SAN FRANCISCO — Before they ship PCs to retailers like Best Buy, computer makers load them up with lots of free software. For $30, Best Buy will get rid of it for you.  That simple cleanup service is threatening the precarious economics of the personal computer industry. Software companies pay hundreds of millions of dollars to PC makers like Hewlett-Packard to install their photo tools, financial programs and other products, usually with some tie-in to a paid service or upgrade. With margins growing thinner than most laptops, this critical revenue can make the difference between profit and loss for the computer makers, industry analysts say. If the programs are removed, the software makers gain no value out of the $2 to $10 they typically pay H. P. and others to install them on each PC — and PC makers miss out on their cut from revenue-sharing deals. But Best Buy, the nation’s largest electronics retailer, tells computer buyers that the preinstalled software, also known as bloatware, can clutter their machines and slow them down. “You’d be surprised how often consumers tell us to get rid of it,” said Robert Stephens, the head of Geek Squad, the technical support division of Best Buy that removes the software. He declined to say how many people were paying for the service, but said that “it’s going to increase in popularity.” The demand for the service, along with similar offers from Circuit City and other chains, reflects an outpouring of consumer frustration with the way that a brand-new computer can feel as if it is full of digital infomercials — even if those come-ons knock a few dollars off the PC’s price tag. The Web has dozens of do-it-yourself guides to removing such software, which, as one tutorial puts it, “turns your computer into a messy battleground.” Mr. Stephens said the personal computer makers should be worried about the demand for less cluttered computers. “No matter what manufacturers want, we’ll give consumers what they want,” he said. But he added that he believed computer makers would find different ways to profit: “While they may be scared by these trends, they’ll be O.K.” As it turns out, H. P., the world’s largest technology company, is already working on a fundamental change in the way it packages software on its new computers, and thus how its business model works. Stephen DeWitt, who oversees H. P.’s personal computer business in the Americas, said that starting next year the company’s new computers would point users to a Web site where they can buy and download games, productivity software and other programs. Revenue from the site will be split in some fashion among H. P., a retailer like Best Buy and the makers of the software. Mr. DeWitt said the change would cut how much software comes preloaded. Mr. DeWitt said this was happening because consumers were demanding something different, but also because the technology was now in place to allow downloading of software on demand. For now, he said, the benefits to consumers of the free software far outweigh whatever small slowdown it might cause. And he said Best Buy’s cleanup service was not pressuring H. P. to move to a new model. “There’s no tension coming from Best Buy on this — none,” he said. But in Best Buy stores in Northern California, there is clear evidence of the different agendas of Best Buy and the computer makers. The stores display two H. P. computers, identical except that one desktop is cluttered with software icons from eBay, Quicken, AOL, Yahoo and others, while the other is entirely cleaned up. Best Buy workers use the display to promote the company’s $30 “optimization” service. Industry analysts said that the planned change in H. P.’s approach could well reflect Best Buy’s growing influence — and its ability to exact new concessions from computer makers. They said Best Buy has benefited from two key changes: the declining fortunes of competing retailers like CompUSA and some large regional chains, and the addition to its shelves in the last year of computers made by Dell and Apple. Bob Kaufman, a spokesman for Dell, said, “This is an evolving story and Dell is evaluating how it can best deliver software to its customers.” Best Buy’s offer to remove software began in 2006. But recently the toll its policies are taking has heightened considerably, analysts and industry executives say. “Best Buy’s sway is definitely growing,” said Matt Fassler, an industry analyst who covers Best Buy for Goldman Sachs. He said the company had good relationships with computer makers, and, while it wouldn’t seek to harm those relationships, “if they have a strong competitive position, it is incumbent on them to use it.” Mr. Fassler estimates Best Buy will have sales of $44 billion this year. Of