Associated Press has an ERROR in reporting "IBM Wins Settlement From Microsoft"

[David Farber <dave () farber net>]

Begin forwarded message:

From: "John F. McMullen" <observer () westnet com>
Date: July 1, 2005 11:19:04 AM EDT
To: johnmac's living room <johnmacsgroup () yahoogroups com>
Cc: Dave Farber <farber () cis upenn edu>
Subject: Associated Press has an ERROR in reporting "IBM Wins  
Settlement From Microsoft"


(johnmac -- This type of thing drives me crazy. OS/2 was a Microsoft  
product -- they own it; IBM developed and owns OS/2EE. Certainly,  
Microsoft sandbagged IBM by continuing to develop Windows as a  
business alternative. IBM would have had an advantage over its  
competition with its OS/2EE and microchannel architecture. had the  
industry adopted OS/2 as the standard -- and the continued  
development of Windows not only sandbagged IBM but brought down the  
the leading application developers for MS-DOS, Lotus Development  
Corporation (now part of IBM) and WordPerfect (now part of Corel  
after a stop with Novell), who chose to only develop OS/2 versions  
and not Windows ones -- by the time they realized they were on a  
sinking ship, Microsoft's Word and Excel programs had become the  
standards for Windows. This type of reporting only perpetuates a  
misunderstanding of the history).

Fom the New York Times -- http://www.nytimes.com/aponline/business/AP- 
Microsoft-IBM.html? 
hp&ex=1120276800&en=a79539d008f7620a&ei=5094&partner=homepage

IBM Wins Settlement From Microsoft
 By THE ASSOCIATED PRESS

Filed at 10:50 a.m. ET

BOSTON (AP) -- IBM Corp. will receive $775 million in cash and $75  
million in credit for software from Microsoft Corp. to settle claims  
that resulted from the federal government's antitrust case against  
Microsoft in the 1990s, the companies announced Friday.

The payout is one of the largest that Microsoft has made since U.S.  
District Judge Thomas Penfield Jackson ruled in 2000 that Microsoft  
engaged in anticompetitive practices. Jackson's ruling cited IBM as a  
company that Microsoft had forced to ''desist from certain  
technological innovations and business initiatives.''

For example, Microsoft didn't charge all computer makers the same  
amount for its Windows operating system, allegedly using higher  
prices as a cudgel against PC companies that didn't comply with  
Microsoft's wishes.

IBM had irked Microsoft in the '90s by pushing its own OS/2 operating  
system as a Windows alternative and putting its SmartSuite  
productivity software on IBM PCs, cutting into the market for  
Microsoft Office programs. IBM also was an early supporter of Java, a  
programming language that doesn't need Windows to run.

IBM hadn't sued Microsoft, but still pressed for retribution for the  
behavior cited by Jackson. Microsoft reached a similar deal with  
Gateway Computer Corp. for $150 million in April.

Separately, Microsoft has spent more than $3 billion in recent years  
settling lawsuits by rivals, including a $1.6 billion deal with Sun  
Microsystems Inc. in 2004 and a $750 million truce with America  
Online, part of Time Warner Inc., in 2003.

Redmond, Wash.-based Microsoft still faces other legal challenges,  
including a lawsuit by RealNetworks Inc. and an appeal of a $600  
million antitrust ruling against it by European regulators.

Even so, Microsoft's general counsel, Brad Smith, said he believes  
the antitrust issues are close to being resolved. IBM had been the  
biggest rival with a pending claim.

''This takes us another very significant step forward,'' he said in  
an interview. ''We're entering what I think is the final stage of  
this process.''

IBM shares were rose $1.04, 1.4 percent, to $75.24 in morning trading  
on the New York Stock Exchange. Microsoft shares rose 5 cents to  
$24.89 on the Nasdaq Stock Market.

The U.S. case against Microsoft led Judge Jackson to rule in 2000  
that Microsoft should be broken into two companies as punishment for  
its monopolistic practices. But a year later, with the Clinton-era  
Justice Department having given way to the Bush administration, the  
government decided not to seek the breakup. The case was settled in  
2002.

Neither IBM nor Microsoft have decided when the $775 million payment  
will be accounted for. Microsoft set aside $550 million in April to  
handle antitrust claims, so this deal might result in a charge from  
that quarter, Smith said.

Whenever it comes, the payment would be a significant boost for  
Armonk, N.Y.-based IBM, which showed a $1.4 billion profit in the  
first quarter but fell short of analysts' expectations.

Even with Friday's deal, IBM reserved the right to press claims that  
its server business was harmed by Microsoft's behavior. However, such  
claims appear unlikely to surface soon, because IBM also agreed that  
it would not seek damages for actions that occurred before mid-2002.  
That means the findings in Jackson's ruling would no longer apply.

Copyright 2005 The Associated Press
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                          John F. McMullen
   johnmac () acm org johnmac () computer org johnmac () m-net arbornet org
                  johnmac () tmail com johnmac () echonyc com
           jmcmullen () monroecollege edu johnmac () alumni iona edu
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                  http://www.westnet.com/~observer
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