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
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. …