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Microsoft: hardware kingpin?

NEWS ANALYSIS: Microsoft is parlaying its colossal software clout into a leadership role in hardware that may give the company the helm for the entire PC industry as it heads into a new age of consumer computing.

Microsoft is parlaying its colossal software clout into a leadership role in hardware that may give the company the helm for the entire PC industry as it heads into a new age of consumer computing.

The company's sway in hardware design was affirmed this week at its Windows Hardware Engineering Conference (WinHEC), one of the premier events for the PC industry. There, Microsoft spelled out in precise detail the key technologies that it wants to appear in consumer PCs over the next 12 to 18 months, most notably a new "sealed case" design that it has dubbed the Simply Interactive PC (SIPC).

Microsoft also issued detailed hardware design guides for servers and workstations, in papers entitled "Server PC 97" and "Workstation PC 97" respectively.

Some in the PC industry argue that Microsoft's hardware influence is even beginning to overshadow that of Intel, historically the key hardware supplier and in some cases development partner to most if not all of the largest PC vendors. Not only a chip manufacturer, Intel has established itself as a research and development powerhouse, succeeding in turning Intel-driven technologies such as the PCI bus into industry standards found in nearly all PCs now coming off the manufacturing line.

The balance of power seems to have shifted since the two companies fought last year over an Intel-initiated technology that Microsoft nixed.

"It's been different ever since," said the president of a major hardware company. From his perspective, Microsoft started edging in on Intel's leadership of hardware design, even to the extent that his company was forced to rework hardware designs to conform to Microsoft's position.

Not everyone thinks that Microsoft' new-found hardware influence is bad. "This is a maturation process, an evolutionary process. All these hardware issues are very tangled up. In order to make [software] happen you have to know what the [hardware] guy's doing," said Nathan Brookwood, an analyst at market research firm Dataquest.

That's certainly how Microsoft sees it.

A quick glance at some of the WinHEC papers and sessions conducted by Microsoft show that the company is eager to participate in the creation of new hardware designs and technologies. In one paper, entitled "Building the Great Entertainment PC," Microsoft spells out in a 24-page "technology brief" design parameters for a 1996-97 home PC, including surround sound, large-screen TVs, and MPEG-2 video hardware. Other related papers delve into minute technical detail of system designs.

In pushing its SIPC designs, Microsoft is even taking the reins on hardware issues near and dear to Intel's heart. For example, Microsoft officials discussing next-generation SIPC designs at WinHEC suggested eliminating, or at least relegating to a lesser status, the PCI technology that Intel has promoted for years and replacing it with a new specification known as the 1394 bus, which Microsoft says is faster and more powerful.

Analysts say that far from interfering in an area it knows nothing about, Microsoft engineers have done their hardware homework.

"There's absolutely no question about [Microsoft's] increasing expertise in hardware. I would say it exceeds the level of expertise at some start-up [hardware] companies," said Dean McCarron, a principal at Mercury Research in Scottsdale, Arizona.

But McCarron cautions that Intel is still extremely powerful in hardware. "These may be edicts [from Microsoft] but they're interpreted [by the industry] as guidelines only. Microsoft is a software company. They don't build these things. Microsoft defines what they'd like to see [in hardware], but Intel defines what you actually see."

Intel, for its part, professes not to care. Mike Baily, Intel's platform industry marketing manager, takes a pragmatic view: "As long as we're working together. That's what matters."