Microsoft Plans Silicon Valley Campus

Planting its flag in the heart of the enemy camp, Microsoft on Thursday announced plans to build a 35-acre Silicon Valley campus for the employees it now has scattered across the Bay Area.

The new campus will open next summer in Mountain View, just a mile and a half from the headquarters of Netscape Corp., the bitter rival in the browser wars that precipitated the Justice Department’s antitrust suit against Microsoft. The case goes to trial next month.

“It makes sense for Microsoft to have a higher profile down there so they can defend themselves against all the attacks,” said Dwight Davis, a longtime Microsoft watcher at Summit Strategies, a Boston-based market research company. “At a political level, it will make clear to people that Microsoft is an important player in the local economy.”

Microsoft already has a substantial presence in the Bay Area as a result of its $425-million acquisition of WebTV, a business that sells Internet access via a set-top box attached to the television, and its purchase of Hotmail, a free Internet e-mail service. The company’s Bay Area presence also includes many of its Macintosh product groups and various regional sales offices.

Those operations, combined with a new Development Laboratory and Development Community Center designed to provide support for 1,200 independent Windows developers in Silicon Valley, will bring the campus’ population to 800 employees.

The Bay Area Research Center, which Microsoft established in San Francisco to attract top computer

scientists who are unwilling to relocate to Microsoft headquarters in Redmond, Wash., will remain in its current location.

“People have this impression that Microsoft is set apart from the Valley,” said Microsoft spokesman Greg Shaw. “The truth is there is a large segment of the company right there in the valley.”

Analysts believe there is another agenda: tapping into the Silicon Valley labor market.

“It’s Microsoft acknowledging that their core technical competence is in the Bay Area and that to find the best people they have to come here,” said Chris Le Tocq, an analyst at San Jose-based Dataquest. Le Tocq suggested that nearby rivals could find their best employees being lured away by their powerful new neighbor.

Analysts said the company may also be counting on the new campus to help imbue its Bay Area employees with the “Microsoft Way” of doing business. New employees in Redmond typically undergo an intense indoctrination process. By contrast, many employees in the Bay Area joined Microsoft through acquisitions and have not undergone the same process.

What won’t change, said Microsoft’s Shaw, is the company’s policy of conducting its most important work at the Redmond headquarters. “The leadership of the company has always felt it was important to keep product development here in Redmond,” Shaw said.

Of the company’s 18,000 U.S. employees, 14,000 are in the Seattle area. And Microsoft is building a massive 115-acre campus in Issaquah, Wash., to handle continued growth in the region.

Given Microsoft’s Redmond-centric view of the world--the new Silicon Valley campus will be called Microsoft South Campus--and its heavy attacks on the markets of many Silicon Valley companies, the Northern California satellite operation might not do much to change its treatment as an outsider.

“Our hope is that they will be a good neighbor,” said a Netscape spokeswoman. “But we don’t plan on holding a block party any time soon.”