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Big smiles, brass knuckles

WASHINGTON -- Besides turning the respective spokesmen for the government and Microsoft into media stars -- at least for their requisite Warholian 15 minutes of fame -- the MS-DOJ trial has torn away the veil on how business really gets done in the computer industry.Computer companies make elaborate preparations and regularly go out of their way to dismiss any suggestion that they are on anything but the best of terms with their business partners.
Written by Charles Cooper, Contributor
WASHINGTON -- Besides turning the respective spokesmen for the government and Microsoft into media stars -- at least for their requisite Warholian 15 minutes of fame -- the MS-DOJ trial has torn away the veil on how business really gets done in the computer industry.

Computer companies make elaborate preparations and regularly go out of their way to dismiss any suggestion that they are on anything but the best of terms with their business partners.

Press releases, news conferences, laudatory words for profiles of their opposite numbers -- the works -- and all in a bid to paint a Norman Rockwell picture of fairness, satisfaction and contentment.

But judging from several of the internal memoranda and other disclosures in the Microsoft antitrust case, it's clear that these "partners" don't spend a lot of time with each other around the campfire singing kumbayah.

For starters, contrast the public image of cooperation assiduously developed by spinmeisters at Apple (Nasdaq:AAPL) and Microsoft (Nasdaq:MSFT) with the tension and hostility that marked their relationship in private.

As far back as August 1996, Apple was complaining about Microsoft's "animosity and disrespect."

But just in case the two companies couldn't get their relationship back on track, Apple was ready to sic the DOJ on the Redmondians. What's more, the computer maker stood ready to sock Microsoft with a $1.2 billion cashectomy for infringing upon its patents.

One year later, Apple and Microsoft kissed and made up for the cameras. In return for making Internet Explorer its default browser, Apple received $150 million from Microsoft, which pledged to continue developing the Mac Office suite.

Trouble in River City
But there continued to be trouble in River City.

During his testimony this week, Apple's senior software veep, Avie Tevanian, described Microsoft's bully-boy tactics, saying it tried to force Apple out of the multimedia playback market. Ultimately, Microsoft's product managers got so out of control that Steve Jobs fired off an e-mail to Bill Gates.

"There is one thing that threatens to be quite divisive, and that is the Microsoft NetShow team's recent behavior," Jobs wrote this past February. "They are really going out of their way to say that they intend to kill QuickTime, and they are being quite threatening and rude about. Apple will have to reciprocate in kind if this behavior keeps up."

A lot of noise was made about Microsoft's threat to curtail development of Office for the Mac.

No best buddies
At the time, Apple was weak and in disarray. Microsoft took advantage of the situation, but I'm willing to bet the Redmondians would have backed off had Apple called their bluff.

This wasn't about doing favors; it was about cold-cash interests: The Mac office-suite business accounted for about $400 million in annual sales, and Gates wasn't so stupid as to leave that amount of change on the table for someone else.

But Apple, which could ill afford any damage to its delicate public image, decided to suffer the indignity in silence -- until now.

So much for best buddies.

'Coopetition'?
Novell's (Nasdaq:NOVL) former chief exec, Ray Noorda, first coined the term "coopetition" -- an apt description of the way companies compete even as they cooperate.

But the tenor of their cooperation is quite another story.




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