But the Microsoft chairman on Tuesday said his company remains the overall industry leader, and he compared the current rivalries to legendary ones with Lotus, Novell and WordPerfect situations in which the Redmond Company ultimately overcame steep odds to prevail.
"At any point in our history, we've had competitors who were better at doing something," Gates said in an interview with the Seattle Post-Intelligencer, underscoring the fact that it wouldn't be unprecedented to come from behind now.
That was one of the subjects addressed by Gates during the interview at the company's Professional Developers Conference, where Microsoft is seeking to rally support for Windows Vista and Office 12, the next versions of its dominant PC software programs. Among other things, the company showed plans to shift away from traditional drop-down menus to a new "ribbon" of commands across the top of the widely used Office programs, reports Seattle Post Intelligencer.
Speaking about new Windows Vista Gates said, it would have better connectivity with corporate servers, improved graphics and more advanced search capability to allow users to find files more easily on their hard drives.
The new version will be the first major upgrade to Microsoft's core product since the release of Windows XP in 2001.
Today, Windows runs on nearly 90 percent of the world's computers and accounts for about a third of Microsoft's revenues.
In June, Microsoft said it would release Vista in the second half of 2006, and yesterday the company reaffirmed its intent to meet that schedule.
Mr. Gates also previewed for the first time a new version of Microsoft Office, called Office 12, which should be ready for release at roughly the same time as Windows Vista.
Microsoft Office, a suite of programs that includes Word, Excel and the PowerPoint presentation program, has long been considered due for an overhaul, informs New York Times.