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By Sally Watson, 6 August 1999 00:15

NEWS Microsoft could be threatened by further fragmentation of the IT industry, according to David Birss, MD of networking specialist, Xstreamis. The software giant has spent the last 12 months tied up in court battles with the US Department of Justice, industry competitors and, most recently, the US Internal Revenue Service. So far, the company's profits don't seem to have suffered, but Birss warned that Microsoft could end up being left behind by the pace of the industry. "I was one of the guys in the 70s and 80s who believed IBM could never be beaten - well, IBM was beaten. It wasn't beaten by a head-to-head competitor, it was beaten by a fragmentation of the industry," he said. "I think that is what's going to catch Microsoft out - the possibility of fragmentation in the marketplace - and they're either too big to catch up with it or they don't spot it." But Meredith Fischer, VP of marketing at Pitney Bowes, thinks Bill Gates could use market change to his advantage. "I believe there will be a lot more of what we call 'information appliances', in which bits and pieces of the operating system will be available attached to applications. "I think that will break Microsoft's stranglehold of power on the desktop - but if they work it right, they could also have a lot of bright, new applications and a lot of great new content behind those bits and pieces." Dr Richard Sykes, outgoing chief information officer at ICI, claimed Microsoft faces the same problem as a lot of hardware companies. "Increasingly, the world moves to buying services rather than software, and Microsoft will find it very difficult to become a service provider," he said. "Once you've grown up in an industry writing software or making boxes, it's a very, very big shift to becoming a service provider, and other people often do it better." To see these views and more of Silicon.com's top guests, watch http://www.silicon.com/groupware