that, $1.5 billion to $2 billion will be from the sale of H. P. computers, analysts estimated. One important question is whether the new model being developed by H. P. will be as profitable as the current one. Mr. DeWitt said he expected it to be more profitable. But A. M. Sacconaghi Jr., an industry analyst at Sanford C. Bernstein & Company, said the change could imperil H. P.’s profitability, in part because there is no guarantee that consumers will buy software offered through H. P. instead of another site. As software buying moves online, Mr. Sacconaghi asked, “what makes a consumer go to HP.com over Google?” He also says the challenge for personal computer makers is that they are losing control of what shows up on PC screens — a form of real estate that they have used to sell billboard advertising for software. “They no longer have that real estate advantage,” he said. “There’s a substantial profit pool at risk.” And there can be little profit to begin with, analysts said. The profit margin on many personal computers can be 5 percent or lower, depending on the model. The margins are slim in part because of intense competition that has driven down prices. In some cases, the computers are profitable only because their makers earn $30 or more for each computer for preinstalling the software, according to Shaw Wu, an industry analyst with American Technology Research. And J. P. Gownder, an analyst at Forrester Research, said, “For the average PC, that could be the entire margin.” Without the preloaded software, Mr. Gownder said, “it could put them in the red. That’s why they’ve become so addicted to it.” Mr. Stephens of Geek Squad says he agrees with H. P. that the future is in allowing computer buyers to choose and download what they want. But he said he believed Best Buy, not H. P., was in the best position to help people choose what works for them because, he argued, the in-store technicians are in closest contact with them. “Geek Squad agents have one thing over Apple and Microsoft engineers. We spend most of the day talking to people,” he said.

In what has become a familiar pattern on Wall Street, stocks surged Friday, a day after falling sharply. The immediate impetus for the rally appeared to be a big drop in commodity prices, including a 4.1 percent fall in crude oil, which settled below $116 a barrel for the first time since early May. The dollar also continued to gain strength, rising 1.7 percent against a basket of six major world currencies. The Standard & Poor’s 500-stock index rose 30.25 points, or 2.39 percent, to 1,296.32, its biggest one-day gain since April. The Dow Jones industrial average was up 302.89 points, or 2.65 percent, to 11,734.32; the Nasdaq composite jumped 58.37 points, or 2.48 percent, to 2,414,10. In recent weeks, the stock market has swung between strong rallies and steep drops. The S.& P. 500 has moved by at least 2 percentage points on 6 of the last 25 trading days since July 4. By contrast, there were only two days with 2 percent changes from the end of 2003 to the end of 2006. Despite all the sharp moves, the S.& P. 500 index rose just 0.3 percent from July 4 to Thursday’s close. Friday’s jump increased that gain to 2.7 percent. Some analysts say the volatility indicates that investors are increasingly uncertain about the economy. While they are encouraged that oil prices have fallen more than 20 percent from a high of $145.29 in early July, the housing market and the economy over all are still showing significant weakness. Earlier on Friday, Fannie Mae, the government-chartered mortgage giant, slashed its dividend after reporting a $2.3 billion quarterly loss. “Strictly from a psychological standpoint, it tells you that there is not a lot of conviction,” said Barry L. Ritholtz, chief executive of FusionIQ, an investment firm in New York. “Fund managers that are hot to buy one day, turn around and sell the next.” But others see reason to hope the market may have bottomed in mid-July and is starting a slow and hesitant rebound. These analysts note, for instance, that recent economic and housing reports may be bleak but the data is often better than expected. Home sales appear to be flattening out, though at a very low level, and in some regions home prices have edged higher during the spring and summer seasons, when home sales are at their highest levels of the year. “When you get that steady trickle, the market builds on that,” said James W. Paulsen, chief investment strategist for Wells Capital Management. “In between, what takes the market down is not economic reports. Sometimes it’s straight company reports, other times it’s spreading of rumors and fears.” Another trend that may be contributing to the volatility are reports