New Products Reveal Microsoft Wants It All

WITH Bill Gates now married and building a spectacular lakefront home, some people have speculated that he will lose touch with his business, leaving Microsoft Corporation vulnerable to competition.

Yet Mr. Gates appears to be as determined as ever to see the firm remain the 600-megabyte gorilla at the center of the fast-evolving computer-software industry.

Spending millions of dollars on forthcoming versions of its core products - basic software on which most personal computers run - is just a start. The Redmond, Wash., firm is looking beyond the PC on numerous fronts:

* Gates last week announced ``Microsoft Exchange'' - software designed to help corporate work forces share information among many computers. This is a fast-growing area of software, known as ``groupware,'' in which Microsoft lags far behind Lotus Corporation of Cambridge, Mass.

* ``Microsoft at Work'' is a parallel effort to integrate office equipment, such as copy machines and telephones, with computers.

* When people arrive home after a hard day using groupware, Microsoft wants to be waiting in their TV sets. Software controlled by a hand-held keypad will help them sift through masses of entertainment, education, and shopping opportunities that will become available on cable TV.

* Expecting CD-ROM players to proliferate as an attachment to home computers, Microsoft is cranking out compact-disc titles ranging from an encyclopedia to a baseball guide that has sold more than 100,000 copies in less than a month on the market.

``[Microsoft] wants it all'' says Karl Wong, an analyst with Dataquest, a San Jose, Calif., research firm. Indeed, as a featured speaker at two recent gatherings here, Gates implied that more is on the way. He talked up possibilities for digitized art images to a meeting of museum curators and told electric-utility executives that his firm is ready to work with them on ideas such as regulating and monitoring home appliances using the TV/keypad as control panel.

Gates, who is writing a book about information technology, also mentioned the idea of a ``wallet PC'' - potentially a credit card-sized item with computer memory and voice-print security, which could be used in place of money or keys.

To other software companies smarting financially from price competition, all of this must seem an embarrassment of riches.

But can Microsoft win at all these games? ``If there's any company that can, it would probably be Microsoft,'' says Jesse Berst, editor of Windows Watcher, a Bellevue, Wash., newsletter about the company. ``Bill is so focused on staying ahead'' that Microsoft is running scared despite its clout.

Yet Microsoft is not guaranteed success on any of these fronts, analysts say. In groupware, Lotus's popular Notes product is well-established, and while Microsoft Exchange may offer some new features, it's still a long way from being on the market. Nor does Microsoft have any natural advantage in the emerging area of interactive TV, Mr. Berst says.

On another front, Wordperfect Corporation, based in Orem, Utah, will unveil a new suite of office software this week. Led by a strong word-processing program, the basic PC software should be a strong third player in the race between Lotus and Microsoft, Mr. Wong says.

While the competitive influence of Microsoft is rippling out to more companies, ``there will always be niche markets,'' where smaller firms can thrive, Wong adds.

The United States Justice Department, however, is concerned enough by widespread allegations against Microsoft that it is investigating the company for alleged anticompetitive practices. The Federal Trade Commission explored the charges and took no action, but the subsequent scrutiny by Justice suggests that the agency will probably attempt some sort of action by the end of the year, Berst says.

One charge is that Microsoft uses its position as the key supplier of operating systems to gain advantage over rivals in creating software that runs on top, task-oriented applications.

Berst says it would be difficult for Justice to force Microsoft to create a firewall between its operating-systems and applications divisions. And, while Microsoft could score public-relations points by taking this action voluntarily, Berst calls this unlikely.

Last week, another legal challenge for Microsoft fell away, as Microsoft and Stac Electronics, of Carlsbad, Calif., reached a settlement in a patent dispute. Stac had won an initial ruling of $120 million against Microsoft but faced the threat of a protracted legal fight before it could get the money. Microsoft, meanwhile, stood to lose popular memory-expanding features in its operating systems. Microsoft will now invest $40 million in Stac and pay $1 million a month in royalties over the next 43 months.