Br'er Hill & The Briar Patch A Cautionary Tale.

Br'er Rabbit is the cleverest animal in Uncle Remus' beast fables. Caught stealing from a garden by his archenemy Br'er Fox, he begs of his captor: "Do anything you want to me, but please, don't throw me in the briar patch!"

This convinces Br'er Fox that impaling the rabbit on myriad sharp thorns would be a more fitting (and more sadistically satisfying) punishment than merely tearing out his throat. So he tosses Br'er Rabbit in. Whereupon Br'er Rabbit dodges every thorn and skips away to safety, calling over his shoulder: "Born and raised in the briar patch!" This may not be the most sophisticated literary allusion I've ever made in my columns, but it seems to me that when Bill Gates tells the judge (and the public on TV), "Do anything you want to Microsoft, but please don't break it into two separate companies," he's saying it like Br'er Rabbit.

I first interviewed Gates twenty years ago and came away convinced that he was a genius. He was also an adolescent with retarded social development, a Peter Pan who never grew up. Other interviewers, noting his compulsive rocking back and forth in chairs, suggest that he may be borderline-autistic. Whatever. He's still a genius. His grasp of soft ware code was then--and to a great extent still is--unrivalled, even by the other geniuses he's drawn into his orbit and whose work he obsessively micromanages.

The surprise, of course, is that his business acumen was just as keen. He has earned his billions the old-fashioned way: as a fiercely competitive plutocrat, exhibiting no compassion whatsoever for any enterprises but his own. Gates' money machine has prospered (beyond, I suspect, even his wildest dreams) despite the painfully obvious shortcomings of nearly all of his OSs and apps, at least in their initial releases, and often through several subsequent versions--as any early adopter of, say, Windows or Word can attest.

Microsoft's monopoly position in the operating system market is easily explained. Long before he ever thought of bundling Internet Explorer with Windows, Gates was forcing retailers to bundle MS-DOS with PCs. This was only alluded to in the course of the trial and was never the subject of a specific charge (as bundling TE with Windows was), but I think that's only because Microsoft stopped doing it just in time, a few years before the charges were actually filed.

From 1982 through the mid-1990s, a customer could buy an IBM PC or a PC clone with CP/M or OS/2 or Pick (remember Pick?) or some flavor of Unix, for which the dealer would pay a license fee to the OS developer and pass that cost along to the customer. However, the dealer had to also pay Microsoft its license fee for DOS (about $40) whether or not that particular PC had actually shipped with DOS, i.e., in addition to whatever fee for the other OS was included in the sale.

If dealers didn't pay, Microsoft would rescind their license to ship DOS at all. So there was no incentive to promote any other operating system but DOS and a real incentive to simply bundle DOS with every computer, since they had to pay for it anyway. That generated heaps of cash ($40 times tens-of-millions of PCs) and produced the de facto monopoly. As for its near-monopoly in apps, the reason for that is what I call Gates' implied guarantee and which I paraphrase thusly: "This application will work pretty well on your computer as is; but if you had just a little more RAM, a bigger hard drive, a faster CPU--more powerful hardware, in other words--you'd really see this puppy run."

That encouraged (one might even say "forced") users to upgrade their PCs, which made computer dealers happy, since the markup on hardware is higher than on software. So they gave Microsoft's shrink-wrapped boxes pride-of-place on their most visible shelves, which made the packages more attractive to new users, who then bought them and who--confronted by the implied guarantee--upgraded their hardware to the benefit of the dealers ... You get the idea.

There is, of course, a storage component to this tale. Much of Gates' mental energy, along with that of his code-writing crew, has been devoted to making OSs and apps more fully featured, which to them, always means "bigger." There has never been a corporate guideline at Microsoft to make any product do more with less, to trim excess capabilities in favor of operational speed--in other words, to make an app more efficient.

The CD-ROM has almost entirely replaced the floppy as a distribution medium for software, in large part because of all those extra megabytes that Gates & Company have been stuffing in. Don't forget that Microsoft was at the center of CD-ROM development in the '80s too and continues to draw some licensing revenues from CD manufacturers. Loading all that bloated code into one's PC imposed a requirement for online storage devices with at least as large a capacity (650MB) as a CDROM and that pushed HDD developers to introduce higher capacity drives, eventually to crack the 1GB ceiling. So whether one loves Gates or hates him for what he's done to other OS or app companies, he has certainly helped to make a lot of people in the storage business rich, which helps him now find sympathy when he buys TV time to air his cri du coeur: "Please don't throw me in the briar patch!"

The verdict is already rendered: Microsoft does have a monopolistic position in the marketplace; it did take illegal advantage of that monopolistic position; and it did engage in anti-competitive business practices--at least with regard to browsers. Gates can't change those facts by himself and probably cannot prevail on appeal.

So his problem now is about punishment. Historically, the sentence for convicted monopolies such as Standard Oil or AT&T has been to dismember them, but "history" also shows that the sum of those parts eventually becomes greater than the original whole. What were dubbed the "Seven Sisters" are now Exxon, Chevron, etc.; and the so-called "Baby Bells" such as Pacific Bell or Bell Atlantic have grown so rich that they can afford to buy up one another.

I cannot believe that Gates, CEO Steve Ballmer, the rest of the senior management, and their largest shareholders, have not crunched the numbers with that fact in mind. After perhaps only a year or so, two separate companies (one for OSs and one for apps) will certainly be worth more than Microsoft alone is worth today. How could they not, when--literally--money is no object to their growth and the intellectual resources available to them are formidable? Gates can whine about the verdict all he likes (he's still a kid at heart, remember), but in my opinion, he actually wants to double-down and own two Microsoft-brand companies instead of one, if for no other reason than to be able to grin and call over his shoulder: "Born and raised in the briar patch!"