Friend, Foe, or Both? Microsoft Case Highlights 'Coopetition' with the Computer Giant in Court, the Public Gets a Look at a Trend in the Technology Industry - the Mixture of Cooperation and Competition.; NEW RULES OF CONDUCT

Article excerpt

Somewhere, a scriptwriter must be taking notes for a new soap opera from the raw material unfolding at the antitrust trial of Microsoft.

Or maybe "Dallas" and "Knots Landing" have already done the story: Partners are lovey dovey at one moment, carving each other up the next.

Either way, the Microsoft trial, now in its sixth week, vividly depicts how America's newest industry is not only the mother of inventions, but also of some new rules of conduct not found in other, older industries. And in that difference lies one explanation for its dizzying pace of new products and innovation. In the technology field, friend and foe are often the same. Alliances among competitors are common, and relationships can rapidly swing between extremes. "Different companies with different skills come together for a specific purpose. Meanwhile, they're ruthlessly competing on other levels," says W. Brian Arthur, an economist with the Santa Fe Institute. That's been demonstrated amply at the trial. A prime example is the relationship between Microsoft and Intel. The two so dominate their complementary technology spheres - Microsoft in operating systems and Intel in microprocessors - that they're often called Wintel. Yet despite that close alliance, which strives to keep products compatible and the personal-computer market growing, the trial has exposed a major blowup between the companies - in 1995 when Intel threatened to compete in Microsoft's software field. Intel eventually backed down. Cooperation also turned into conflict between Microsoft and Apple Computer and AOL, according to evidence at the trial. And last week, a judge ruled against Microsoft in a separate case brought by Sun Microsystems Inc. that concerned a relationship that was briefly cooperative but turned nasty. Microsoft had licensed the use of Sun's Java programming language, but Sun sued in 1997, charging that Microsoft was using the product improperly to, in effect, sabotage its potential as a longer-term threat to Microsoft. Some experts have coined the phrase "coopetition" or "coopertition" to describe this pattern of behavior among technology firms. Barry Nalebuff, a Yale business professor and co-author of the book "Co-opetition," describes the phenomenon this way: "It's cooperating to create value and then competing to divide it." That, says, Mr. Nalebuff, can be constructive when firms recognize that by cooperating they are "expanding the pie" and then competing for their portion of the expanded pie. …