Microsoft Doesn’T Carry Clout It Once Possessed Ever-Changing Technology Is Shifting Balance Of Power

Much of the high-tech industry has been gradually distancing itself from Microsoft Corp. since the software giant’s legal troubles began, and that tendency is likely to accelerate regardless of whether a breakup is upheld on appeal.

While still an industry powerhouse, Microsoft’s name no longer carries the weight it once did, because operating systems have become less crucial components in the increasingly important business of getting the Internet into everything from computers to cellphones to automobiles.

“As new applications are being built for the Internet, people are seeing the tremendous benefits of being able to provide choice,” said Matthew Szulik, chief executive of Red Hat Inc., a company that makes a brand of Linux software, a key challenger for Microsoft’s family of Windows operating systems.

Unlike Microsoft’s proprietary operating system, Linux is free to developers, can be downloaded from the Internet at no cost and is already widely used on many of the servers that power the Net.

Not surprisingly, many of Microsoft’s traditional allies and closest business partners reacted cautiously Wednesday to U.S. District Judge Thomas Penfield Jackson’s scathing rebuke of Microsoft and order calling for splitting up the company.

“It’s our view that it could - and the emphasis is on could - represent a significant change for this industry,” said spokesman Chuck Mulloy at giant chipmaker Intel Corp., which analysts say stands to become either one of the biggest winners or losers in any Microsoft breakup, depending on how it plays its cards.

“We’re confident that the industry will adapt as it has in the past,” added Mulloy.

Intel has married its best-selling family of computer chips to Microsoft’s operating systems, but is also quick to adapt to other industry trends.

Many equipment manufacturers already are seeking alternatives to Microsoft’s software because the Redmond, Wash.-based company zealously guards the secrets of its programming and does not allow others to tinker with its codes.

“It appears as if we’ve maybe reached another stage in this matter, but not necessarily the end-point,” said Dell Computer spokesman T.R. Reid. “We’ll take care of the business of today and leave the speculation to others.”

Just this week, a San Francisco company called Collab.Net, which brings technology workers together with so-called developers of “open-source” software such as Linux, announced it has received $35 million in funding from Dell, Hewlett-Packard, Intel, Oracle and Sun Microsystems, among others.

Another investor in that company is Marc Andreessen, co-founder of Netscape Communications, the Web browser innovator swallowed up by America Online after losing a bruising battle for dominance with Microsoft’s Internet Explorer.

That battle was the centerpiece of the Justice Department’s case contending Microsoft used its monopoly power to stifle competition.

Andreessen declined comment Wednesday through a spokesman, as did America Online.

But former Netscape chief executive James Barksdale said Microsoft still “doesn’t understand how abusive they are of their monopoly position.”

“Microsoft has crossed the line, and I think this is the only type of remedy that would keep them from the doing it again,” Barksdale said.

Still, analyst Rob Enderle, who follows Microsoft for research firm Giga Information Group, said a breakup of the company could harm the entire U.S. technology industry.

His reasoning: European and Asian companies such as Sony Electronics and Nokia already are slightly ahead of the competition in developing standards for emerging wireless technologies that could dominate in the future.