MONOPOLIES AREN'T so bad, you know. It all depends on your relationship with them.
If you're Netscape and you attempt to chew off some of the monopolist's main sustenance—like, say, control of the desktop—then you will be treated very unpleasantly. But if you are more of a fly on the monopolist's rump, not competing with the monopolist but perhaps helping in your own small way to further the monopolist's aims, you can actually work out quite a mutually satisfying liaison—one that, arguably, benefits everyone.
At least that's the lesson put forward by a handful of Seattle-area companies who, out of earnest principle and evident self-interest, recently lent their names to the cause of Microsoft in its tussle with the Justice Department.
A Microsoft-backed lobbying group called the Association for Competitive Technology (ACT) recently took out ads in The Wall Street Journal and The Washington Post, presenting an "open letter to the new Administration and the 107th Congress." Signed by 60 little-known CEOs, the letter states, "We are the small businesses behind America's information technology revolution. . . . And we believe in innovation, not regulation." It goes on: "We're deeply troubled by the potential legacy of the outgoing Justice Department. . . . Misguided application of antitrust laws, such as the case against Microsoft, ignores the realities of our industry and could create disastrous new rules to govern competitive behavior in the 'new economy.'"
Signatories to the ad included firms from across the country, including a half-dozen right here in Microsoft's hometown. I called these local entrepreneurs to find out what led them to rally to Bill's defense.
"I RECEIVED AN E-MAIL from [ACT], requesting—actually not requesting, asking—if I would be interested in my involvement, and I said, 'Yes, I'm all for competitive technology,'" says Kelli Adam, CEO of ConnectOS, a tiny Internet service provider in Kirkland. Adam says her 10- employee firm services Microsoft technology almost exclusively; her home page carries no less than five Microsoft seals, buttons, and logos. "We've partnered with them from day one," she says. "We hosted the Windows 98 launch." She's currently looking for a new round of funding.
A monopoly, Adam argues, "is where a set of industry players come together to take over the market," whereas Microsoft, she contends, has simply "outperformed all other companies. They didn't sneak in the back door; they simply grew a business. I don't think we can encourage that in America and then punish the companies that finally succeed."
Bellevue's Hunt Interactive is another firm that signed the letter. John Hunt, who runs the four-year-old consulting outfit, worries that the antitrust case "could very well threaten the well-being of the Northwest economy. If Microsoft gets whacked, that will have a ripple effect on a lot of people"—not the least of them Hunt. Microsoft accounts for about 20 percent of his business. "Without a doubt they're a great client of ours," he says. "We would hate to see anything happen that would turn off that spigot."
Besides, he says, it's the issue of fairness: "The whole point is to be aggressive, get out there and win. Then somebody steps in and says, 'Oh, no, you can't do that.' It just doesn't seem right to me. I'd hate to see someone coming to me and saying I can't do something."
At SinoMetrics International, in Lynnwood, CEO Robert Michaelson and his staff do "software localization": translating US programs into foreign languages, adapting the graphics, currency, time, and date conventions. "We started off with China; now we do 30 different languages," he says.
Like the other firms mentioned here, SinoMetrics is what's called a Microsoft Certified Solution Provider. In exchange for paying Redmond a fee and hiring staff who are specially trained in Microsoft technology, the company gets to display the Solution Provider insignia and work cooperatively with Microsoft developers to make sure their own applications work smoothly. For example, Microsoft provides Michaelson with foreign language versions of Windows on which he can test his programs.
Microsoft is one of his biggest clients too. "We work on some of their marketing tools, products related to the Solution Provider Web site for European and Asian languages. They're very important to us." So how did Michaelson respond when ACT approached him two years ago about becoming a member? "I agree 100 percent with what they're doing," he says, "so it was an easy sell for them."
Michaelson believes the Department of Justice "went overboard" in the case. "From the international point of view," he observes, "other countries treat their star companies, for better or worse, with kid gloves. If Microsoft were in another country, like China for example, I have a real hard time imagining this happening."
FOR THESE LOCAL entrepreneurs, all of them building on a Microsoft platform, Chairman Bill's dominance is a boon, not a bane—and the same, they claim, is true for their customers.
Says Gordon Harter, head of a small Seattle software developer called DataLoom, which builds application frameworks to run over Windows 2000, "When I look at what our customers are asking for, they're asking for the ability to work in very standardized ways. It doesn't necessarily serve economies of scale when you have to tweak applications for every single environment." The lawsuits against Microsoft, he fears, will cause "proliferation of competing standards, rather than driving what seems to be best for our customers, which is standardized platforms."
Intuitive Manufacturing Systems in Kirkland, a 70-employee firm, is a perfect example of how to enter into this symbiotic circle with the Redmond giant. Intuitive makes an "enterprise resource planning" application (you know, an ERP) that handles accounting and other activity for small manufacturers. Marketing director Andy Levy says that Intuitive's customers "in the past couldn't afford anything at all, or they would really stretch to buy some kind of Unix-based system. We uniquely took Microsoft technology and applied it to bring a sophisticated level of functionality to a target market that never got it before."
And Microsoft is grateful as well: An endorsement from Redmond on the Intuitive Web site praises Levy's firm for being "a leader in driving the adoption of Microsoft technology as the new standard for the manufacturing industry."
So when Intuitive CEO Sara Gillam got a call from ACT, asking if she'd be willing to lend support, she was happy to do so. Far from feeling stifled competitively, says Levy, "We've never felt anything but full support [from Microsoft]. They've never interfered with us in the marketplace; we certainly don't feel threatened by them."
For these firms, Microsoft's monopoly opens up opportunity: The more pervasive the Microsoft platform becomes, the more potential customers they have. It all works out nicely—provided, of course, that you steer clear of the 800-pound gorilla's primary feeding grounds. Obscure accounting programs for widget makers—OK, word processing—not so OK.
Says Mac Cutchins, head of Intek Integration Technologies in Bellevue, which develops "warehouse management" software, "Microsoft has strategic products, and certainly when they decide to do something strategic, they're very competitive. They could decide to enter the space we're in, but I don't see them doing this sort of specialized stuff."
On the other hand, streaming audio didn't seem so important to Microsoft either back in 1994 when Rob Glaser started RealNetworks; now Bill is doing everything possible to swat that former fly away.