INSIDE BUSINESS: Safety Net for Microsoft

Computing: Bill Gates has at last put a superhighway on his road map of the future. Is it too late?

ON THURSDAY Bill Gates gave away a little Microsoft strategy. He was setting up a number of links to push the software giant to the centre of the Internet world. He had, he admitted, been slow in realising just how significant the Net would be.

This was real news, and will make up a little for the lack of innermost thoughts in Gates's long-awaited book, The Road Ahead. It reveals little new material on what Microsoft thinks the immediate future is going to be like, although its folksy style and associated publicity blitz will undoubtedly bring the message to a lot of people who would not have heard it otherwise. You do not become the richest businessman in the world by printing several hundred thousand copies of your corporate strategy.

So although the Gates view of the medium-to-long term is clear enough, the immediate road ahead is murky. How exactly are we going to get from today's personal computers to the wallet PCs, multimedia services piped direct to the home, and the rest of the technological exotica that he describes? One key part of the link has to be Windows 95.

Designed to make multimedia applications more powerful, operation more intuitive and bolt-on technology simpler thanks to "plug and play", Windows 95 was supposed to bestow Apple-like ease of use on the desktop - paving the way for the ultimate "set-top" machine that will act as a conduit between the home television-cum-PC and the information superhighway.

In fact, although the absolute level of sales has been more than satisfactory, relatively few users have upgraded - only 7 per cent, according to figures released in the US last week. The remainder, put off by high associated costs in disk space and memory, are either waiting for costs to fall or the benefits of upgrading to become clearer. So will Windows 95 meet the challenge?

Sitting in his office in Seattle, just before setting off on a European promotional tour, Mr Gates was bullish. "Every two or three years we'll have major new releases that will go another level in exploiting what's happening," he said. "Look at where technology is going - bigger storage, 3-D graphics, middle- band communications like ISDN instead of 28,800- baud telephone lines: so look for new multimedia and Internet stuff to be added to Windows."

As an example he points to digital cameras. "For $500 (pounds 326) you can buy a colour camera. Colour printers are also amazingly cheap. Soon they'll both be cheaper, everyone will buy them and want to pass around photographs of their family and friends. That's supernice, and it's really going to spark a market. And for us, it means we get to do some very cool software."

But it is Mr Gates's reference to "the Internet stuff" that is most revealing. For he has confessed to underestimating both the growth and the potential of the Internet: "We didn't realise just how fast it would reach its critical mass. I certainly didn't expect everyone to be talking about the Internet in the way that they are now."

Critics are seizing on this as an indication that he may be losing his uncanny ability to both predict and manipulate computing's continuing evolution. The irony is immense, for in The Road Ahead, Mr Gates dismisses the risks of this occurring. "Success is a lousy teacher," he asserts. "It seduces smart people into thinking that they can't lose - and it's an unreliable guide to the future." Pointing to former computer visionaries, such as IBM's Tom Watson and Wang Laboratories' An Wang, he concludes that it is difficult for computer companies to make the transition from one era of computing to the next. Nevertheless, insists Mr Gates, "I want to defy historical tradition."

Yet even as The Road Ahead was being printed, Goldman Sachs, the US stockbroker, downgraded Microsoft's investment rating from a "buy" to a "hold", citing its lack of a clear Internet strategy.

Yet that certainly is not a charge that could be levelled at the man some are already calling "the next Bill Gates" - Marc Andreessen, the 24-year-old behind Netscape Communications Corporation.

This summer's highly successful stock flotation saw Mr Andreessen's personal wealth rise from virtually nothing to $50m in a single day - his reward for creating, as a graduate student at the University of Illinois, the first "browser" software for the Internet's World Wide Web, a program called Mosaic. Distributed free on the Internet, the program rapidly became a standard - prompting Mr Andreessen (and others) to develop it further on a commercial basis.

The success of World Wide Web browsers based on Mosaic is one of the reasons why Microsoft had to execute a sudden about-turn with its plans for its own on-line Microsoft Network, by including in it Internet access. The company has also had to rush through its own Web browser, an addition to Windows 95, and is hurriedly developing other Internet applications.

Mr Gates's latest announcement, that he was getting together with companies that include Sun Microsystems and Oracle, is designed to mount a belated challenge to Netscape. He certainly is not admitting he has missed out.

"Perhaps some time in the next hundred years we will miss a turn in the road," he said.

Even so, having for the first time put in print a detailed vision of the future adds to the pressure. People are able to compare what actually happens with what he predicted - and may seize on discrepancies as a sign that the boy wonder is losing his touch. "It's a risk," shrugs Mr Gates. "To that extent, the book is a hostage to fortune."