The CBI Conference: Psion chief says Gates is just paranoid
Speaking at the Confederation of British Industry conference, Mr Potter said Mr Gates was paranoid, adding: "That shows why he is such a good competitor.
"If you're not terrified or paranoid, your business is in danger."
Mr Potter, who founded Psion back in 1980, said Microsoft was a very successful company, but condemned its domination of the market.
In the middle of last month, US newspapers obtained a copy of a confidential memo from Microsoft, in which Mr Gates listed a handful of companies, including British-based Psion, as being Microsoft's greatest competitive threat.
Microsoft is locked in a legal battle with the US Justice Department, which has alleged the company has abused its market power.
Mr Potter, a former Cambridge academic, addressed the CBI conference during a session on innovation.
Mr Potter, whose Psion "palm top" computers are market leaders, said there needed to be a change of culture in Britain.
He said: "Recent data presents a gloomy picture of the UK in terms of productivity and engagement in new industries.
"At the root of our difficulty is a culture which is risk averse and conservative."
Mr Potter said the Government needed to take the lead in broadening the British education system.
Speaking at the same seminar, James Dyson, inventor of the Dyson vacuum cleaner, urged the Government to change the tax system to encourage innovation.
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