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Microsoft?s cunning plan.

The firm?s woes are not confined to the courtroom. Adoption of Microsoft?s Windows 2000 operating system has been slower than expected, as has take-up of its Office 2000 applications suite?particularly bad news, as applications account for half of Microsoft?s revenues. A slowdown in the PC industry, combined with the shift from PC-based to Internet-based computing, has further dented the firm?s prospects, prompting it to issue its first profit warning in over a decade. To cap it all, Microsoft was this week hit with one of the biggest race-discrimination lawsuits in American history?to be heard, ironically, before Judge Jackson.

Microsoft faces three main challenges: the rise of the Internet, slowing applications revenues and the threat of break-up. But it has a plan, in the form of a new blueprint for the future of software. This plan, called .NET and unveiled last summer, is nebulous in some parts and non-existent in others, but over the next year it should come into focus. And it might just be able to solve all three of Microsoft?s problems simultaneously.

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