(Pocket-lint) - Bill Gates has admitted that Microsoft is under threat from innovative competitors such as Google through a leaked internal memo.

In a memo to senior staff, Microsoft's billionaire founder quoted Bill Ozzie, the Internet guru recruited by Microsoft earlier this year to bulk up its web-based business.

"We knew search would be important, but through Google's focus they've gained a tremendously strong position", the document said.

"While we've led with great capabilities in Messenger and Communicator, it was Skype, not us, who made [Voice over Internet Protocol] broadly popular and created a new category".

Gates heralded the seven-page memo as something of a manifesto for Microsoft. The memo follows a trend of two previous so called ‘crisis points' that strangely come every 5 years. The first was the initial appearance of the Internet, described as "the Internet Tidal Wave" in a 1995 memo he wrote, and a shift 5 years ago to internet-focused software development.

Gates finished the memo saying “The next sea change is upon us. We must recognize this change as an opportunity to take our offerings to the next level, compete in a manner commensurate with our industry responsibilities, and utilize our assets and our broad reach to reshape our business for the benefit of the users of our products, our customers, our partners and ourselves”.

The latest leak is the most recent in a string of sources suggesting that despite Microsoft's public denials, it is seriously concerned that it could lose its leading position in the IT market.

Writing by Stuart Miles.