Microsoft's pounds 50 million brain

Computing giant sets up in Cambridge for the sake of one man

If Roger Needham were a footballer, rock star or supermodel, then probably nobody would be surprised that an international company intends to invest pounds 50m over the next five years to build on his talents.

But Roger Needham is none of these: he is a 62-year-old professor of computer science at Cambridge University's computer laboratory, who has worked on the subject since 1956. And the company making the investment is Microsoft - the biggest software company in the world. But the outcome could be to make Britain pre-eminent in computer software in Europe.

Microsoft announced yesterday that it intends to establish a research arm in Cambridge, hiring up to 50 specialists in computing from all over Europe and investing pounds 10m in a venture capital fund, to be run by the entrepreneur Hermann Hauser, which should create a "Silicon Fen" - a breeding ground for hi-tech companies and expertise like Silicon Valley in western California.

This is the first time Microsoft has set up such an establishment away from its headquarters in Redmond in Washington State. Until now, its UK operation has consisted almost entirely sales and marketing staff.

The intention of the centre is to develop the new generation of computers - able to listen and speak, and see what is going on around them. "Computers today are pretty inflexible," said Nathan Myhrvold, Microsoft's chief technology officer, and one of the most powerful people in the corporation besides its co-founder and chief Bill Gates. "To make computers evolve as a tool we need to invent new technologies."

Professor Needham said: "There's a rich area to mine in this field - but you should realise that new computer products are a long time in the pipeline. The things that are on every desk today, such as a mouse, were developed in research 20 years ago."

Many new technologies, such as picture and speech recognition, are already being developed at the laboratory in Cambridge under Professor Needham. His presence was key to Microsoft's decision. The corporation decided earlier this year to expand its research and development division, on which it already spends $2bn (pounds 1.25bn) annually. It had barely begun the process of investigating possible locations - such as Boston, where the prestigious Massachusetts Institute of Technology (MIT) Media Laboratory is based - when Mr Myhrvold heard that Professor Needham was not presently attached to any industrial work.

"We did consider a number of places, and Cambridge was at the top of the list," said Mr Myhrvold, who took a postgraduate course at Cambridge University in 1983. "It fell into place." Professor Needham commented simply: "When they found I was available, they basically short-circuited the shortlist process."

While that might sound arrogant, he has been in the forefront of computer research for decades, and can reel off a list of products and systems, such as local-area networks, encrypted password files and sorting algorithms, which he helped develop and are now in common use. Microsoft tried to recruit him seven years ago, offering to set up a research laboratory on the American west coast which he could run. He turned the offer down. Now Microsoft has come to him.

The new laboratory, to be called Microsoft Research, will house a mixture of Microsoft employees, students and people on sabbatical.

The investment sparked by Professor Needham could drive an entire industry in the area. Microsoft has made millionaires of many of its employees, who are given lucrative stock options in return for the hectic lives they have to lead, under high pressure, to produce results.

But the presence of the research centre should also encourage local firms to set up and use it to boost themselves. Told that some local software companies were worried that the centre would drain talent away, Mr Hauser said: "For years in Cambridge we've had the problem that small software companies didn't have the connectivity with the bigger market in the rest of the world. Many companies that I have talked to welcome the arrival of Microsoft. Their investment means we will be able to attract more talent into Cambridge to make it the mini Silicon Valley that it deserves to be."

Professor Needham added, "We shall be looking for the best people from the rest of the European Union, not taking a vacuum cleaner around the outskirts of Cambridge."