of increasing weakness in Europe and Asia. On Friday, a report showed that Italy’s economy unexpectedly shrank in the second quarter. Earlier, reports showed weakness in Germany, Japan and Great Britain. Even Chinese government figures have suggested that growth will be a few percentage points lower this year. Such news has contributed to the drop in oil prices. Oil settled at $115.20 a barrel on the New York Mercantile Exchange Friday. Other commodities also fell sharply, with wheat falling 6.7 percent and copper closing down 2.4 percent. In a report titled “Calling a Top,” analysts at Lehman Brothers wrote on Friday that oil prices had peaked, citing among other things lower demand from developed economies. Analysts suspect that slower growth could force the European Central Bank and the Bank of England to start lowering short-term interest rates, which are significantly higher than the Federal Reserve’s benchmark funds rate of 2 percent. That anticipation — coming the day after both central banks decided to leave their key rates unchanged — pushed up the dollar, which earlier this year fell to its lowest level since the currency was allowed to float freely in the 1970s. One euro now buys $1.50, down from $1.53 on Thursday. The yen fell to 110.24 to the dollar, from 109.45. If investors around the world believe the dollar will strengthen further, they may be moving some of their money into American stocks, said Douglas M. Peta, market strategist at J.& W. Seligman & Company. “All of a sudden investors have come to the conclusion that Europe and U.K. may be in worse shape than the U.S.” Still, weakness in Europe and Japan would not necessarily be a good thing for the United States, because American exports have become an important counter to the problems in the domestic housing market and helped keep the economy growing in the first half of the year. Another abiding challenge to the stock market and the broader economy alike is access to credit. Even as stocks have rallied, the credit market remains sluggish, with few new deals coming to the market and worries about defaults spreading to auto loans and credit cards. The KDP high-yield index, which tracks yields on junk bonds, climbed this week to its highest level since early 2003. Mortgage interest rates are near 12-month highs as investors worry about the future of Fannie Mae and Freddie Mac. “It’s tougher for individuals or corporations to have access to the credit markets,” said Steven M. Rogé, a portfolio manager at R. W. Rogé & Company in Bohemia, N.Y., who is skeptical that stocks have bottomed. The recent big moves in the market have also come at a time when trading volume has been relatively low, a phenomenon that is more common in the summer, said Jerry Webman, chief economist at OppenheimerFunds. When volumes are low, a few momentum traders can more easily drive markets up or down significantly, he said. “I would be cautious about overinterpreting any of the up days or down days this week.”

In an effort to cast himself as independent of the influence of money on politics, Senator Barack Obama often highlights the campaign contributions of $200 or less that have amounted to fully half of the $340 million he has collected so far. But records show that one-third of his record-breaking haul has come from donations of $1,000 or more: a total of $112 million, more than Senator John McCain, Mr. Obama’s Republican rival, or Senator Hillary Rodham Clinton, his opponent in the Democratic primaries, raised in contributions of that size. Behind those larger donations is a phalanx of more than 500 Obama “bundlers,” fund-raisers who have each collected contributions totaling $50,000 or more. Many of the bundlers come from industries with critical interests in Washington. Nearly three dozen of the bundlers have raised more than $500,000 each, including more than a half-dozen who have passed the $1 million mark and one or two who have exceeded $2 million, according to interviews with fund-raisers. While his campaign has cited its volume of small donations as a rationale for his decision to opt out of public financing for the general election, Mr. Obama has worked to build a network of big-dollar supporters from the time he began contemplating a run for the United States Senate. He tapped into well-connected people in Chicago prior to the 2004 Senate race, and once elected, set out across the country starting to cultivate some of his party’s most influential money collectors. He courted them with the savvy of a veteran politician, through phone calls, meals and one-on-one meetings; he wrote thank-you cards and remembered birthdays; he sent them autographed copies of his book and doted on their children. The fruits of his