Fireworks cancelled: Be, Microsoft settle

$23 million buries lawsuit

The settlement between Microsoft and Be on Friday has deprived the public of some spectacular allegations.

A month after its liquidation auction, held on a chilly January day last year, Be filed suit, alleging anti-competitive behavior by Microsoft. The settlement pays Be $23.5 million, most of which will find its way to shareholders. Be burned its way through more than $90 million of capital in its ten year history, initially as a workstation vendor, then offering alternative operating systems on first the Macintosh, then x86 hardware, before ending its life as an information appliance vendor.

Between 1998 and 2000, Be marketed its BeOS operating system to PC OEMs with some subtlety, but little success. The company had pitched BeOS as a complementary operating system to OEMs' Windows images, allowing users to reboot from the Windows desktop. But Hitachi, one of the few OEMs to bite, discovered that it wasn't permitted to do so by its Windows licensing agreement. When running Windows on dual-boot Hitachi PCs, the user had no indication that another operating system was even present.

However, the lawyers had a rich source of additional material on which to draw. The proceedings would have been enlivened by controversy surrounding the re-pricing of Be stock shortly before the 1999 IPO, and the timing of visits by Microsoft executives to OEMs and the subsequent cancellation of Be appliances by OEMs.

It isn't the first time Microsoft executives killed hardware initiatives by its software licensees that it felt threatened the PC. Intervention was blamed for the termination of the promising Shark network computer by Digital Equipment Corporation.

It's hard to say if these allegations will now ever be made public.

Privately, Be had already given up on the desktop OS business before the IPO in the summer of 1999. Earlier that year it demonstrated its "kitchen appliance" to venture capitalists, and the appliance strategy gave the company an additional two years of life.

True to form, in the settlement Microsoft admits no wrongdoing.

Earlier this year Microsoft settled anti-competitive litigation filed by AOL, with the latter agreeing to use Microsoft browser technology for a further seven years, and endorse Microsoft's media formats. ®

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