Valley welcomes Microsoft breakup

Honey, I shrunk the company: Topic A in the cubicles of Silicon Valley this past week has been, of course, the US government's recommendation that Microsoft be split into two companies. One of these Baby Bills would handle all things Windows and one would run everything else.

In Microsoft's case, everything else means a diverse empire that straddles everything from media companies (MSN) to reference products (the Encarta CD-Rom encyclopaedia) to software programs (Microsoft Office) to game consoles (the XBox) to Web browsers (Internet Explorer). All we need now are Microsoft branded snack foods, soft drinks, luxury car dealerships and financial advisers on complex share option schemes and Microsoft would offer a full geek life support system.

The general consensus is that splitting the technology titan is a good thing. Most people (in smaller, less profitable tech companies) seem to feel that the division will increase competition, spur technological innovation, and allow the entry of young whippersnapper companies. What they really mean is that the split will (they hope) create more opportunities for millionairedom so that they too might someday run a company so powerful it will need Justice Department intervention.

Silicon Valley reportedly coins 65 new millionaires daily already but then, those are badly needed to replace all the ones that have crashed back into the ignominy of five to six-figure net worth in our new dot-bomb economy.

For some, two Microsofts don't miniaturise the company enough. San Jose Mercury News technology columnist Dan Gillmor would like to see the company chopped up into lots and lots of junior Microsofts for example, because he feels two companies leave two much room for a simple shift from Microsoft monopoly to Microsoft duopoly.

But sentiment is by no means all anti-Microsoft. Some people worry that more operating system options will mean headaches and extra expense for consumers and software developers - imagine if the VHS-Beta battle had spawned rather than eliminated competition and we were stuck with 10 incompatible videotape systems and types of videotapes.

In the meantime, Mssrs Gates and Ballmer are predictably defiant and yodelling their traditional song about innovation and benefits to consumers. What's certain is that the fat lady definitely hasn't sung for Microsoft yet - this saga is ready to play out in the courts for some time to come.

THE real battle of the titans, though, has apparently been won - at least for the moment - by colourful Oracle chief executive Larry Ellison, whose income has now surpassed that of Microsoft founder Bill Gates. If one calculates their relative incomes based on the number of shares each owns in his company, Ellison last week overtook Gates in net worth as Oracle powered up the Nasdaq and Microsoft, to use the Silicon Valley vernacular, "tanked".

Only recently Ellison was valued at a lowly $13 billion (€14.58) while Gates, then the world's richest man, hovered around $70 billion. No doubt the turnabout brings exquisite pleasure to the Oracle boss who's never made any attempt to hide his hatred of Microsoft and contempt for Gates.

My favourite Valley story of the week, though, pitches east coast against west. `Puppets in court' said the newspaper headlines, referring to a lawsuit filed by pet accessories retailer Pets.com against the TV show Late Night with Conan O'Brien. According to the suit the rude-mouthed dog puppet on O'Brien's show allegedly has defamed the friendly sock puppet spokesperson for the Pets.com adverts. Really, the suit is not a joke, although it may well provide some useful material for comedian O'Brien.

Eircom certainly lacks a certain je ne sais quoi when contrasted with its Silicon Valley counterpart, dominant telco Pacific Bell. Pac Bell is currently offering a special deal for people who want to sign up for its ADSL (ultrahigh speed Internet access) service. Under the offer, you get all the (somewhat costly) ADSL hardware needed for free, and installation, which can take some time with this tricky service, is also free. Then, the service itself costs about £30 monthly (read it and weep, folks).

Why such a great deal? Pac Bell is trying to become more dot.com and less telco-like in its thought processes and is following the classic Internet diktat, "He with the greatest mindshare (translation: customer base) wins."

A Palo Alto friend jumped on the offer. Last week I went over to his place to sit in the sun, drink the obligatory latte, talk shop and keep him company while he awaited the arrival of the Pac Bell ADSL installation crew.

Not having completely forgotten their telco roots, they had given him a convenient window of "from eight to five" as the time when they might deign to arrive. At three they finally drove up - in a large, black BMW. If installing ADSL systems has such a positive knock-on effect for employees perhaps Eircom technicians will agitate on behalf of their right to luxury cars. This might at last accelerate Eircom's rollout of this long-promised access technology in Ireland.

AND to end, another onlyin-Silicon-Valley tale, but this time, of woe. In last Sunday's San Francisco Chronicle, a forlorn Internet share "day trader" wrote to the paper's personal tax columnist with a matter of urgent concern.

"As an Internet stock trader, I made $2 million in short-term capital gains in 1999. I reinvested that cash, but lost all my funds on April 14, 2000, when the Nasdaq crashed. . . Now I'm broke, but do I still owe taxes for 1999?"

Alas, poor day trader, he does, on the complete $2 million. He could always drop day trading and start installing ADSL.

klillington@irish-times.ie