Competitors may be hoping that low-cost network computing will inflict terminal damage to Microsoft. But the largest supplier of desktop software last Monday released terminal server software which, it claims, will bring the Windows environment to simpler machines which could not previously run the top-selling operating system.

The product, called Hydra, was released to 1,000 test customers, and is due for full release early next year. Microsoft is facing challenges on multiple fronts: the American Department of Justice currently has it before the courts defending the inclusion of its Internet browser in the Windows package; in another case rival computer giant Sun has claimed Microsoft is violating the terms of its licence for Java, the language which allows the development of applications running across networks. Sun is hoping Java will spur the sales of network computers (NCs) and break Microsoft's dominance of the desktop market.

But Mr Bill Gates is on the attack too, rolling out its own versions of network computing under the name Windows Distributed interNet Applications (Windows DNA). Mr Leo Ring, Microsoft Ireland's organisation customer unit manager admits there are times when NCs - also called thin clients - are useful, such as task-intensive applications like airline reservations. "Microsoft is not afraid of network-centred computing," he says, explaining how the company is using networks to provide cheaper computing. The company says its Windows-based terminals "will require as little as 4 megabytes of RAM [memory] . . . and will be priced in the range of $500".