Gates goes all out to dominate the Internet

Microsoft is ready to run up $1bn in losses to rule the information superhighway

Bill Gates, already the most powerful man in personal computing, is today expected to confirm his intention of dominating the Internet, whatever the cost.

Mr Gates, who delivers the keynote speech to the Comdex annual convention of Personal Computer makers in Las Vegas today, has already committed his company to losing an astonishing $1bn over the next three years in its quest to conquer the information superhighway.

Microsoft's willingness to dip so deep into its huge war chest has taken competitors by surprise, from Netscape, the pioneer and present front- runner in World Wide Web browsers, to proprietory on-line providers like America Online.

The outlay is all the more stunning given the scorn expressed about the World Wide Web until quite recently by Mr Gates. The rapid rise of Netscape convinced Microsoft that the Internet was a much more important sector than it had realised and forced it to change tack.

"It's going to take a lot of experimentation, technology and serious investment," Steve Balmer, Microsoft's Vice- President, announced at a meeting of technology executives in Boston last Friday. He forecast a loss of pounds 300m to pounds 266m on Microsoft's Internet ventures in the coming year and further, if smaller, deficits in the two years following. However, with a cash reserve of some pounds 4.7bn, these are losses that Microsoft can afford.

It's next step is expected to be the relaunch later this month of its MSN - Microsoft Network - service. In its original form, MSN was a proprietory service like AOL and Compuserve. It has already been repackaged once as a more Internet- oriented service. Microsoft is also using the Comdex gathering to push its new Windows CE operating system for an emerging generation of hand- held computers - a cut-down version of Windows 95 designed to work with palm-sized computers

The initiative was backed by seven big PC and electronics companies which launched their own hand-held computers, all designed to use Windows CE. Compaq, Hewlett-Packard, Casio Computer, Hitachi, NEC, LG Electronics and Philips all weighed in with their own products, due in shops by the end of the year.

However, the move by Microsoft and its heavyweight allies had one notable absentee - Psion, the British company which has achieved huge international sales for its handheld Series 3 computers.

While there are some 150 million PCs in the world, there are fewer than five million handheld computers. Past efforts such as Apple's Newton and Fujitsu's Poquet have been market failures. The Psion Series 3, launched in 1991, has sold more than a million and stands out as a notable success. Yesterday, Psion launched a suite of Internet connection software for the Series 3.

But Psion's use of its own operating system, and the complexity of the software used to link it to desktop PCs, has held it back from widespread corporate use. A Psion spokesman did not know whether Psion and Microsoft had discussed putting Windows CE on the Series 3.

Windows CE computers will have a keyboard, touch-sensitive screen and an infrared wireless communication system. The big selling-point for the new machines is that they should work in concert. A Windows CE electronic diary on your desktop PC could be taken on your handheld machine. Any changes made while away would be updated to the desktop version by clicking on an icon on your return.Though such facilities have been available using packages on larger, corporate machines, they have not been shrunk to fit users of desktop and handheld machines before.