efforts have put Mr. Obama’s major donors on a pace that almost rivals the $147 million raised by President Bush’s network of Pioneers and Rangers in contributions of $1,000 or larger during the 2004 primary season. Given his decision not to accept public financing, Mr. Obama is counting on his bundlers to help him raise $300 million for his general-election campaign and another $180 million for the Democratic National Committee. An analysis of campaign finance records shows that about two-thirds of his bundlers are concentrated in four major industries: law, securities and investments, real estate and entertainment. Lawyers make up the largest group, numbering roughly 130, with many of them working for firms that also have lobbying arms. At least 100 Obama bundlers are top executives or brokers from investment businesses: nearly two dozen work for financial titans like Lehman Brothers, Goldman Sachs or Citigroup. About 40 others come from the real estate industry. The biggest fund-raisers include people like Julius Genachowski, a former senior official at the Federal Communications Commission and a technology executive who is new to political fund-raising; Robert Wolf, president and chief operating officer of UBS Investment Bank; James A. Torrey, a New York hedge-fund investor; and Charles H. Rivkin, chief executive of an animation studio in Los Angeles. “It’s fairly clear that this is being packaged as an extraordinary new kind of fund-raising, and the Internet is a new and powerful part of it,” said Michael J. Malbin, executive director of the Campaign Finance Institute. “But it’s also clear that many of the old donors are still there and important.” The care and feeding that top Obama fund-raisers have received underscores their significance to his campaign. Members of his National Finance Committee who fulfill their commitment to raise at least $250,000 are being rewarded with trips to the Democratic National Convention in Denver. Finance committee members participate in conference calls with top campaign officials every other week. The fund-raisers meet quarterly, often with Mr. Obama dropping in. He lingered after the most recent meeting in June in Chicago, telling his staff he wanted to thank every person in the room. Some fund-raisers who knocked on doors for Mr. Obama in places like Indiana, Iowa and Pennsylvania got to spend time with Mr. Obama backstage before and after speeches on primary nights. His fund-raisers invariably say their support for him is not rooted in any kind of promise of access, but rather their belief in him. “This is about Barack Obama and changing the direction of our country,” said Jonathan B. Perdue, a business consultant in Mill Valley, Calif., who has raised more than $250,000 for Mr. Obama’s campaign. Mr. Obama has pledged not to accept donations from lobbyists or political action committees registered with the federal government. But some top donors clearly have policy and political agendas. Hedge-fund executives, for example, have bundled large sums for Mr. Obama at a time when their industry has been looking to increase its clout in Washington. Kenneth C. Griffin, chief executive officer of Citadel Investment Group in Chicago, has collected more than $50,000 for Mr. Obama. But Mr. Griffin, whose $1.5 billion in income in 2007 made him one of the country’s highest-paid hedge-fund executives, has given generously over the years to Republicans as well, and he recently helped to hold a fund-raiser for Mr. McCain. Citadel has spent more than $1.1 million, dating back to 2007, in lobbying against higher tax rates for hedge-fund gains. (Mr. Obama has supported the higher tax rates.) Similarly, Paul Tudor Jones, a billionaire hedge-fund manager from Connecticut, has raised more than $100,000 for Mr. Obama. But he also gave to Mr. McCain, to Rudolph W. Giuliani and to Mitt Romney. Mr. Jones, who has given more than $900,000 over the last decade to federal candidates and political organizations, helped form a trade association that has fought hedge-fund regulation. Many fund-raisers sit on the campaign’s array of policy working groups, getting a chance to weigh in on policy positions and speeches. Mr. Genachowski, a Harvard Law School classmate of Mr. Obama, leads the technology working group. Fund-raisers from private equity and hedge funds sit on Mr. Obama’s economic policy group. Despite Mr. Obama’s image as a newcomer, many of his bundlers are Democratic Party stalwarts, including people who were some of the top fund-raisers for Senator John Kerry in 2004. At least 58 of them appear to have personally made more than $100,000 in contributions to federal candidates and committees over the last decade. Updated bundler lists released