Microsoft chief Bill Gates says his company is to steer clear of media mergers, and stick instead to developing software.

He told world business and political leaders gathered in Davos, Switzerland, that owning a film studio or other content was not the way forward for the Seattle-based firm.

"The strategy that my company is pursuing has really been the same for the last 25 years," said Mr Gates.

"It would be fun to own a movie studio, but I don't have any expertise, so we're going to stay away from that. We're not going to go out and buy magazines or other traditional content things.

"Instead, I think there's room for a company whose main goal is to create software."

Changing internet use

Microsoft's European chief, Bernard Vergnes, added: "We might end up having agreements, relationships, with content companies, we might go as far as some ... investment, but in no case can we see ourselves running, or having responsibility for the definition of the strategy of a content company."

Microsoft has spelled out a vision that includes expanding beyond the PC onto the internet and into mobile devices and household appliances.

At the heart of Microsoft's strategy was the belief that as the novelty wears off, the appeal of the internet will lie more in what it can do for them, said Mr Vergnes.

"Today it's probably true that the content is what drives people to a site, but the way people use internet today is probably not the way they would like to use it," said Mr Vergnes.

During the debate on the future of the internet, Steve Case, chief executive of America Online, said the merger with Time Warner would enable them to use new technologies to create services for consumers which each company would have been unable to do as independent entities.

Murdoch and Arafat

Mr Case said AOL and Time Warner aimed to work on bringing together telephone, television and computers.

"The next step is trying to think through from a consumer standpoint what is the best way to use these new devices to take advantage of new networks," said Mr Case.

The World Economic Forum focus switched to the future of the internet as discussions continued about ways of narrowing the gap between rich and poor nations.

Among other high profile figures at the gathering in Davos on Monday were Palestinian leader Yasser Arafat and global media mogul Rupert Murdoch.