Microsoft Targets E-Commerce

With a remarkable sense of deja vu, Microsoft Corp. is launching software aimed at helping smaller companies open shop to cyberspace.

Chairman Bill Gates and recently anointed President Steve Ballmer, who leads the Redmond, Wash. company's e-commerce group, were scheduled to unveil the newest products during a three-hour blitz in the San Francisco Bay area, arguably the heart of Internet innovation.

The push into rapidly growing e-commerce business comes as a peer group called for the breakup of the company.

Online purchases totaled about $6 billion last year, but are expected to jump to about $37 billion by 2002, according to analysts.

Microsoft (MSFT) has been here before. The company has offered other e-commerce products aimed at smaller companies, including a suite of software unveiled by Gates in a morning-long event just three years ago. Thursday's appearance is likely to build on that effort.

However, other companies, notably IBM (IBM) and Sun Microsystems (SUNW), have stolen most of the show so far with similar offerings. The products are critical to Microsoft if the company is to extend its dominance of desktop computing into the fast-growing area of electronic commerce. Microsoft shares rose 1 1/4 to 150 7/8 Thursday morning.

Clarify Inc. (CLFY) said it would be among the company's supporting Microsoft's latest effort, integrating its FrontOffice with Microsoft SiteServer 3.0 Commerce Edition. "Microsoft's added commerce functionality will enable our customers to find new, cost-effective ways to enhance brand loyalty and create competitive advantage," said Kirsten Berg-Painter, Clarify's vice president for marketing.

In a significant new twist to the landmark Microsoft antitrust case, published reports say that one of the computer industry's most prominent trade groups is endorsing the breakup of Microsoft Corp. in a secret 40-page report circulated among its board and sent to government lawyers.

The Software and Information Industry Association proposed what some legal experts describe as the "death-penalty" for Microsoft - splitting it up into companies selling separate products, such as Windows software, business programs and Internet content, or breaking it up into three or four so-called "Baby Bills" - mini-Microsofts that each would have identical product lines.

It said a mandatory breakup of Microsoft "deserves the most careful attention of the government and the court." But it doesn't distinguish which breakup plan it recommends, calling it a "Hobson's choice" and "ultimately an antitrust policy question with no clear answer."

The breakup proposal by the trade association is significant because Microsoft is one of the biggest companies in the 1,400-member group, formerly known as the Software Publishers Association. Its board includes executives from Netscape (NSCP), Oracle Corp. (ORCL), IBM Corp., Symantec Corp. (SYMC), as well as Dow Jones & Co. and Reuers.

The Washington-based group "concludes that a structural reorganization of Microsoft can avoid the drawbacks associated with conduct-based, behavioral relief," such as constant government oversight and the risk that Microsoft might find loopholes in any restrictions imposed by a judge.

The group's executive director, Ken Wasch, declined to comment about the report, which was reported by The Associated Press and The Wall Street Journal.

Written By Tom Murphy, CBS MarketWatch