recently by the McCain and Obama campaigns show that they have similar numbers of high-dollar fund-raisers. The Obama fund-raising operation is meticulously organized. Bundlers are assigned tracking numbers, and the finance staff sends them quarterly reminders of how they are doing in meeting their goals. “There’s no price for admission,” said Alan D. Solomont, a top Democratic fund-raiser in Boston who made his fortune in the nursing home industry and has given more than $1.5 million to Democratic candidates and causes. “We value every donation and every donor equally. But we are a performance-based organization. We want everybody to feel like they’re included, but at the same time we’re not here to have tea together.” Mr. Obama began courting many of his fund-raisers soon after he burst upon the national scene with his rousing speech at the 2004 Democratic National Convention. Mr. Solomont, a major fund-raiser both for Mr. Kerry and for Bill Clinton during their presidential runs, received a call on his cellphone in February 2005, a year after Mr. Obama’s election to the Senate, from a member of his staff who asked if he would like to get together with Mr. Obama. They met for Chinese food in Washington the following week, and Mr. Obama scored points with Mr. Solomont when he pointed out that they had both been community organizers earlier in their careers. “I’ve been involved in politics a long time,” Mr. Solomont said. “Nobody’s bothered to know that about me.” Early that same year, Mr. Obama attended a dinner in the Bay Area for about 20 major Kerry supporters. The dinner was organized by Mark Gorenberg, a Silicon Valley venture capitalist who was Mr. Kerry’s single biggest fund-raiser, after Mr. Obama’s staff members contacted him. Several of those on hand, including Mr. Gorenberg and John Roos, head of a Silicon Valley law firm, became among the earliest and biggest check collectors for Mr. Obama’s presidential bid. In 2006, Mr. Obama became a vice chairman of the Democratic Senatorial Campaign Committee, giving him the opportunity to campaign across the country and to cultivate other potential benefactors. When his book “The Audacity of Hope” came out later that year, his staff members organized book parties at the homes of major Democratic donors. In December, Mr. Obama visited the New York office of the billionaire investor George Soros to court a roomful of high-powered Democratic fund-raisers, hoping to lure some of them away from Mrs. Clinton. Not everyone was swayed, but Mr. Obama won over Orin Kramer, a hedge-fund executive from New Jersey, and Mr. Wolf, the UBS executive, both of whom are now among Mr. Obama’s biggest fund-raisers. Mr. Obama signed on as his finance director Julianna Smoot, who had led fund-raising for Senate Democrats and, before that, for Senator Tom Daschle when he was majority leader. With guidance from Ms. Smoot, a key part of the campaign’s fast start was its success in scooping up top former Kerry fund-raisers, including Lou Susman, a Chicago investment banker who was Mr. Kerry’s national finance chairman, and Kirk Wagar, a lawyer in Miami who became Mr. Obama’s finance chairman in Florida. Even so, the initial meeting of Mr. Obama’s national finance committee, held in Chicago the day after he officially announced his candidacy, was a relatively small affair, numbering about 75 people. Penny Pritzker, the billionaire heiress to the Hyatt hotel fortune whom Mr. Obama asked to become his finance chairwoman, challenged the group to double in size. The number of bundlers ballooned quickly. The Obama campaign made important inroads among affluent people under age 45, including Silicon Valley engineers and hedge-fund analysts, many of whom had not been on the political radar screen. Donations in June, the latest month for which Mr. Obama has disclosed his donors to the Federal Election Commission, illustrate the double-barreled nature of the campaign’s fund-raising. Mr. Obama brought in nearly $31 million in contributions of less than $200, his best month for small donations. But he also collected more than $12 million in contributions of $1,000 or more, the most since the first half of 2007. The share from large contributions appears poised to increase, as Mr. Obama has stepped up his fund-raising schedule. “In 2007, the campaign relied on the tried and true methods like fund-raisers, for both large- and small-dollar donors, with the candidate or his surrogates, and the Internet largely financed it in 2008,” said Kirk Dornbush, the president of a biotech firm and a top fund-raiser in Atlanta. “When you combine the traditional fund-raising methods with the continued online contributions, you have a very, very powerful fund-raising engine.”

