a contrast to the carefully guarded code from Microsoft. Yet the software giant said it doesn't want to make Perl on its own, but configure the software to work better on PCs that run the Windows operating system. Open source proponents, however, charge Redmond is only trying to add proprietary features to the Windows version of Perl to make it incompatible with non-Windows versions.

The open source charge is also turning heads on Wall Street, as two companies that have helped spread the Linux operating system are reportedly considering a public offering of stock. VA Linux Systems, a manufacturer of Linux computers and a company with Dell-sized ambitions, is considering an IPO, the company's chief executive said. Sources have said Red Hat is planning an offering in the fall, although the company would not comment on any plans.

Rock on
The sound of music on the Net got sweeter as Diamond Multimedia slashed prices on its Rio portable MP3 player, bringing the cost of the popular device to its lowest yet.

Diamond was the first company to market a portable MP3 (MPEG 1, Audio Layer 3) player in the United States. The MP3 format has stirred controversy in the music and computer industries because it allows easy access to pirated music as well as legitimate titles. Consumers, on the other hand, have largely embraced MP3, lured by easy access to an almost limitless library of music.

The nation's largest Internet service provider also doesn't want to be left out of the dance. America Online bought Net radio firm Spinner.com and music technology company Nullsoft in a deal valued at about $400 million.

AOL's moves are designed to give it a leg up in the online music space, which has seen tremendous activity of late. The buys are aimed to help AOL provide a wide range of new audio and other applications to its huge subscriber base, the company said.

Toy wars
Selling toys online isn't a kid's game, as recent moves by some of the leading players have shown. Toysrus.com will launch its redesigned Web site next week, as the brick-and-mortar toy giant tries to catch up with its online competition.

And the competition is tough. Last month, eToys launched an initial public offering and KB Toys announced that it will merge its online store with rival BrainPlay.com. In April, Toys "R" Us spun off Toysrus.com and toy manufacturer Mattel announced its new online strategy. And bookseller Amazon.com wants to play too, possibly planning its own toy retail push during the holiday season, according to analysts.

Toys have been on the mind of the computer heavyweights as well. Hewlett-Packard's Apollo subsidiary and Mattel have introduced the Apollo P-1220 Barbie color ink jet printer. The two companies are betting that Barbie's popularity in the children's gaming market will compel parents to purchase the pink and gray printers. The new printer is only the third announced product from Apollo, which was launched this January.

Also of note
Oracle chief executive Larry Ellison said his software firm is rethinking its approach to the consulting market to avoid going head-to-head with the larger consulting firms?A federal judge in Oregon ruled in favor of regional officials who want AT&T to open its high-speed cable networks to competing Internet access providers. The ruling may give a much-needed boost in the fight for cable open access, although AT&T is widely expected to appeal the decision?The newly christened Excite@Home may need to look at traditional dial-up Net access to expand its business, analysts say, as broadband is still only available to a limited audience...The industry heavyweights that make up the Bluetooth consortium ready the publication of their first specification for their wireless technology?Hewlett-Packard said it sees $200 million in expenses in the second half of the year as it splits off its measurement division into a separate company, but said it still expects double-digit revenue growth during that same period.