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Be Inc sues Microsoft

Beast scuttled IPO price, Compaq deal - claim

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Be Inc is suing Microsoft for the destruction of its business. A damages figure isn't enumerated, but Be points out that at one stage the company was valued at over $1 billion.

The company is now a shell, with the assets including BeOS and BeIA, and some 46 staff, having been transferred to Palm Inc in the Fall for $11 million.

But BeOS as a desktop system effectively ceased to compete for OEM attention in the New Year 2000.

The main focus of the suit is on the boot-loader question, which Gassee aired in Byte last year.

Hitachi had agreed to license BeOS, and ship a dual-boot system using Be's boot loader and an icon on the desktop that enabled a Windows user to reboot into BeOS with one click.

"Microsoft sent two U.S. managers to Japan who expressed their 'anger' with Hitachi over its arrangement with Be, and 'reminded' Hitachi of the terms of its Windows license," according to the claim. "

Hitachi eventually shipped a system with BeOS loaded, but with no sign that Be was loaded on the system the PC booted directly into Windows and users were required to create boot floppies and install the bootloader themselves.

Compaq and Gateway declined to market dual-boot 'Creativity PC' systems Be had co-developed with Intel, citing the Windows license. Even when Be offered the OEMs the operating system for free.

Be alleges that Microsoft scuppered a 1998 deal with with Compaq to produce an internet appliance after Compaq boss Eckhard Pfeiffer received a personal visit from Gates as part of a Microsoft "Digital Appliances Review." This predates the BeIA platform announcement of January 2000. A Compaq BeIA appliance Clipper eventually appeared, but only in a limited form, Be alleges.

Should the case come to trial, the most incendiary part of the case is likely to focus on Paragraph 54, which alleges that Be Inc's IPO was sabotaged by Microsoft:-

"Microsoft, in conjunction with third parties acting as its agents, succeeded both in artificially depressing the price at which Be was able to sell its initial IPO shares and in preventing Be from engaging in a post-IPO effort to raise investment capital through a private placement offering."

The repricing of Be's stock has long been the subject of Valley scuttlebutt. Be Inc originally announced its intention to price the stock in the "$8 to $10" range; the company eventually launched at $6.

Be couldn't be contacted at press time to elaborate. ®

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