HOW did Hollywood lose Steven Spielberg? Late last month, DreamWorks, the boutique movie studio that Mr. Spielberg co-founded in 1994, let it be known that it had found a way to exit its unhappy three-year marriage with Paramount Pictures. Reliance ADA Group, a Mumbai conglomerate, was nearing a deal to give the dream workers $550 million to form a new movie company. That Mr. Spielberg and his business partner David Geffen had found an investor wasn’t surprising. Mr. Spielberg is a superstar. DreamWorks had made it clear for months — via public comments and private grousing fed into the Hollywood grapevine — that they hated being part of Paramount and were going elsewhere as soon as it was contractually allowed. But there was still an element of shock: Hollywood could not come up with a rich enough deal for Mr. Spielberg, the most bankable director in the business and a “national treasure”? His last movie alone, “Indiana Jones and the Kingdom of the Crystal Skull,” has sold $743 million in tickets and is still playing in theaters around the world. For that matter, there wasn’t anybody on Wall Street willing to write a blank check for the guy with “Jaws” and “Jurassic Park” on his résumé? The pending deal with Reliance underscores some realities about Mr. Spielberg — mainly that he has become so expensive that few public companies can afford him. Mr. Spielberg’s standard deal, on par with other blue-chip talent, is 20 percent of a movie’s gross from the first ticket sold, although he agreed to a somewhat less aggressive paycheck on the latest “Indiana Jones” installment to offset its high budget. And there’s another whisper coming from Hollywood’s highest echelons. It’s a sensitive topic — and one that Mr. Spielberg’s associates find hugely insulting — but one that bears consideration: How long before the A-list director, at 61, is a little, well, Jurassic? SUCH talk is rooted in sour-grapes justifications for losing Mr. Spielberg to Reliance, his allies say, noting his huge list of projects on the horizon. Among them are potential blockbusters like “Transformers: Revenge of the Fallen,” which he will produce. He’s also pursuing more cerebral projects like an Abraham Lincoln film with a script written by the “Angels in America” playwright Tony Kushner. Even so, Mr. Spielberg’s representatives had been talking with potential backers for months, said three people involved who requested anonymity for fear of angering the powerful director. The Spielbergians had casual chats with companies including Sony and the News Corporation. Hollywood-friendly banks like JPMorgan Chase and Goldman Sachs were also in the mix. Hollywood’s seeming inability to close a deal with Mr. Spielberg highlights the shift toward a more corporate, buttoned-down movie business. Just a few years ago, bragging rights often drove business decisions. Steven Spielberg is available? Back up the money truck. We want that jewel in our crown no matter what the cost. And studio bosses could justify such ego-driven loss leaders: In the entertainment business, talent draws talent. Associates of Mr. Spielberg say they have not seriously entertained any Hollywood overtures, something corroborated by Ron Meyer, the president of NBC Universal. “We have not been given the opening to be in business with DreamWorks,” said Mr. Meyer, adding that the studio would jump at the chance given “the opportunity and the right deal.” But now that the big studios are all firmly embedded in big corporations, profit margins are the obsession. Add in skyrocketing star salaries and ballooning marketing costs, which have hammered margins, and pop go the sweetheart deals. “Big names don’t carry the same weight they used to,” said Harold L. Vogel, an independent media analyst. DVDs also have a starring role in the reluctance to take on risk. After years of blistering growth, domestic DVD sales fell 3.2 percent last year to $15.9 billion, according to Adams Media Research, the first annual drop in the medium’s history. While DVDs are still a big business, any decline is cause for great concern, because DVD sales can account for as much as 70 percent of revenue for a new film. When DVDs were soaring, studios had an incentive to own projects outright. Recently, they’ve been going the other way, trying to share ownership to protect themselves. Indeed, the DVD situation combined with other business challenges — the arrival of widespread Internet streaming being one of the thorniest — has studios so panicked that all their executives chatter about these days is mitigating risk. Hardly a time to double down on a fat deal with Mr. Spielberg. Studios are also increasingly focused on out-of-the-park franchise films that sell overseas. The DreamWorks slate is a little patchy — namely because Mr. Spielberg and Stacey Snider, the company’s chief executive, believe in delivering a mix of prestige films and blockbusters. Along with “Norbit,” the sophomoric Eddie Murphy smash that sold $159 million in tickets, come films like “Things We Lost in the Fire,” a drama starring the Oscar-winner Halle Berry that sold about $8.4 million in tickets. Chip Sullivan, a corporate spokesman for DreamWorks, declined to comment. He said Ms. Snider was on vacation and unavailable. Mr. Spielberg, via a spokesman, declined to comment. Bruce Ramer, the director’s longtime lawyer (Mr. Spielberg named the mechanical shark in “Jaws” after him), also declined to comment. As for Wall Street, the firm belief in Hollywood is that the arrival of Reliance marks the end of the private equity and hedge fund boom that has propped up the industry. With the capital markets in turmoil, terms have tightened substantially for movie deals. Investors are demanding faster payback schedules, better guarantees and even a say in how movies are made and marketed. None of that is acceptable to the DreamWorks team. Mr. Spielberg, who has directed more than 50 films, also wants to control his own destiny; at this point in his career, say friends, his accomplishments have earned him the right to have 100 percent control over his movies. Autonomy and ownership are paramount, and, at the moment, overseas investors are the most likely to allow Mr. Spielberg to write his own ticket, say studio executives. In some ways, Reliance marks a return to the past. Studios have over the last decade tapped American investors — DreamWorks began with backing from Paul Allen, a founder of Microsoft — but foreign investors, notably Germans, were a big source before that. THE deal with Reliance is not done. People involved in the talks, which are private, say that work is progressing but that no deal is likely to be signed for several weeks. In addition to the $550 million in equity — which may inch higher during negotiations — DreamWorks is seeking access to a $400 million line of debt financing. And Hollywood will still have a chance to nab a piece of the storied director. After negotiations with Reliance wrap up — if they wrap up — Mr. Geffen and Mr. Spielberg will start looking for a distribution deal with one of the big studios, most likely Universal Pictures or 20th Century Fox. Will Mr. Geffen and Mr. Spielberg see a bidding war? Probably, but it depends on what kind of terms they want. Tags:INDIA INTERNATIONAL NEWS MONEY SUCCESS US WEALTH WORLD AFFAIRS

Bill Gates is retiring, sort of. He is still only 52, and he is going off to spend more time guiding the world’s richest philanthropy, the Bill and Melinda Gates Foundation. He will still be Microsoft’s chairman and largest shareholder, but Friday is his last day as a full-time worker at the software giant, marking the unofficial end of his career as a business leader. And what a career it has been. Mr. Gates has been an animating force behind the personal computer revolution, helping to build a huge global industry and engineer blockbuster products like Windows and Office, used every day in offices and homes around the world. The Harvard dropout was the wealthiest person on the planet for years — worth more than $100 billion in 1999 — though his fortune is now about half that because of the decline of Microsoft’s shares and his continued donations to his foundation, which is focused on global health and education. Despite his success, Mr. Gates is moving on as the company he co-founded in 1975 is struggling to find its way. The center of gravity in technology has shifted from PCs to the Internet, altering the old rules of competition that were so lucratively mastered by Microsoft. For millions of users, mobile devices like cellphones are beginning to edge out PCs as the tool of choice for many computing tasks. And Google, the front-runner in the current wave of Internet computing, has wrested the mantle of high-tech leadership from Microsoft. Although Mr. Gates will spend one day a week at the company, it will be up to his successors, led by Steven A. Ballmer, the chief executive, to master the challenges of the Internet or watch Microsoft’s wealth and stature in the industry steadily erode. “Bill’s legacy is Windows and Office, and that will be a rich franchise for years to come, but it’s not the future,” said David B. Yoffie, a professor at the Harvard Business School. Still, the Gates legacy is impressive. In addition to the software itself, Mr. Gates and his company have fundamentally shaped how people think about competition in many industries where technology plays a central role. Today, there are more than one billion copies of the Windows operating system on PCs around