Almost a year after the infamous Halloween Documents were uncovered [see NewsSource Nov. 09 '98 (2nd report)], at least one of Microsoft's proposals to defeat Linux has been enacted. While plans to embrace and smother Linux have yet to bear fruit, Microsoft's propaganda machine is running at high speed with the creation of a page to diffuse 'myths' about Linux. Among the supposed myths tackled by Microsoft: Linux's superior stability, security, performance, price, and usability.
While those 'myths' are valid issues, Microsoft chose to answer most of them by omitting the last few versions of Linux in its comparisons to NT, using Unix instead of Linux for the overall cost of running a Linux system, and not mentioning that most of the problems in Linux are even more prevalent in NT. But more significant than those misleading 'facts', the Linux Myths page confirms - just like the Halloween Documents before it - that Microsoft is scared to death of Linux.

Security Expert Georgi Guninski, who has discovered numerous bugs and security holes inside Microsoft products, is now warning Internet Explorer 5 users about a problem permitting information to be stolen off their computers - even if they run a firewall. Essentially, the problem occurs when JavaScript has a small program downloaded to the computer then has IE send information to that program, which isn't covered under Explorer's security because the program is on the same machine. The program then uploads that information, giving a hacker access to then information. Microsoft admits that the problem exists, and suggests users disable IE's Active Scripting until a patch can be created.

In the first public accounting of money spent, the US Department of Justice revealed Thursday that some $12.9 million has been spent over the last decade investigating and prosecuting Microsoft. About $7 million of that was used in the most recent trial and investigation started in June 1995. While $13 million isn't exactly lunch money, it is a discount compared to other high profile antitrust cases, like the $34 million investigation, trial, and eventual breakup of AT&T. Legal experts agree that Microsoft has certainly spent much more than that on defense, particularly for the salaries of its high profile lawyers. Some of those soon-to-be-unemployed ambulance chasers charge hundreds of dollars per hour, while the DoJ agreed in advance to pay its chief attorney a set sum of only $104,000. Defending against this case - along with a half-dozen other trials that have popped up over the last year - raised Microsoft's legal expenses by 59 percent to $689 million in fiscal year 1999.

Shortly before that relevation, the New York Attorney General's office announced a key player in the state case against Microsoft, Stephen Houck, had resigned. Houck was replaced as the New York AG's antitrust division chief after an election earlier this year, but continued leading the states' part of the antitrust case until closing arguments were completed late last month. While most of his work was done behind the scenes, Houck did play a crucial role to the case - particularly the taped Bill Gates interview he conducted with Department of Justice hired gun David Boies. Assistant antitrust bureau chief Richard Schwartz (who had been working on possible punishments for Microsoft) is expected to replace Houck as lead attorney for the states, but Houck could still be recalled by the government to testify about antitrust law during the expected sentencing phase.

According to Microsoft, an outside accounting firm has confirmed Hotmail is secure and the e-mail service's recent security lapses have been repaired. Unfortunately, Microsoft refused to reveal what company had performed the audit, choosing only to say it was one of the 'big five' accounting firms (they also chose not to list which firms make up that group). The audit was recommended by the Microsoft-sponsored Trust-e privacy group after a devastating Hotmail security lapse last month [see NewsSource, Sep. 13 (1st report)].

The first "beta" of Millennium Windows has finally been shipped to testers following a four-day delay. On Friday, September 24, Microsoft sent out a press release saying that the first beta of that system was shipping, but in fact the package scheduled to ship that day was just a routine weekly build of the system not intended for wide-release. After being called on the premature press release, Microsoft claimed that it really meant what it said and had actually shipped a Millennium beta on September 28, the following Tuesday.
Whatever they actually did ship, Microsoft appears to be just as confused about its OS strategy as everyone else is, particularly since there are now two projects inside the company being called 'millennium' - and only one of those is actually an operating system. If you'll recall, Millennium Windows was announced earlier this year as a Windows 9X-based consumer operating system that would ship around the same time as NT-based Windows 2000. Millennium replaces the consumer version of 2000, which was scrapped because of code compatibility problems. An actual Windows 2000-based consumer OS codenamed 'Neptune' is still planned for late 2001 or 2002, but at this rate Millennium and Windows 2000 still won't be out by that time.

