Bill Gates' worst nightmare may be taking shape at Ritual Coffee Roasters, a hip café in San Francisco's Mission district. Amid the lattes, patrons at their laptops are whipping up an internet revolution that could shake Microsoft's software empire. Five years after the dotcom phenomenon burnt itself out, a new version of the web is taking shape.

The Microsoft chairman has recognised the threat. In a memo to staff released last week, he warned that the latest phase of online innovation was likely to be "very disruptive" to the industry's established powers. "This next generation of the internet is being shaped by its grassroots adoption and popularisation model," he added.