ECONOMIC VIEW

        Is Gates Pouring Fuel on His
        Rivals' Fire?

        By STEVE LOHR

            CAMBRIDGE, Mass. -- The worthies of the
            Massachusetts Institute of Technology had just
        finished thanking William H. Gates profusely for
        paying for a planned new computer science building
        with a handwritten personal check for $20 million.

        No sooner had Gates walked out the door last week
        than a procession of leading researchers at the
        university's renowned Laboratory for Computer
        Science sketched out projects and visions of the
        technological future that all headed in one direction:
        away from the personal computer.

        In a talk called "The Post PC Internet," David Clark, an
        MIT computer scientist, described a world in which the
        personal computer is less important because everything
        -- TV, wristwatch, eyeglasses, toaster -- has a
        computer-on-a-chip and "everything is going to be
        connected to the Internet." For example, a watch face
        might temporarily become a tiny screen displaying your
        appointments for the day, information sent wirelessly to
        the watch from its storage folder on the Internet.

        "The future of computing is inevitably heterogeneous,"
        Clark asserted. "Get used to it." He means
        technologically heterogeneous, not ruled, as PCs are,
        by a dominant technology standard like Microsoft's
        Windows operating system.

        Shrink-wrapped software will go the way of the buggy
        whip, according to the MIT computer experts.
        Consumers will be given computers -- "information
        appliances" in the new world -- free, or more
        accurately, bundled into a monthly service charge, on
        the model of cellular phones.

        Much of corporate computing, predicts Hal Abelson, an
        MIT professor, will shift to the service model as well.
        The large computer installations at companies that run
        their own Web sites will be replaced by centralized
        hosting services. The analogy is with electricity: in the
        19th century, factories had their own generators, but
        with the rise of electric utilities, manufacturers left
        power generation to the specialists.

        Abelson expects that even storage of corporate data,
        from procurement orders to customer records, will be
        handled by outside service suppliers. "You'll see the
        market for disks being replaced by storage services,"
        he said.

        Clark summarized with this forecast: "What does the
        future look like? Well, it's a network full of services."

        So is Gates supporting a computer lab dedicated to the
        destruction of Microsoft's world? After all, many of the
        pronouncements heard last week at the conference
        marking the 35th anniversary of the MIT computer lab
        -- an incubator for pioneering work ranging from word
        processing and spreadsheet software to PC networking
        and e-mail -- sound strikingly like the marketing
        slogans of Microsoft's rivals.

        The network is king? The mantra of Sun Microsystems
        is "The network is the computer." Big iron at the hub of
        hosting operations and Internet services as the business
        of the future? Key chapters in the IBM playbook of
        Louis V. Gerstner Jr.

        Microsoft, of course, resists the notion of the post-PC
        era. An unrivaled marketer, Microsoft knows the
        opinion-shaping power of a deftly phrased concept, and
        buying patterns tend to follow ideas. But mostly, the
        company seems to object to the term post-PC; failing to
        counterattack when the demise of your lifeblood
        business is heralded would be a strategic mistake.

        But Microsoft itself is moving toward the future
        foreseen at MIT. Steven Ballmer, Microsoft's
        president, described a reorganization last month as the
        "renewal of our vision" to put a "PC on every desk and
        in every home." But now, Ballmer says: "We want to
        extend that notion. While the PC will stay central, we
        realize there is demand for computing on non-PC
        devices." Translation: The only religion at Microsoft is
        winning. And the Windows CE operating system is its
        bid to get its software into these non-PC devices.

        If the lucrative commodity of the future is Internet
        services sold by subscription, that is fine with Gates.
        He just calls it by a different name: software. In a
        question-and-answer session in Technology Review
        with Michael Dertouzos, director of the MIT computer
        lab, Gates said, "Software will evolve into even more
        of a service business than it already is, and in the long
        term there will probably be a move toward a
        subscription-style model."

        The stakes are high in the future shape of the
        information economy, and not just for Microsoft. That
        makes some people suspicious that Gates is trying to
        buy the future, by using big donations to computer
        science departments at MIT, Stanford, Harvard and
        Cambridge to bend academic research in
        Microsoft-friendly directions.

        But Dertouzos, at least, has demonstrated independence
        of mind. He was briefly on the list of witnesses
        Microsoft planned to call in its antitrust trial, but
        according to colleagues, he agreed to testify as an
        expert witness on one condition: no coaching from the
        Microsoft legal staff. He was soon dropped as a
        witness when his deposition testimony did not echo
        Microsoft's defense.

        A towering man, Dertouzos issues an emphatic
        declaration of academic independence. "Nobody has
        bought me yet," he said, "and I'll cripple anyone who
        claims they have."