By Mark Ward BBC News Online technology correspondent

In the same week that Microsoft's legal battle with the US Department of Justice ends, the software giant is due to unveil hardware that is partly a product of the time when it was at its most arrogant.

The product in question is a tablet PC that uses a smart pen instead of a mouse.

During the 1990s Microsoft had a long running dispute with pen computing pioneer Go over who owned the basic technology.

The claims and counterclaims are detailed in a book called Startup: A Silicon Valley Adventure by Jerry Kaplan, Go's former chief executive.

At that time Microsoft was far more combative than it is now.

But it is a mistake to think that it is the US government which has brought about the firm's change in attitude.

In the desktop computing world, Microsoft remains an 800-pound gorilla that can sit where it wants.

The settlement means that occasionally it will have to ask permission before throwing its weight around.

But Microsoft is no longer concentrating on desktops.

Instead it wants to extend its reach to games, phones, handhelds, databases, web-based services and the core programs companies use to run their businesses.

And its success in these markets is uncertain.

Games and gains

Microsoft's Xbox games console was launched in 2002, but so far consumers seem to prefer Sony's PlayStation.

Recent estimates put sales of the PlayStation at 40 million since its launch in 2000, more than 10 times as many as the Xbox has achieved.

Microsoft is moving in to new products

On phones, Microsoft is even further behind, because handsets bearing its Smartphone software are only just going on sale.

By contrast, rivals Nokia, Symbian, SonyEricsson, Motorola, Philips and Samsung have millions of devices already in consumers' hands.

Importantly most of these companies are committed to using a technology called Java which makes it easy to add games and other small programs to these devices.

Microsoft has set its face against Java and this could mean its phones are shunned by mobile phone operators.

Adopting the Microsoft Smartphone means re-purposing many of the services they are already developing for Java phones.

The tiny number of consumers using Smartphones may not make it worth their while to invest in the re-purposing.

Source forge

Then there is Linux and the open source software movement.

Although Linux is not a good choice for many home users, it is ideal for many businesses.

Microsoft has irritated many customers with recent licence fee increases and the myriad security failings of its flagship products.

By contrast Linux is free and much more secure than Windows in any of its incarnations.

Some open source companies, such as Suse, are producing single packages that work with both Microsoft and Linux programs.

Some Linux makers have banded together to create United Linux which aims to standardise packaging of the software to make it easy to adopt.

The freedom to tinker with Linux source code and the fact that it works well on large and small computers, factors boosting its popularity.

Only this week the government of the Spanish region of Extramadura abandoned Windows in favour of Linux . It is distributing Linux and a package of prepared programs on a CD to help people convert.

Xbox: shrivelling in Sony's shadow

The German government is also considering a shift towards open systems such as Linux.

The pressure on Microsoft to work better with rivals is likely to increase as the web becomes central to many walks of life.

When trading partners are tying themselves together with software they need to be sure that their computers talk a common language.

The best bet for this common tongue is XML, the development of which is not driven by Microsoft.

Instead, Microsoft has to make sure its software works with the widely agreed standard, a development likely to dilute its power.

Slowly then Microsoft is being forced to accommodate the wider world and in the process could undergo change, albeit one that takes a long time to complete.