Startups told to be wary of Microsoft

On the same day Steve Ballmer talked up Microsoft's upcoming $500 million marketing campaign around Windows Vista and business software products, a group of entrepreneurs met in Bellevue to discuss ways they can build businesses around Vista.

One opportunity is for compelling products that run on Microsoft's software stack and may be sold by the company's sales force, attendees at The Indus Entrepreneurs forum learned Thursday.

Another opportunity is for applications that show off platform capabilities, or fill gaps in Microsoft's offering.

Yet startups must still be wary of Microsoft, which may go after big opportunities that emerge on its platform, warned Bill Baxter, who co-founded Bsquare, left the company in 2004, and recently started a digital music business called Snaptune.

"They have to expand into new software markets" to meet their growth targets, he said. "You have to think about whether that is one Microsoft ultimately wants to own."

Among Baxter's suggestions: Pursue a small niche market that wouldn't interest Microsoft.

He said the marketing blitz around new operating systems is a good opportunity, but it may be too late for a Vista-focused startup to "get in on the gravy train of the launch."

Another opportunity is for consultants to upgrade applications that don't work with Vista, said Rajeev Agarwal, founder of MAQ Software in Redmond.

Companies are likely to spend billions on services as they move to the new platform, said Carey Butler, Bsquare vice president.

A little cranky?

Bill Gates may have burned up some of his goodwill at the Massachusetts Institute of Technology, where he helped pay for a computer science building that bears his name.

Last Wednesday, the Microsoft chairman mocked the $100 laptop that MIT is creating for developing countries, according to a Reuters report. The laptop project, which has backing from Google and Red Hat, calls for machines with small screens and a hand crank to generate their own power. The machines are intended to be shared by numerous users, in a village, for instance.

"If you are going to go have people share the computer, get a broadband connection and have somebody there who can help support the user, geez, get a decent computer where you can actually read the text and you're not sitting there cranking the thing while you're trying to type," Gates said at a Microsoft Government Leaders Forum in the Washington, D.C., area.

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