By Stephen Keating
| UPDATA
| Big Dog Malone
<p>OApril cover story, "<a hTelevisionspace Race</a>em>d</em4, page 148), presented Bill Gates as the nerdy beagle playing poker with the big dogs of TV and cable. Among them, the hound of hounds and head of TCI – John Malone. Reacting to the cover, Malone acknowledged that Gates was holding some cards, but so were other players around the table, and Malone is hardly considering folding.</p>
Talone, Gates is just another vendor, no different from Sun or any other player. TCI's promise to put the Windows CE operating system into at least 5 million new digital cable boxes is no big deal, he insists: "It's just being made into a big public relations thing because of the fight between Sun and Microsoft." Though Malone also signed a deal to license Sun's Java, he denies that he's playing the software rivals against each other – he's just doing business. "What could be more American than a purchasing decision where you're getting proposals from multiple vendors?" he asks.</p>
Iebruary, TCI cut a deal with Kraft Foods to deliver targeted advertising through the cable box, and with Intuit and Bank of America to provide financial services on the TV screen. Malone's deal with Intuit is part of his "Let someone other than Microsoft play" strategy. "We don't want to give the business to any one software supplier," he says. "Otherwise, you're riding on the back of a tiger known to be a man-eater."</p>
Mne took the Microsoft ride a few years ago, when TCI traded US$125 million of its own stock for 20 percent of The Microsoft Network, passing up a stake in AOL. He's not about to put all of his stock in one basket again. By working with multiple software producers, Malone is keeping his options open. "Because we don't use a certain OS on day one doesn't mean we can't use it on day two," he's learned.</p>
Bif Gates is just one of the players in the televisionspace game, he's also a player with a few aces up his sleeve. Malone – who preceded Gates as Washington's most-feared technomonopolist – can appreciate Gates's dealings with the US Department of Justice: When Malone stood up to regulators in the early '90s, Congress responded with rate controls that kneecapped the industry. "When the DOJ was suing Bill in 1994," Malone notes, "he took golf lessons and accepted an invitation to play with Clinton on Martha's Vineyard. A week later there was a resolution of the government's antitrust action against him."</p>
Pidential schmoozing or no, the little beagle has other advantages over the big dog. "All of our assets are in the US; they're very hard to move," Malone concedes. "By moving 100 miles, Bill could probably get a tax treaty with the Canadian government and export under NAFTA. The Feds have got to treat him a little bit carefully. He might bite."</p>
AGates's final strong card: "The computer guys don't have to be forward compatible," Malone comments. "You bought the computer, you bought the software. The fact that it doesn't work with the new digital camera is not their problem. They don't own it." TCI, in contrast, owns the hardware, the cables, and the set-top box used by many of its 14 million customers. The cable industry business model depends on monthly fees. "If I make a mistake on the capital I use," says Malone, "the monthly fee is going to go through the roof. You're not going to like it, I'm not going to like it, but the satellite guys are going to love it."</p>
<atricia Krueger</em
<strTA</st>
<a hDog Malone</a>T
Greatest OS That Ever Was</p>
ohe demands of the business world, both the Linux code and the freedom to customize it have been seized upon by hardware developers. Mountain View, California-based Cobalt Microserver, for one, adapted Linux for its 7-inch Qube microserver. The OS choice enabled the company to price its product at US$1,000, about half the cost of competitive systems. "We don't have to pay the tax for a Microsoft system," explains Cobalt cofounder Vivek Mehra.</p>
