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Tech Industry

High tech faces the real world

While Bill Gates and other high-tech titans have notched their belts with conquests among themselves, they are venturing into new territory from Washington to Hollywood where the rules are different and the players formidable.

Bill Gates may feel as if he's losing his virginity all over again. Professionally speaking, that is.

While he and the other titans of high technology have notched their belts with conquests among themselves, they are venturing into new territory from Washington to Hollywood where the rules are different and the players formidable. Sort of like the Big Man on Campus in high school who gets a scholarship to a college where he's just another jock, and the youngest one at that.

Although this culture clash is nothing new, the industry's inexperience with the real world became painfully clear with two recent events.

The first was the Senate Judiciary Committee's nationally televised antitrust hearing in March, where chairman Orrin Hatch--a prototypical Washington veteran who has sparred with the likes of Ted Kennedy and Anita Hill--played Bill Gates like a cheap fiddle. While Gates may honestly believe in technology and the free market (as long as he's on top), true convictions are not what count inside the Beltway; perception does.

The cult of image that is Washington has eluded Silicon Valley. Whether out of hubris or ignorance or both, high technology has not invested much time or money in making friends in government, and companies like Microsoft and Intel may now be paying the price for that glaring oversight as politicians find them easy prey, at least from a PR standpoint. After all, even Ralph Nader is on the government's side in this case.

Now begins the pile-on phase of the sport. Even California Attorney General Dan Lungren, a pro-business Republican who had been on the fence where Microsoft was concerned, has committed to taking some kind of antitrust action. Lungren is running for governor, by the way.

The other humbling event for Gates and company took place in the television industry a few days ago at the National Broadcasters Association annual conference. For the last couple of years, as the "convergence" of the PC and TV became the mantra, many technology companies were boasting as though their leadership in this area was a foregone conclusion. But somewhere along the line, computer companies figured out that the arena where these worlds will collide would not be the personal computer.

One of the clearest signs that the PC would not be the convergence box of choice came just after the new year began, when Compaq announced that it was getting out of the PC-TV business, finding that there was little demand for systems that cost upwards of $5,000. And Intel is planning a Pentium II processor for a TV set-top device, but it's unclear whether any box makers will choose the chip over the ones they're already using.

Realizing that they were not in the driver's seat on the road to convergence, computer hardware and software companies tried to make nice with their TV counterparts. "We're dying to work with you guys," Steve Jobs told broadcasters at the convention. "We can bring some architecture to this Tower of Babel that's happening today."

By that time, however, the die had long been cast.

Television executives, born from the cutthroat culture of the entertainment industry, like nothing better than a good fight. At a cable business convention in December, Ted Turner and Barry Diller were practically making fun of pocket protectors in public remarks.

That rhetoric became reality at the broadcasters convention last week, where the network and cable bullies made it clear that they have no intention of being led around by a bunch of outsiders. As a result, they seemed to have come to rare agreement among themselves on one thing--keeping Bill Gates at bay.

For now, the strategy seems to have worked. A quick scan of headlines from the convention pretty much sums up the state of the high-tech assault on the business of television: a lot of disparate ideas flailing about, with various players partnering on one initiative and parting ways on another.

Microsoft was certainly busy doing deals, but it was far from assuming the dominant role it is so used to playing. Instead, the king of software was relegated to the status of commoner, lumped in with competitors from various industries such as Sony, Nokia, General Instrument, and Scientific-Atlanta, not to mention long-time rivals like Sun and Oracle.

The resulting technological chaos plays right into the TV industry's hands, allowing it to call the shots on its own timetable. And don't expect any breakthroughs anytime soon. The tactic of the long stall is prominent in television history, having been a key factor in the victory of the VHS and the death of Betamax.

As long as they can keep the technological playing field level, network and cable executives can play a game of divide and conquer. But they should enjoy having the upper hand while it lasts.

Microsoft has a history of its own--one of not making the same mistake twice. As it matures beyond gangly adolescence, it will quickly grow into the role of a global power, assimilating the idiosyncracies of these foreign lands along with way.

Resistance is futile, as they say.

Mike Yamamoto has lived in and reported from Washington and Hollywood, and he still survived. He writes a monthly column as managing editor of NEWS.COM.