When Microsoft touched down in Cambridge last summer with the announcement that it intended to invest £50 million establishing a research laboratory in the university town, the British public took technology to heart.

The average person in Reading or Purley might not have known, or cared about, the difference between RAM and ROM, but nearly everyone has heard of Microsoft, and more pertinently, Microsoft's financial clout.

Any ambiguities about the company's big-bucks pull were banished when Microsoft founder Bill Gates flew in like visiting royalty, landing by helicopter on one of Cambridge University's expansive lawns before being whisked away for red-carpet treatment. Prime Minister Tony Blair fawned.

The deal was solemnised, the national newspapers gave the investment front-page coverage and editorialised about Britain's technology know-how, and Prof Roger Needham, the Cambridge academic and vice-chancellor appointed to head the lab, was beset with interview requests by publications from London to Silicon Valley.

Nearly a year on, he's slightly exasperated at the memory. "The announcement in London last June was, from a PR point of view, a disaster," he says. Perhaps an odd sentiment given the story's wall-to-wall coverage and his own sudden popularity explaining odd corners of computer theory to television reporters.

But he worries that the scale of the project and investment was blown out of proportion. "It gave people the idea that a very much bigger thing was being done."

Certainly, a £50 million investment over five years is not a monumental amount for a company which handed over $8 million (£5.67 million) to use the Rolling Stones song Start Me Up as the theme for its computer operating system Windows 95.

Also lost in the jumble of Microsoft publicity was the fact that the Microsoft laboratory is hardly a unique phenomenon for Cambridge, but the fourth research laboratory to be set up by technology companies there. It's not even the largest that honour goes to the Olivetti-Oracle lab.

Nonetheless, there's a breathtaking luxury to Prof Needham's acknowledgment that the £50 million is actually "a metaphorical statement that there's enough money"; Microsoft just needed to come up with a base figure to shape the deal. Basically, there's plenty of cash to lure in the deep thinkers of the theoretical computing world, the ones who can visualise today how the power of the microchip might be harnessed tomorrow.

For a man who has devoted a career to computing research Prof Needham has worked in the labs which bring distant longing to the eyes of computer devotees, like Silicon Valley's Xerox Palo Alto Research Center, the birthplace of modern computing being instructed by Microsoft's chief technology officer Nathan Myhrvold to "Go and get the best people there are" must be geek heaven. "Who could resist that proposition?" he agrees.

Whatever the real budget, it includes a minimum yearly $500,000 "external research" fund which Prof Needham decided to start spending in Ireland.

Along with assistant director of the Cambridge lab, Scotsman Prof Derek McAuley, he was in Dublin last Friday to announce the culmination to a relationship born over a pint several years ago with Dr John Lewis, the head of the School of Theoretical Physics at the Dublin Institute for Advanced Studies: a two-year post doctoral fellowship worth £50,000 per annum.

The Microsoft-sponsored fellowship which will heighten considerably Ireland's profile in scientific circles will place a fellow at Cambridge during termtime and at DIAS the remainder of the year.

Little known outside the research institute world, DIAS is a Government-funded body proposed by Eamon de Valera in 1939. Its credentials are impeccable Dev wanted Albert Einstein as its first director, but due to his unavailability, eagerly pursued the famed mathematician Erwin Schrodinger, helping him to get passage out of Nazi Germany so that he could take up the post.

According to Prof McAuley, DIAS has had a close working relationship with Cambridge University while he was an academic there, and DIAS's leading work in applied probability mathematical theory underlying computing applications made it a natural partner for the fellowship.

The fellowship also is evidence that the Cambridge lab, known formally as Microsoft Research Ltd, is finding its feet. It was offered no original guidelines: "About the only thing that emerged in conversation [with Microsoft] was, obviously, not to duplicate anything that's done in Redmond," says Prof Needham.

"We didn't have a clear agenda and it's only at the moment clarifying." At the top of his own agenda is to emphasise that they are not a British, but a European lab; to the extent that he says the Irish DIAS fellowship was a good way to make that point.

Profs Needham and McAuley have determined five areas of research emphasis for the facility: security, networking, information retrieval, programming language theory, and decision theory. "Some areas we knew we'd be working in because they're our research areas," says Prof McAuley. "The others evolved." The evolutionary process is in some cases linked to whom they've been able to lure to the lab (so far, 13 researchers of an eventual 40 or 50).

A top research lab develops by attracting the best people in their field, not the best available people, emphasises Prof Needham. Their interests then shape the lab's reach. Prof Needham acknowledges that snapping up talent means salaries must be "internationally competitive" by which one can guess they are highly attractive.

"We can't quite get anyone we want," he insists. "Our offers aren't invariably accepted." a spouse who can't find work in the region. Then, there are those who have, he says, "delusions" about working for Microsoft. The stuff of those delusions was almost uniformly ignored in the breathless reportage which followed the lab's announcement in June.

One of the few people to express cynicism about the deal was Mr Bill O'Neill, editor of the OnLine technology section of the Guardian, who wrote a strongly-worded editorial asking, "Is this the sort of partner that Cambridge wants, let alone that its world-ranking scientists and technologists deserve? Cambridge needs investment to exploit its intellectual talent. . . But forging a deal with Microsoft looks more likely to shackle Cambridge staff to the ideals of a ruthless organisation. . ."

Not surprisingly, Prof Needham says: "I think this is actually a misplaced view." He stresses that the lab is a European, not British lab, with its own set of international researchers, not Cambridge University scientists.

He and Prof McAuley insist they find the Microsoft work environment exhilaratingly proresearch, with a satisfying connection between research and its practical application to products. But still, isn't British or European brainpower being channelled outside Britain to benefit an American multinational?

Almost no European companies or institutions are funding significant research, he counters. "If you look at the worthwhile computing research places in the UK they're all American-owned," excepting BT's lab.

Now, Europeans have the option to stay in Europe, he says, and "do world-class computing".

At the end of the day, it's undoubtedly the availability of top facilities and not who runs them that matters to researchers. But ultimately, the companies running them call the shots.

The high profile of both Cambridge and Microsoft guarantees there will be no shortage of onlookers interested in whether the relationship between Europeanbased theorising and Redmondbased practical implementation remains cosy or turns uncomfortable.