Last week's column on my bootleg 802.11b installation drew so much interest that I'll be doing a follow-up column next week. But now I just have to comment on recent legal events for Microsoft. You know I can't help it.

So the Court of Appeals has been heard from and things don't appear to be quite so dark for Microsoft as they were under Judge Thomas Penfield Jackson. Jackson, himself, is gone — booted from the case by the disdainful appeals panel. They threw out Jackson's remedy of breaking-up Microsoft, threw back to the lower court (but not back to Jackson) the issue of whether Microsoft's squashing of Netscape was anti-trust or not, but left intact the basic conclusion that Microsoft had broken anti-trust laws by the way it promoted Windows. Don't mistake the fact that Microsoft is still guilty and that is unlikely to change, even on appeal. So what happens now? A hundred prognosticators beat me to this one by a week, proposing that the Feds would cave, or that Microsoft was in graver trouble than Bill Gates thinks, or that a settlement is probably near. But none of those smarty-pants said a word about what all this means to us, the consumers. What happens to us now?

This is not a legal question, but a business question. Sure, Microsoft will appeal to the U.S. Supreme Court, will enter settlement negotiations with the DOJ, and will be the subject of almost immediate lawsuits by companies like Sun Microsystems and AOL Time-Warner. But how will our lives be changed by any of this?

First, you have to understand the woeful state of the PC industry. The PC software and hardware industry is now way past recession. I call it a depression. Sales growth in dollars has been falling since 1996. Probably half of the U.S. software firms from 1995 no longer exist. U.S. fourth quarter 2000 sales were actually LESS than fourth quarter 1999 sales in both units and dollars. This kind of negative growth had never happened before. The largest software retailer in 1995 was Egghead, which made some truly stupid moves and is now an afterthought. If this is what happened to a big guy, imagine the atmosphere for small guys. Probably half the resellers in the U.S. are either in Chapter 11 bankruptcy, have been in Chapter 11, or are moving toward Chapter 11. The number of distributors has been cut in half, which makes people very conniving. Everybody is an extortionist, including the resellers, because everyone is being squeezed. And the outfit they most like to blame for these troubles is Microsoft.

Here is how Microsoft reacts to this environment, according to one beleaguered reseller: "Microsoft raised its absolute price of operating software for the consumer desktop by over 100 percent AND has devalued the license agreement itself by well more than 50 percent. Subtly, Microsoft's 'current OEM license agreement' only allows the operation of the software 'on the original machine.' Now, if you can tell me what an original machine is, thanks. Furthermore, Microsoft now receives as much as 33 percent of gross income from the sale of a simple desktop PC. A 128MB Celeron 633, fully equipped without monitor is $250 without Windows Millenium, and $375 with it."

Microsoft is tough, sure, but is this behavior the cause of the troubles for the rest of the industry, or is it a result of those troubles? I believe the problem is not Microsoft — it's the business environment.

Please understand that I still think Microsoft has broken laws and should be punished, and I happen to think that my particular suggested punishment (selling-off Microsoft's programming language group and giving the proceeds to registered users) makes a lot of sense, but to blame everything in the industry on Microsoft is just a mistake. Times are lean and mean, and Microsoft is just meaner than its competitors. Microsoft is meaner than anyone.

Microsoft is doing everything they can do to cut corners and to maximize revenues. Yes, they are being overly aggressive, they beat up competitors and partners alike, and probably can't be trusted. Yes, they make more profit on each PC than does the manufacturer of that PC. And they will probably win, no matter who or what they stand against. Microsoft has way more money than anyone else, and they're incredibly aggressive. But do their actions haveanything to do with creating current economic conditions? No, I don't think so. Microsoft is certainly not the only successful software company. Look at Adobe, Intuit, Oracle, or Autodesk to prove that. Most importantly, does the average consumer think that Microsoft is extorting him? No.

If you don't like Microsoft, stop buying their products. Go to Linux or Apple. There are alternatives, many of them cheaper and most of them better, so use them.

Here are my predictions for what will happen for Microsoft in the months ahead. They will begin half-hearted settlement negotiations with the DOJ — half-hearted because Microsoft gets richer the longer it takes to settle. All the while, they'll push every button they can find in the Bush Administration, which may well cave and let Microsoft off with a warning. But that doesn't eliminate the many states that are party to the original lawsuit. Microsoft will just have to threaten each of these in turn.

Understand something here — Microsoft is a Spartan outfit, and Spartans like to fight. They don't see all this as anything except an opportunity to win. Forget the private lawsuits; those will take decades to settle. And you can pretty much forget a settlement with the Feds, too, unless it can be done for under about $2 billion.

Why $2 billion? Because that's about how much it would cost to move Microsoft offshore, something they will threaten to do. Bill Gates has built an empire by threatening to take his ball and go home and he will do it again. It has been a very successful strategy. And if Microsoft skips town like a Robert Vesco, Gates won't feel bad at all because in his mind it will have been the government's stupid decision, not his, that made the move happen. "They forced me to do it."

I have no idea where Microsoft would move, but I know they are considering it. Let me repeat that: I KNOW THEY ARE CONSIDERING IT.

The best solution I think would be for Gates and Ballmer to simply buy a small country and declare Microsoft's sovereignty. Belize would be nice. It's a small tropical country in Latin America where the dominant language is English and the CIA 2000 Factbook says the Gross Domestic Product is $740 million. Microsoft could easily buy Belize ($2 billion is $400 per acre and would probably be enough) pay off the $380 million national debt, then throw up luxury condos for 20,000 programmers. Gates couldn't be king, because Belize is part of the British Commonwealth and already has Queen Elizabeth II to do that job, but I'm sure he could get a title of some sort. Prince Bill?

Once Microsoft is not only outside the USA, but is itself a sovereign nation, all anti-trust bets are off. As a diplomat, Gates couldn't even be arrested for speeding on visits back to Redmond, a result that might make the move worthwhile in itself.