The Redmond Menace

ANALYSIS A throbbing techno dance beat filled Seattle's convention center earlier this month as 3,000 computer scientists broke into applause. Bill Gates strode onto the stage, his normal geek pallor replaced by a healthy, confident glow. Forget that whining, evasive CEO who testified during the antitrust trial – Gates is in command again.

This spring, the founder and chief software architect of Microsoft has been busy, in his element and on the offensive. Inviting prospective Silicon Valley partners to come dance with the devil, Gates opened a new Microsoft technology test facility in Mountain View, Calif. Flying to the heart of Sony territory, he revealed plans at the Tokyo Game Show to bring the Xbox videogame console to Japan. Back in Redmond, Wash., ignoring an ongoing European Union antitrust investigation, he touted the British government's adoption of Microsoft technology for its Internet portal. Most significantly, Gates announced Hailstorm, a bold multimillion-dollar initiative that could win Microsoft dominance of the next generation of Internet computing.

In short, the software giant is on a tear. The threat of a court-ordered breakup has diminished. So, too, has the fear of obscurity in the face of faster Internet innovators. While the rest of the tech industry reels from the dot-com collapse, Microsoft's leaders consider themselves once again poised to rule the world.

"We are a vital company," asserts ever-bullish CEO Steve Ballmer. "There's another revolution coming in computing. I think we are way out front. I don't think there's really anybody else to look to as providing any leadership."

Competitors have been dancing on Microsoft's grave for the past couple of years. The antitrust trial was an embarrassing debacle. Internet startups were as sexy as desktop software was pass&#233. Top execs were leaving in a brain drain. But now that the dot-coms have flopped, a favorable outcome in federal appeals court could bring Microsoft back with a vengeance. At a crucial and daunting moment for the industry, when many of its rivals are struggling and strapped for capital, Microsoft has $27 billion in ready money to rebuild the growth engine that for years dazzled Wall Street.

The company, which saw $23 billion worth of sales its latest fiscal year (ending June 2000), is making sweeping moves onto the Internet, into corporate business software and onto handhelds, phones and game consoles. To build a new empire online, Microsoft is inviting partnerships from software developers and companies that need applications. It's also eyeing a slew of acquisitions this year to snap up tools and services for its Internet push.