Microsoft verdict: double trouble for Microsoft's competitors

Microsoft is dead. Make way for its two terrible offspring.

This evening, Judge Penfield Jackson backed the US government's remedy for Microsoft's anti-competitive behaviour. Judge Jackson wants Microsoft split in two - applications on one side, operating systems on the other.

Shortly after the ruling, Bill Gates vowed to appeal against the decision. Behind closed doors, he'll be laughing all the way to the top of the 'Richest Men in History' list.

At 20:29 GMT there was Microsoft, which utterly dominated the software industry. At 20:30 GMT, Microsoft became two companies, one with 98 per cent market share, the other with 99 per cent. The reality of course is that such a split could take a year or more to be put into practice. But the die has been cast.

Judge Jackson's ongoing restrictions focus on the relationship between the two companies, and their agreements with PC manufacturers and ISVs (independent software vendors). There is nothing to stop them pressing home their overwhelming advantage in each market, becoming incredibly acquisitive, incredibly profitable, and of course incredibly difficult to compete with.

The real question is where Bill Gates will place his allegiance. His heart may lie with Windows, but his head will be telling him applications. The operating system market is in flux. Open source is on the rise. IBM is backing Linux. Sun has opened up its Unix code. There may come a day when the OS is free, and only services cost money. That day is a very, very long way off for applications.

With Microsoft's corporate and Gates' personal investments in content and content delivery companies across the globe, the applications route is doubly appealing. The door is opening for writing applications for the next generation of wireless access devices.

That door could also open the way for Seattle to lead Nasdaq into yet another tech boom.