Most technology firms haven’t had to spend the last five years in court with the federal government. But Microsoft Corp.’s legal odyssey — a big chapter of which seems to have ended with Friday’s approval of the proposed antitrust settlement by U.S. District Judge Colleen Kollar-Kotelly — doesn’t seem to have weighed it down a bit. While many of the Redmond, Wash., software developer’s primary customers — computer manufacturers that sell millions of copies of Windows a year with new PCs — have had to stage serial layoffs, Microsoft has remained largely immune to the industry depression. “I wouldn’t say they’re living large, but they’re doing a lot better than the rest of the industry,” said Roger Kay, an analyst with research firm IDC. Microsoft’s dominant market share in operating systems has yet to be seriously challenged, and the company has not stopped pursuing new markets for the Windows operating system. This fall, for example, marks the debut of two new versions of Windows: Media Center, to go with a hybrid television, stereo and computer, and the Tablet PC operating system for inclusion on a clipboardlike device with a touch-sensitive screen. “There are at least three generations of analysts who have gone to their graves predicting the end of Microsoft’s monopoly, and of course, so far they’ve all been wrong,” said Paul Saffo, a director of the Institute for the Future think tank in Menlo Park, Calif. Some analysts point out that Microsoft is no longer as eager to integrate Web programs and other applications into Windows — the sort of behavior that won the company the attention of the federal government four years ago. “Microsoft is clearly being less aggressive in trying to build application layers into next-generation operating systems,” said Tim Bajarin, president of Creative Strategies, a research firm in Campbell, Calif. Other industry watchers say the antitrust case has tarnished Microsoft’s image, changing the willingness of other companies to ally themselves with it. “I think that, more than anything else, it has affected Microsoft’s reputation among partners and potential partners,” said Matt Rosoff, an analyst with Directions on Microsoft, a Kirkland, Wash., research firm. “I think that this has hampered the ability for Microsoft to find partners in some areas.” Rosoff sees evidence for this in the failure of Microsoft’s .Net My Services program to gain major third-party support. The idea behind My Services was that Microsoft would store a consumer’s information, from credit card numbers to address book entries, for more convenient online shopping. Other companies would team up with the company to sponsor the service. But after the revelations about Microsoft’s aggressive business tactics during the four-year antitrust saga, the program is in stasis, Rosoff said. “A lot of business partners didn’t understand why they should trust Microsoft with their customers’ data,” he said. A representative from Microsoft did not return a call seeking comment Friday. Online auction company eBay Inc., an early supporter of .Net My Services, said Friday that it doesn’t have a vested interest in the service’s success or failure. “We’re like a software company that wants to make sure people can use both the Macintosh and PC format,” eBay spokesman Kevin Pursglove said. Even in Microsoft’s traditional areas of dominance, small cracks have appeared. Where it was once unthinkable for customers to choose anything but Microsoft, there now is a willingness to explore other, cheaper options. Take Microsoft’s biggest moneymaker, for example: its Office productivity software. A few years ago it was difficult to buy a computer that didn’t come with Office or Works, a cheaper, home-oriented productivity package. Now Dell Computer Corp., Gateway Inc., Hewlett-Packard Co. and Sony Corp. offer Corel Corp.’s WordPerfect software instead of Microsoft Word on certain computers. Corel’s attraction for computer makers and consumers is that the Canadian software maker’s goods cost less than similar products from Microsoft. But many think Microsoft’s biggest challenge is from the “open source” movement — in particular, from the Linux operating system. Open-source software is free for anyone to use and revise, which proponents say means faster development and fewer bugs. International Business Machines Corp. has been pushing Linux, investing $1 billion in 2001 to promote, support and develop the operating system as part of its vision of computing as a cheap, ubiquitous commodity. Companies such as Boeing Co., Amazon.com Inc., DreamWorks SKG and search engine company Google Inc. have recently adopted Linux in important parts of their operations. The governments of China, Germany and about two dozen other countries, by a recent count, are using Linux or considering its use. Microsoft is feeling the heat. This year, the company is experimenting with “shared source” — a way for some customers to get access to the inner workings of Microsoft products, and a nod to the increasing importance of open-source development. Some analysts say the antitrust fight has given the industry breathing room to explore such options as Linux. “Linux would have had a life of its own” without the antitrust trial, said Creative Strategies’ Bajarin, “but the trial may have helped embolden IBM, Hewlett-Packard and Dell to include Linux as an option in server software.”

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