Software giant Microsoft maneuvers for dominance in multimedia systems Bill Gates expands company's vision

April 11, 1994|By Seattle Times

SEATTLE -- Microsoft Corp. and Chairman Bill Gates are determined to become the pre-eminent force in a broad range of new technologies that will take the company far beyond its mainstay business of personal-computer software.

In announcing several major alliances that could result in businesses around the world, Microsoft has charted a future into nebulous, unknown industries loosely defined as multimedia, interactive communications.

"Microsoft is clearly at the vortex of this industry, and they mean to stay there," said Peter Rogers, an analyst for Robertson Stephens & Co. in San Francisco.

The personal-computer industry is evolving into interactive communications for business, education and consumer uses, said Mr. Rogers.

"In order to maintain its leadership, Microsoft has to pursue and lead the industry into these new areas," he said. "The industry is evolving, and Microsoft must continue to be at the front of the evolution."

However, the future that Mr. Gates may be attempting to create is not yet well-defined, just as the future of personal computers was seen only vaguely, and by only a few, when Mr. Gates founded Microsoft in the mid-1970s.

As a result, "We see a lot of activity that does not appear to add up," unlike Microsoft's latest ventures into networking and home PC applications, said Mr. Rogers.

Here are details of a few of the deals expected to expand the software giant's global dominance:

* Mr. Gates and Craig McCaw, chairman of McCaw Cellular Communications, the world's largest cellular-phone company, joined forces to back a $9 billion global satellite venture called Teledesic Corp. The new company filed papers with the Federal Communications Commission to put 840 satellites in low orbit around the Earth. Starting in 2001, the system aims to shuttle voice, data and other telecommunications to and from rural and remote locations otherwise unserviceable by phone lines.

Teledesic is a private investment on the part of Mr. Gates, and thus involves him personally more than Microsoft as a company.

"We have seen in the past his desire to acquire the electronic rights to some images, and this is another indication that Bill's personal ambitions and interests are larger than Microsoft, which is perfectly natural and normal," Mr. Rogers said.

* Mr. Gates, in China and Japan last month, announced that Microsoft has agreed with Nippon Telegraph & Telephone Co. to jointly develop systems that will transmit voice and video communication over phone and computer networks.

NTT is considered the AT&T of Japan. Microsoft wants its operating system technology to be the Japanese multimedia standard in the same way MS-DOS became the standard for the personal-computer operating system.

Analysts said Japan represents a foothold in the international "information superhighway."

Last month, Microsoft disclosed that it had been in talks with the former American Telephone & Telegraph Corp. for the past three months exploring a series of joint ventures, including interactive television, on-line computer services and software. Although they concluded that no major deal is possible now, they continue to discuss areas where they could work together. Mr. McCaw reportedly initiated the meeting between Mr. Gates and AT&T Chairman Robert Allen. Mr. McCaw is in the process of trying to sell his company to AT&T for $12.6 billion.

* Microsoft and Mobile Telecommunications Technologies Corp., the nation's largest paging company, announced they will jointly develop and market what they want to be the nation's first two-way, wireless personal communications services network. Expected to be operational in 1995, the system will allow users to send and receive messages via hand-held devices and laptop and palmtop computers. Microsoft will invest $30 million in the deal. In addition, Mr. Gates is putting in $10 million of his own money as is Microsoft co-founder Paul Allen.

Several weeks ago, Microsoft announced it was jointly developing an interactive television system with cable giant Tele-Communications Inc.

Microsoft and TCI plan a limited trial of the system by 1995 before deploying it widely in Seattle and Denver test markets. Mr. Rogers does not see the new ventures as any significant threat to Microsoft's core businesses. Most of the new ventures "are in the very early stages of formation, and you don't have to commit a lot of resources to it," he said.

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