Microsoft Taking Big Gamble

REDMOND, Washington -- Microsoft Corp. chairman Bill Gates unveiled an ambitious effort to transform Microsoft's software products into Internet-based personal services, a move top officials called one of the biggest gambles the company has ever taken.

The initiative, Microsoft.NET, will allow individuals to access data from a wide array of devices, including personal computers, handheld organizers and cellular telephones. The devices will communicate behind the scenes, coordinating between themselves and constantly updating each other, Gates said Thursday.

"We have the opportunity to take this vision of a digital world and apply the magic of software to make this a reality," Gates said.

Previews of these new services f which will include online versions of Microsoft's popular Office software and features of its Windows operating system f will begin in 2001, but full services will not be widely available until at least 2002, Gates said.

"This is more like Windows," Microsoft chief executive Steve Ballmer said in an interview, comparing it to the gamble the company took in banking on that operating system in the 1980s. "It's another one of those big bet-the-company type deals and it's the right bet."

Despite Thursday's announcement, Microsoft is only the latest entrant into the market for Web-based services. Oracle Corp. has invested heavily in similar services to corporations. Sun Microsystems Inc. will unveil a Web-based office software suite by the end of the summer.

Some analysts have said that the kind of integration needed to make Microsoft.NET a reality could run afoul of the company's antitrust battle. Microsoft is appealing a court-ordered breakup after a federal judge found it had broken antitrust laws. "This is Microsoft, full speed ahead, damn the torpedoes," said Chris LeTocq, an analyst with the Gartner Group. "But if the (Justice Department) doesn't look at this and say it proves their point, I'd be surprised."

There are many proposed restrictions on Microsoft's business practices that, if upheld, could severely hamper the company's progress on Microsoft.NET.

Gates did not comment on the case during his presentation, but Ballmer said "one way or another" the company would finish work on Microsoft.NET.

Microsoft plans to take its popular software products, including Windows, Microsoft Office and the Microsoft Network online service, and make their features readily available over the Internet.

Thus, with Office.NET a user could write Microsoft Word documents and integrate them with Excel spreadsheets or other Microsoft software, all through a Web browser on a handheld organizer with a link to the Internet. The user could access the same documents from another computer, since the material is stored in a central computer and accessible from anywhere over the Web.

Both home and business users would pay a monthly subscription fee to use the Web-based services, on top of the fee they currently pay for Internet access, said Rick Belluzzo, Microsoft's group vice president for consumer products.

Gates demonstrated some new technologies on so-called "smart" phones, handheld computers and a "tablet PC," a fully functional computer that uses a pen and handwriting recognition instead of a keyboard.

Microsoft Network Web sites and services will become MSN.NET and continue to offer such services as free online e-mail, bill paying, appointment management and instant messaging. These services will be part of Windows.NET, Office.NET and a suite of tools that customers can use to build their own products.

Gates has been leading the charge on Microsoft.NET since stepping down as chief executive in January. He said he has focused on making new services easy to use and hopes to make handwriting and voice recognition the keystones of the project, eventually allowing people to get work done by simply talking to a computer.

Microsoft has already received backing from Compaq Computer Corp. and Dell Computer Corp., among others, including Marc Andreessen, founder of Netscape Communications Corp. and now the chairman of Loudcloud Inc.

Microsoft and the U.S. government agreed Thursday on an expedited schedule for submitting briefs to the U.S. Supreme Court that will enable the court to decide whether to accept the antitrust case as soon as late August, The New York Times reported.

On Tuesday, Judge Thomas Penfield Jackson sent the case to the Supreme Court for direct review under a little-used law known as the Expediting Act.

After that, using the normal rules, Microsoft and the government would have had 90 days to file briefs and replies on the question of whether the court should take the appeal or send it to the Court of Appeals, pushing that decision into late September.

But in a notice to the court, U.S. Solicitor General Seth Waxman said that "the parties have agreed to a briefing schedule" under which the last brief would be filed Aug. 22.

If the Supreme Court decides to take the Microsoft appeal, then the litigants will get another briefing schedule, this one on the main issues in the case.