The results for Microsoft's fiscal year 1999 were announced in July, but the company's excessively optimistic annual report wasn't released until this month. While monetary figures were already known, the report is still interesting because of the insight it gives into Microsoft's thinking. The report barely mentioned high profile lawsuits against Microsoft filed by the US government, Sun, Caldera and others, or investigations by France and the SEC. It did however tell investors that "resolving these matters will not have a material adverse impact on the Company's financial position or its results of operations." Readers will note that the statement isn't the same as saying Microsoft expects to win those matters.

Also in the annual filing, it was revealed Bill Gates' personal share in Microsoft has dropped to 787 million shares - a mere 15.3 percent of the company. Back in January Gates owned 1 billion shares, 19.8 percent, but has since given $15 billion in stock to the tax-exempt Bill and Melinda Gates Foundation, a charity operated by Bill's father. Second to Gates is estranged Microsoft cofounder Paul G Allen, who still controls 5.1% of Microsoft in addition to his massive cable television holdings and sports franchises. Not coincidentally, Forbes magazine still ranks Gates the world's richest man, followed closely by Allen (3rd) and Microsoft President Steve Ballmer (4th).

Advancing recently announced plans to host its software on the Internet [see NewsSource, Sep. 13 (4th report)], Microsoft earlier this month made a significant investment into a key player in the application service provider market. The recipient of Microsoft's largesse, USWeb/CKS, hosts applications for 200 small companies in the Santa Clara and Reston, Virgina areas, in addition to its Web development and advertisement businesses. According to a USWeb/CKS spokesman, The Behemoth's $67.5 million will be used to develop new software and build a new hosting center in Europe. In exchange for the money, USWeb/CKS has apparently agreed to standardize its systems on Microsoft technology. Microsoft and USWeb/CKS will also work together on a new lab inside Microsoft's Redmond campus dedicated to developing hostable programs.

While the checkbook was open, Microsoft also invested $15 million in Akamai Technologies - a company offering services that speed up the delivery of Web pages. The deal gives Microsoft a 1% stake in Akamai, making the small privately-owned company worth about 1.5 billion. Microsoft's investment follows similar ones by Apple and Cisco for 5% and 4% of the company, respectively.
While Cisco is only interested in having Akamai use its routers, Apple and Microsoft need the company's high speed network of Web servers to power their streaming audio and video technology. Akamai's distributed server system mirrors data to sites across the world and transparently connects users requesting data from a site to the server nearest to them. Apple's QuickTime is already superior to Real's G2 and Microsoft's Windows Media, but it needs a fast, distributed network to keep streaming servers from overloading. Now with Microsoft's investment in Akamai, The Behemoth can offer the same advantage to its own streaming media customers.
The deal also calls for Akamai to develop a version of its Linux-only technology for Windows NT. That would make NT more attractive to companies already using the service, particularly Yahoo!. Beyond the technological and competitive advantages the investment provides, Microsoft may also be eying Akamai Technology's filing with the SEC to get an IPO sometime early next year.

Microsoft is gearing up for smart cards, credit-card size plastic cards with embedded chips. The first assault on that prenatal market is in the form of Windows, specifically a new smaller-than-small version of Windows that can be run straight from the card. According to Bill Gates, the first cards will be used for security, replacing the "incredibly inconvenient" passwords used on computers now. He further said that similar cards will be issued to Microsoft employees, who will use them for computer login, building access, and as credit cards at the Redmond cafeteria.
While the technology may be viable, a bigger question has to be raised: Just how much invasion of privacy will consumers stand for? While smartcards have been popular in Europe for several years, they have yet to catch on in the United States because of the potential security risks and the appearance of Orwellian invasions of privacy. Microsoft has never produced a secure product, and the smartcard-optimized version of Windows likely won't be an exception. Do we really want Windows living on a Visa? The presence of Windows on ID badges and credit cards could very well make George Orwell's predictions in 1984 closer than one would like.

