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Guess what? Microsoft won

CNET News.com's Charles Cooper says the "end of Microsoft as we know it" crowd must face the post-antitrust reality that the software giant is more confident and stronger than ever.

In his 2001 book, "Pride Before the Fall: The Trials of Bill Gates and the End of the Microsoft Era," John Heilemann wrote:

"We are already witnessing the end of Microsoft as we know it...with the dotcom boom, Redmond, Wash.-based Microsoft's position seems, if not tenuous, then increasingly peripheral. The real estate it controls, the PC desktop, remains the most valuable territory on the digital map. But, as everyone can see, with the rise of the Net, the universe of computing is expanding and exploding, while the desktop seems only to be shrinking in strategic importance."

That may have constituted the biggest rush to judgment since the Chicago Daily Tribune declared Thomas Dewey the new U.S. president in 1948.

Squabbles and airy disputations about the exact import of the ballyhooed antitrust case--the so-called trial of the century--will doubtless continue for years. When U.S. District Judge Thomas Penfield Jackson ordered the breakup of Microsoft, the digi-punditry predicted a dire future for a soon-to-be corporate cripple. I generously scored it a draw, since the Redmondians finally agreed to cut out their goon tactics in return for the government ending its jihad.

Three years removed from the breakup order and 10 months after a final settlement was struck, it's fair to ask who really came out on top. One clear winner was the team of high-priced defense lawyers from Sullivan & Cromwell that Microsoft hired for the occasion. Another was the clutch of legal commentators who parlayed their rent-a-quote talents during the trial into comfy gigs.

But considering current events, the "end of Microsoft as we know it" crowd isn't looking quite so hot. While the specter of David Boies may haunt the corridors of Redmond like Banquo at the feast, no would-be challenger has yet emerged to wrest away the crown. Bill Gates' cyberempire is growing richer all the time.

To be sure, Microsoft received some unexpected help from the vagaries of the business cycle. A recession came along at just the right time, wiping out many start-ups that were challenging the company while halting an exodus of employees and managers. The net effect of all this is a Microsoft that is more confident and stronger than ever.

"They made either no change or only cosmetic changes to their business practices," a former executive recently confided to me.

Bill Gates' cyberempire is growing richer all the time.
The scope of the company's wealth and ambition was on full display last week, when senior management outlined its latest plans to spend $6.8 billion and hire some 5,000 new people. Those are breathtaking numbers for most folks, but they're mere rounding numbers when you're sitting on a $49 billion trove.

Meanwhile, the company's desktop monopoly is no less valuable than it was when Internet mania busted out in the late 1990s. Microsoft is predictably late with Longhorn, the next major version of the Windows operating system. But Microsoft's being behind schedule with an OS release hardly rates as an event anymore. The company still winds up registering blockbuster sales.

And then consider the new businesses the giant is hatching.

Windows Media Player is on gazillions of PCs around the world and has become the de-facto standard for secure digital downloads. Is a music store the next logical step? That's not much of a question.

A Microsoft search engine is also in the cards. The company is already building an index of HTML links and documents with a bot that would presumably become part of a move into the increasingly lucrative Internet search business.

Then there's the run-of-the-mill stuff beyond the operating system, such as cell phones, PDAs, game players, online services--even wristwatches.

The scope of the company's wealth and ambition was on full display last week.
All these initiatives are potentially billion-dollar businesses. So much for the tale of a wounded giant. In fact, the biggest risks that Microsoft faces have nothing to do with the aftermath of the antitrust trial.

Linux is Enemy No. 1 these days. The renegade operating system is putting pricing pressure on Microsoft products, and management still hasn't figured out how to block the advance of the Penguinistas. If the braintrust can't come up with a creative response, it'll be a cold day in hell before you see another Microsoft stock split.

At the same time, Microsoft is going to have its hands full with the task of convincing a saturated corporate market to buy new versions of its new Office suite. Business budgets are still tight, and it's going to take a lot more than a few new bells and whistles to get a chief information officer to sign the dotted line.

It's also unclear whether Microsoft can rein in its corporate DNA. Its inability to play well with others got the software maker into hot water once. Will Microsoft commit the same mistake twice? After escaping from a near-death experience, the last thing the company needs is a return engagement in a Washington, D.C., courthouse.

But all that is part of a familiar story line that stretches back nearly three decades. Call it competition and its discontents. But that's a far cry from predicting the end of Microsoft as we've known it. If you doubt me, go ask the folks who declared Harry Truman a certain one-termer what they think.