Rivals Wonder If Microsoft Will Turn Into 'Macrosoft'

LAST year, Bill Gates stood in a darkened convention hall and told a gathering of electric utility executives how computer technology could transform their industry. Bills would be paid electronically. Software in the home would help consumers monitor appliances and manage their energy use.

Mr. Gates, founder of software giant Microsoft Corporation, also said that a host of industries are ripe for technological transformation, from education to banking -- a vision that worries not only Microsoft's rivals, but now the United States Justice Department.

In an antitrust lawsuit filed last week, the Justice Department challenged Microsoft's recent $2 billion bid to buy Intuit Inc., the leading maker of software for paying bills, tracking finances, and preparing taxes on a home computer. The government says a buyout would give Microsoft a monopoly not only in finance software but also, potentially, in the emerging market for on-line financial transactions.

Microsoft is readying an on-line service that could link customers' computers to banks over the phone lines. The Microsoft-Intuit combination would build on Intuit's 70 percent market share in finance software.

''They want a piece of every financial transaction,'' says Mark Macgillivray, managing director of H&M Consulting, a market-research firm in Sunnyvale, Calif.

''Banking, insurance, real estate, TV -- they're all worried about Microsoft,'' he says.

The lawsuit comes on the heels of a separate Justice Department investigation that led to a settlement. In that case, Microsoft agreed to stop certain licensing practices that were deemed unfair. That consent decree was rejected by US District Judge Stanley Sporkin as too timid and is now under review.

In the Intuit case, prosecutors cite letters and memos from executives at both Microsoft and Intuit implying the merger will give banks one clear choice of a software vendor to partner with. Monopoly profits could result.

''There are some banks that are very, very concerned with this,'' says John Hall, an American Bankers Association official.

But even for a powerhouse like Microsoft, there is a big difference between wanting control and winning it. Banks are under no obligation to partner with the Redmond, Wash., company. Rival software waits in the wings.

Indeed, for all the fear and loathing of Microsoft among its rivals and customers, many analysts reject the idea that Microsoft is becoming an information-age Standard Oil Company.

Here is how analysts see Microsoft's chances of dominating several key industries:

* Personal computers. This is already a Microsoft stronghold. Its Windows software is used to control about 80 percent of all PCs. Many observers see Microsoft's lead as all but insurmountable in the near term.

But even here, analysts see some openings. Only about one-third of American households own computers, Mr. Macgillivray says. For most Americans, software is still too hard to use or not compelling enough in value, he says. This leaves room for Apple Computer or other rivals to create software that leapfrogs Windows with new features. ''If you look at that 70 percent of America and their reason for not buying, Apple's potential for market share is huge,'' he says.

''The door is open'' to competition, agrees John Dunkle, president of WorkGroup Technologies, a Hampton, N.H., firm.

* On-line services. Millions of people connect their PCs to phone lines to shop, gather information, pay bills with finance software, and exchange messages. Competition is already hot. But some see the Microsoft Network, due later this year, gaining an unusual advantage: Software for the service will be included in the new version of Windows.

* Corporate computer networks. Microsoft is playing catch-up. Novell Inc.'s Netware is the leading software for linking computers in networks. Lotus Development Corporation's Notes is No. 1 in ''groupware,'' software that helps people share information. Microsoft's high-end software called Windows NT is winning converts after a slow start and could challenge Novell in the long term. A Notes rival, called Microsoft Exchange, will be released later this year.

* Hand-held devices. Microsoft has a way to go in this category, Mr. Dunkle says. Geoworks has been more successful so far -- praised for its compact and flexible software.

* Interactive TV. Microsoft is developing software for cable video services such as ''movies on demand.'' But so are numerous other companies. And the market will take years to develop.