[Jokes] Surprise Microsoft Settlement - Microsoft to split into two companies

[Chris McKenna]

Subject: Surprise Microsoft Settlement

Date: Thu, 14 Feb 2002 11:55:29 -0500

Must read to the very end

SURPRISE SETTLEMENT EVENLY SPLITS MICROSOFT; ONE FIRM TO MAKE SOFTWARE,
OTHER TO MAKE PATCHES

Decision Keeps Redmond from Monopolizing Massive Microsoft Patch Industry

Redmond, Wash. - In a surprise settlement today with nine U.S. states,
Microsoft agreed to be split into two independent companies - one that
will continue to make Microsoft operating systems, browsers, and server
software, and another, potentially larger company that will make patches
for Microsoft operating systems, browsers, and server software.

Critics immediately charged that the settlement - which overrides a
previous agreement with the U.S. Department of Justice - does nothing to
diminish Microsoft's standing as the world's most powerful software
company. But industry analysts argued that providing patches for security
holes in Microsoft programs is a major, untapped growth industry, and
applauded the states for not allowing Redmond to control it.

"Just consider, Microsoft can make an operating system, such as Windows
XP, and sell 200 million copies, but each one of those copies is going to
need at least five patches to fix security holes, so that's 1 billion
patches," said Gartner Group analyst Mitch Fershing. "That is an
enormous, undeveloped market."

Microsoft employees seem to agree, as sources in Redmond described a "mad
scramble" among staffers to position themselves for spots at the new
company, called Patchsoft. Asked why people would want to leave Microsoft
for a startup, the source said the answer was "really quite simple."
"Everyone here is asking themselves, 'Do I want to be part of the
problem, or part of the solution?'" he said.

But J.P. Morgan analyst Sherill Walk suspects another motive.
"Considering the sheer number of patches we're talking about, I think the
new company will become another monopoly, and I believe the people who've
jumped ship very well know that."

"Nonsense. It's really all about consumer choice," responded Patchsoft's
new co-CEOs, Bill Gates and Steve Ballmer.

But how will Patchsoft make money? Currently, Microsoft issues free
patches for problems in Windows XP, SQL Server, Internet Explorer,
Outlook, Windows 2000, Flight Simulator, Front Page, Windows Me, Media
Player, Passport, NT Server, Windows 98, LAN Manager (for a complete list
of MS software needing patches, see www.support.microsoft.com). Under the
agreement, Microsoft will no longer issue patches, which Gates said
explains the recent five-day outage at Microsoft's upgrade site. "That
was planned," he said. "It was a test of the Microsoft No Patch Access
system. Went perfectly. No one was able to download anything."

At a press conference to outline the settlement, Connecticut Attorney
General Richard Blumenthal pledged to keep a close eye on Patchsoft to
ensure it would not overcharge for its services. He also expressed hope
that other firms would soon become Certified Microsoft Patch Developers
(CMPDs) and challenge the spin-off. Asked if Patchsoft, with so many
former Microsoft employees, will have an advantage over potential
competitors in the Microsoft patch market, Blumenthal said the settlement
prohibits collaboration. "Patchsoft developers will not have any
foreknowledge of bugs or security holes before software is released.
They'll just have to be surprised," he said. "So it will be just like it
was when they were at Microsoft," he added.

One Reuters reporter, meanwhile, questioned the long-term viability of
Patchsoft. "This seems like a logical split right now, but what if
Microsoft's products improve to the extent that patches are needed less
frequently, or perhaps not at all?" she asked. "I'm sorry, I can only
respond to serious questions," Blumenthal answered.


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