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Thursday, 28 June, 2001, 19:54 GMT 20:54 UK
Microsoft charges on
Microsoft chairman Bill Gates and US appeals court logo
Gates: 'Behaved as if Microsoft would win appeal'
By BBC News Online's Kevin Anderson in Washington

Microsoft has done little to change its business practices during its long running anti-trust battle with the US government, according to computer industry analysts.

And the company's present efforts show that it has little intention of changing its business model despite ongoing anti-trust scrutiny, they added.

But the appeals court's decision was not a total victory for the company. The court agreed the company has acted anti-competitively.

And analysts also say the company will have to exercise some care to avoid new skirmishes with trustbusters in the US and elsewhere.

Microsoft's business model

"Look at Microsoft's behaviour. They haven't changed one bit," says Dan Kusnetzky, an analyst with IT consultancy IDC.

"They have always acted as if the case had already been decided in their favour."

Microsoft has not changed its basic business model, he said.

The company leverages developers, standard document files and APIs, application protocol interfaces, to generate users, said Chris LeTocq, principal analyst with Guernsey Research.

And the company that built its empire on its flagship Windows operating system for desktop computers is looking to build its presence in server software, middleware and the internet.

It has done this by extending its business to server and internet markets.

Microsoft's .Net strategy clearly links software on their client systems to their server systems to development tools, Mr Kusnetzky said.

"For those upset with how Internet Explorer was linked with Windows, they will be more upset with .Net," he said.

Mr LeTocq said: "Frankly, what Microsoft is creating with .Net is Microsoft's version of the internet with the same business model and tactics."

Market share grows

And Microsoft has an even stronger market position with consumers, Mr Kusnetzky said.

In 1999, Microsoft had 88% of the shipments for desktop operating systems and 38% of server software system shipments, and in 2000, they expanded that to 91% of the desktop market and 41% of the server software shipments, he said.

Microsoft has little left to conquer in the way of desktop operating systems which has led it to seek new markets including the server software market, hand held computers, smart phones, set-top boxes and the internet.

And as Microsoft looks to new markets, it has an advantage in its battle with trustbusters.

"From Microsoft's perspective, one of the largest advantages it has [is that] the technology market moves so fast compared to [the] litigation process," says Mr LeTocq.

They can move forward now and deal with anti-trust fallout much later.

"Microsoft went full steam ahead to get Netscape out of the way," he said, adding, they knew any lumps they would take would come by the time Netscape was gone.

Microsoft's mixed results

But while Rob Enderle of Giga Information Group says that the ruling will not have any initial impact on the company's behaviour, the ruling was not a total victory for the company.

The appeals court did agree with the lower court finding that Microsoft was a monopoly that acted anti-competitively with respect to the operating system market, he said.

"Microsoft is emboldened, but going forward, it will be treated as a monopoly, and any anti-trust case will be fast tracked," he said.

But he added, "There will be no behavioural change unless Microsoft is forced to make that change."

The settlement

Appeal court ruling

Appeal hearing

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