Thomas Reardon knows exactly how Microsoft (MSFT) thinks when it sets out to destroy a competitor. He knows how it goes about running down rivals that once had huge leads, and how it rips the heart out of little upstarts -- software companies no bigger than the one he works for -- that seem only the most distant threat. He knows because he was once inside Microsoft, helping to push the plunger on one of the greatest corporate demolitions in history.

In the mid-1990s, Reardon ran the Microsoft engineering team that developed Internet Explorer, the product that methodically snuffed out Netscape. This, he says, is the one thing anyone going up against Microsoft must understand: "The presumption at Microsoft," says Reardon, now vice president for technology at cell-phone software maker Openwave, "is that all you have to do is wound the opponent, and they will bleed to death."

The list of companies that have bled out at the hands of Microsoft is long and legendary: Borland, Lotus Development, Netscape, WordPerfect, and on and on. Many others, including Oracle (ORCL) and Sun Microsystems (SUNW), have sustained grave damage. And now there's fresh blood flowing elsewhere. Facing slowing sales of its signature desktop software, Microsoft is swarming into the consumer market, slashing at the likes of AOL Time Warner (AOL), Palm (PALM), and Sony (SNE). That's because Microsoft already owns America's offices, says Sun's chief strategist Jonathan Schwartz; now "it wants America's living rooms."