Microsoft Yearns to Unseat Lotus at Top of Computer Software Field

Article excerpt

BELLEVUE, Wash - Something is gnawing at Microsoft.

By all accounts, the Microsoft Corp., the first major company spawned by the personal computer to reach its 10th birthday, has a lot to celebrate. Clearly the company has prospered, with revenues leaping by more than 40 percent in its last fiscal year.

It has by far the broadest product line among software companies. And recently it signed a long-term agreement with the International Business Machines Corp. that is seen as cementing Microsoft's position at the center of the personal computer universe.

""They're just on top of the world right now, as far as I'm concerned,'' said David S. Wagman, co-chairman of Softsel Computer Products, a leading distributor of software.

But what is spoiling the party is that the company was eclipsed last year as the largest personal computer software concern by the Lotus Development Corp., creator of the highly successful 1-2-3 spreadsheet program. Lotus's revenues totaled $200 million for the 12 months ended June 30. Microsoft's revenues came to $140 million in that same period.

While Lotus and Microsoft remain friendly rivals, Microsoft and its 29-year-old chairman, William H. Gates, clearly want to be No. 1 again. ""It drives him up the wall,'' said one friend of Gates.

To catch up to Lotus, or even merely to continue to grow, Microsoft must continue to expand beyond systems software, which governs the basic functions of the computer, to the far larger market of applications programs, such as word processors and spreadsheets, which guide the computer in particular tasks. Lotus sells only applications software.

Microsoft is now unleashing a barrage of programs, including Excel, a spreadsheet program for the Macintosh computer, and Access, a communications package for the IBM computer. It is also finally bringing Windows to market. That program, a key part of its strategy, is more than a year behind schedule.

But selling software to consumers is different from selling highly technical operating systems directly to computer companies. To compete against sophisticated marketers like Lotus, Microsoft is also undergoing a corporate makeover, trying to shed its ""techie'' image in favor of a flashier one.

The corporate image perhaps is a reflection of Gates himself, who is a technical genius but is much less outgoing than Mitchell D. Kapor, Lotus's chairman.

""We're taking a look at everything,'' said Jean Richardson, a former Apple official who now heads Microsoft's corporate communications. ""A year from now you will see a very different image of Microsoft.''

Going public next year is also part of the plan. Officials say that the need for money is not the primary reason for a public offering. The company has been consistently profitable and is believed to have more than $15 million in cash on hand. …