Be Inc. sues Microsoft for 'destruction' of business

Scott Hillis

SEATTLE: Be Inc., the failed maker of a computer operating system hailed by
some as an elegant rival to Microsoft Corp.'s dominant Windows platform, said on
Tuesday it is suing the software giant for allegedly destroying its business
through anti-competitive practices.

Be, which sold most of its assets last year to handheld computer maker Palm
Inc., said in a filing in federal court in San Francisco that Microsoft struck
deals with PC makers barring them from installing more than one operating system
on computers they sold.

"Microsoft harmed Be through a series of illegal exclusionary and
anti-competitive acts designed to maintain its monopoly in the Intel-compatible
PC operating system market," Be said in the statement.

Be said the acts resulted in the "destruction" of its business.

The suit is the latest legal headache for Microsoft, which is battling a US
government antitrust suit as well as private class action suits and a new case
filed by rival AOL Time Warner Inc. alleging Microsoft harmed its Netscape
browser unit.

"This sort of litigation is not in the interests of consumers, nor is it
good for the industry," Microsoft spokesman Jim Desler said, adding that
Microsoft would "respond accordingly" in court once it had reviewed
the suit.

Desler also took issue with Be's core contention, saying: "Computer
manufacturers have always been able to ship multiple operating systems with
their computers. In fact, they could and did install Be's operating system on
their computers."

Last August, Be said it was selling the operating system, called BeOS, to
Palm for $11 million. Elements of BeOS are expected to be included in Palm's
next operating system, Palm OS 5.

While the company sold its product assets to Palm, it held on to other assets
like cash and receivables, as well as some contract obligations and the right to
pursue certain legal actions like antitrust claims.

Shares in Be rose 2 cents, or 20 per cent, to 12 cents on Tuesday in Nasdaq
trading.

The "Batmobile" OS

The BeOS, introduced in 1990, had been hailed as a visionary product for its
multimedia abilities, elegance and ability to run many programs at the same
time.

But while it had a core of devoted fans, including science fiction writer
Neal Stephenson, who called it the "Batmobile" of operating systems,
Be never achieved commercial success. Most recently, it powered a short-lived
Web-oriented computer from Sony called the eVilla.

"The great idea behind BeOS was to start from a clean sheet of paper and
design an OS the right way. And that is exactly what they did. This was
obviously a good idea from an aesthetic standpoint, but does not a sound
business plan make," Stephenson wrote in his 1999 operating system essay
"In The Beginning Was The Command Line."

Be's founder, Jean-Louise Gassee, became a poster child for missed
opportunities when he reportedly turned down an offer by Apple Computer Corp. in
1996 to buy the company for $125 million.

Gassee, according to the book "Apple Confidential," wanted $200
million. Apple eventually bought Next, a company started by Steve Jobs, Apple's
co-founder and former chief executive, for $400 million. The Next operating
system now powers Apple's newest computers in the form of Mac OS X.

In the late 1990s, Be also saw increased competition from the upstart Linux
operating system, which gained ground as a free alternative to Windows and other
proprietary software.