JAPAN'S Toshiba Corp and Microsoft will co-operate in developing next-generation portable computer software and hardware, according to an announcement made last week. The two companies will work closely on Microsoft's future Windows software that incorporates new portable computing technologies. Toshiba, Japan's second largest electronics company, would act largely as an adviser, a company spokesman said, adding that it planned to manufacture notebook computers incorporating the new Windows software. The deal will help Toshiba develop new products by obtaining information about Microsoft's future operating systems. Microsoft, in turn, will promote its systems through Toshiba computers. Toshiba has also agreed to license the Microsoft At Work software to incorporate it in its hand-held computers. It is understood the hardware for the notebook and hand-held systems will be marketed in the United States beginning next year. YET another Silicon Valley founding father has moved aside to make room for younger blood. David Packard, co-founder of Hewlett-Packard, announced last week that he would retire as chairman of the company he and William Hewlett started in a Palo Alto, California, garage in 1939. ''At my age, it's time for me to step aside,'' Mr Packard, 81, said in a statement. ''The company is in a strong competitive position and we have an excellent management team in place to meet the challenges ahead,'' he said. ''This is a good time to make the change.'' Analysts said Mr Packard had been far more active in day-to-day management than most non-executive chairmen, and that he was the key architect of Hewlett-Packard's restructuring last year. That process culminated in John Young stepping down as chief executive after 14 years under Mr Packard, and the succession of Lewis Platt to the position. Mr Platt, 52, will now add the chairman's post to his titles of president and chief executive. Mr Packard had been chairman of Hewlett-Packard since it became a public company in 1964. He left to serve as deputy secretary of the Department of Defence from 1969 to 1971. ''I think today's event is Dave saying that the company's transition is complete,'' said Robert Herwick, an analyst with Hambrecht & Quist. He said Packard and Hewlett had ''thought the company had lost its aggressiveness, and its decision process had become too slow''.