the world. Industry experts and economists say that Windows is not necessarily the best or most admired software for running the basic operations of a personal computer — Apple’s Macintosh can claim the most devout fan club. But Mr. Gates grasped and deployed two related concepts on a scale no one ever had in the past: the power of network effects and the value of establishing a technology platform. Put simply, the network effect describes a phenomenon in which the value of a product goes up as more people use it. E-mail messaging and telephones are classic examples. A technology platform is a set of tools or services that others can use to build their own products or services. The more people who use the tools, the more popular the platform can become. Mr. Gates took advantage of both notions and combined them to build Microsoft’s dominance in PCs, spreading its influence with computer makers and software developers. Today, there are many thousands of software applications that run on the Windows platform, not just word processing and spreadsheets but also the specialized programs in doctors’ offices, factory floors and retail stores — a very broad network on a nearly ubiquitous technology platform. “Gates saw software as a separate market from hardware before anyone else, but his great insight was recognizing the power of the network effects surrounding the software,” said Michael A. Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. That, Professor Cusumano added, was the essential difference in the paths of Microsoft and Apple, the early leader in personal computing. Apple, he said, focused on making outstanding products alone, while Microsoft nurtured a growing ecosystem of outside software developers who use, and are dependent on, Microsoft’s technology. The result, he added, is that, while Apple continues to make outstanding products, more than 90 percent of personal computers run Microsoft software. In the early years, it was unclear how much Mr. Gates was pursuing each opportunity as it came, as opposed to carrying out a grand strategy. He certainly had large ambitions. When he was a Harvard undergraduate, Mr. Gates lamented that so many of his fellow students pursued a “narrow track for success” instead of being willing to “take big risks to do big things,” recalled Michael Katz, a Harvard contemporary who is now a professor at New York University. In a Harvard Business School case study, published in 1994, Mr. Gates spoke of Microsoft’s strategy in terms of network effects and technology standards that, combined, enabled the company to command markets. “We look for businesses where we can garner large market shares, not just 30 or 35 percent,” he said. In the past, Microsoft has beaten back challenges and vanquished rivals, even when it came late to markets, as it did in the first wave of Internet technology. Mr. Gates’s shrewd 1995 decision to embrace Internet browsing technology and attack the early leader, Netscape Communications, started a pitched antitrust battle with the government. “But he extended Microsoft’s hegemony for a decade,” said Mitchell Kapor, a longtime rival. However, Microsoft is lagging badly in current round of Internet competition and, analysts say, is facing more formidable challengers this time — notably Google. Microsoft’s share of Internet search in the United States is less than 10 percent, while Google holds more than 60 percent and Yahoo has about 20 percent. And search is only part of the new platform on the Web, which includes social networks like Facebook and MySpace and Internet-based alternatives to traditional desktop software, including e-mail messaging, word processors and spreadsheets. Traditional desktop software — and the technology standards Microsoft controls there — matter far less when more software is accessed with a Web browser and delivered over the Internet from vast data centers run by Google and others. The new approach is known as “cloud computing,” and the business model behind it is typically to sell online advertising and software services. At Microsoft, there is scant sign of panic, despite its trailing position and its failed bid to buy Yahoo for $47.5 billion as a catch-up strategy. Microsoft sees an evolution in computing, not a disruptive revolution that will imperil the company, said Craig Mundie, Microsoft’s chief research and strategy officer. Mr. Mundie said Microsoft is preparing for a widening world of both cloud computing and “client” machines, not only personal computers but also cellphones, cars, game consoles and televisions, all running Microsoft software. “The next big platform is the union of the clients and the cloud,” he said. Tags:INTERNATIONAL NEWS Internet MONEY ONLINE SUCCESS US WEALTH WORLD AFFAIRS