Microsoft dominates the market for desktop computer operating systems. But computers are shrinking and becoming small enough to fit into the palm of your hand.
Combined with mobile phone technology, the next generation of computers will offer email, internet access and even videophone links - all in a pocket device.
The hostile takeover bid launched by the mobile phone company Vodafone for its German rival Mannesman demonstrates how intense the battle is becoming for control of the mobile market.
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As the technology gets smaller, so the competition to run these computers becomes more intense with a number of operating systems struggling for dominance.
These include Microsoft's Windows CE, but this is not growing as fast as 3Com's Palm Pilot series - and the multinational consortium Symbian is doing well with its EPOC operating system.
Next generation
Microsoft has been heavily criticised for trying to cram a large operating system into a small computer, whereas both Palm Pilot and EPOC are praised for being specifically designed for hand-held devices.
Mobile phone companies are working on high speed wireless links that will allow portable computers to connect to the internet faster than a desktop computer with a modem.
Whoever wins the battle to control these devices is likely to dominate the next generation of computers.
As Microsoft waits to see what sanctions will be imposed on it after losing the antitrust case in the United States, the company will have to work hard to maintain its market position as computing enters a totally new phase.