On October 7, two leading antivirus companies said they uncovered a new Windows NT virus more dangerous than any seen before. According to Central Command and the Kaspersky Lab, WinNT.Infis is the first known virus capable of breaking into into the highest levels of NT's security structure. A Microsoft spokesman confirmed the virus' existence, but the company isn't expected to release any patches since it only affects NT 4 running the last four servicepacks.

Teledesic, the satellite Internet company partially owned by Bill Gates, announced it may soon enter into the highly competitive mobile phone market. Back in 1990, Gates, Craig McCaw, Boeing, and Saudi prince Alwaleed Bin Talal founded Teledesic with plans to put more than 800 low earth orbit satellites into orbit, delivering high speed data access anywhere on earth. Since then the original plans have changed, with the number of birds reduced to under 100 and Motorola replacing Boeing as the venture's technology partner. Now the business plan is changing again, as Teledesic could merge with or buy the assets of bankrupt satellite telephone operators Iridium and ICO Global. That would reduce the costs of starting up service, since buying either or both of those companies would be less that the expected $6.5 billion in costs that remain before Teledesic can begin offering service.

Microsoft and Europe's second-largest mobile phone company, British Telecommunications, last week announced plans to roll out wireless Internet services in Europe beginning with a trial involving 1,000 mobile phone users. The full-service test will be conducted among employees of several large European companies, who will be able to receive e-mail and some limited Internet content through their Windows-CE based digital mobile phones. If the three-month trial is successful, it will be followed sometime early next year with a worldwide rollout of the service. Curiously, Wirelessknowledge, Microsoft's joint venture with Qualcomm, is not involved in this project, nor is potential satellite phone operator Teledesic [see story above]. Without the help of those companies or mobile phone market leaders Nokia, Ericsson, and Motorola (standardized on a Wince competitor), Microsoft's project may be doomed from the getgo.

Cirrus Logic announced last week that a new line of ARM processors will support Microsoft's Windows Media Audio music format. The new Maverick chip series will replace an older line primarily used in handheld computers and portable audio players like the Diamond Rio. According to Cirrus, the new chips will ship in the next few weeks at the same cost as their predecessors. Handheld computers running Windows CE aren't expected to use Mavericks, since Wince already supports the Windows Media format.

Consumer electronics giant Philips has tossed in the towel, giving up on its Windows CE-based handheld computers. In early 1998 Philips introduced two lines of Wince computers, the Nino handheld and a slightly larger clamshell HPC called Velo that was discontinued only a few months after its introduction. The Nino never had much success either, reaching only 4.5% of handheld sales last year while Palm Computing handheld products held nearly fifty percent of the market. A Philips representative said the company would continue to sell the Nino until its current supply is exhausted, and added that Philips will continue working with Microsoft on Wince-based WebTV devices.

If you ask Google.com the question "who is more evil than Satan?," the partially-Netscape-owned search engine brings up microsoft.com as the first match. However Google isn't giving the opinion of its owners, rather reflecting the high number of links to microsoft.com with the word 'satan' in them. Highly interesting, but also highly meaningless.
As part of the latest MSN relaunch, Microsoft last week signed a non-exclusive agreement with Network Solutions to provide international domain name registration. That allows The Behemoth to provide registration for .com, .org, .net, and a handful of other domains through one of its sites - likely the planned MSN LinkExchange small business portal.
Microsoft is planning to produce a half hour television version of its Slate Internet magazine. The show will be coproduced by Seattle public television station KCTS and hosted by Slate editor Michael Kinsley, who once worked as a CNN commentator.

Microsoft: Bad security, or bad press?
Will Microsoft lose the living room?
How much does MS need to dampen its stock price?
Win2k everywhere: 70 per cent of you _will_ upgrade
MS minions bid for Bill airtime again
Leaked email exposes MS charity as PR exercise
MS's woes confront green funds
Linux art stunt takes jab at Microsoft