"The decision is certainly unsettling the competitive landscape, and there is an additional focus and spotlight on Microsoft's competitors," said Hambrecht & Quist analyst, Christopher Galvin. "But we don't know how they will be affected until a final determination is made." Other analysts also cautioned that there was no way to predict the final outcome of the landmark case. However, some are expecting that Microsoft will ultimately prevail on appeal.
Red Hat (the largest distributor of the Linux operating system, considered to be an alternative to Microsoft's Windows), the database software maker, Oracle, and the computer workstation developer, Sun Microsystems, were all regarded as possible beneficiaries of US District Judge Thomas Penfield Jackson's ruling that Microsoft is a monopoly that has bullied competitors and harmed consumers.
Red Hat shares gained $181/16 to $104 on Nasdaq. Oracle gained $3/4 to $597/16 and Sun Microsystems gained $23/16 to $1117/8 in heavy trading volumes.
"It could be positive for companies rallying at this point, although the timeframe for injunctive relief could be years away," said Morgan Stanley analyst Chuck Philips. "By that time, it may not matter in a lot of the areas covered."
A court-ordered break-up of the world's leading software company, although seen as highly unlikely, became more conceivable after Judge Jackson's 207-page opinion was issued on Friday, backing the US government's anti- trust regulators on nearly every point.
Even in the long-shot scenario of a break-up, companies might not be able to shift enough funding into research and development fast enough to take huge chunks of market share, Mr Philips said.
"There is a limit to what some of these companies can spend on R&D," he said, adding that companies that are in alliances with Microsoft are not moving at this point to hedge their bets.
"Most companies hedge anyway, and they have seen these anti-trust actions lag on for years before in other cases. For some time to come, people will need to be compatible with what Microsoft is doing anyway," said Mr Philips.
Analysts say there is no way of knowing at present whether the continuing litigation will actually help competitors to eat into Microsoft's market domination in the long run. Despite the legal challenges it is facing, Microsoft commands as much as 90 per cent of the global market for personal computer operating systems.
Even if action taken against Microsoft falls short of a full break-up, state and federal anti-trust regulators could seek fundamental changes in the way Microsoft does business, making a settlement improbable and setting the stage for an appeals process that could drag on for years.