Media coverage focuses on Microsoft’s competition with Google, but Chairman Bill Gates sees IBM–not the Web search leader–as its biggest challenger.

Microsoft faces a host of competitors, ranging from Sony to Apple Computer to Nokia, in its quest to control the next generation of software, Gates said in an interview Wednesday, ahead of his keynote speech at the Consumer Electronics Show (CES) in Las Vegas.

“People tend to get over-focused on one of our competitors. We’ve always seen that,” Gates said, comparing the potential threat of Google’s search capabilities to past competitors such as Internet browser Netscape and Sun Microsystems’ Java programming language.

“I’m never going to change the press’s view about what the ‘cool company’ to write about is. That’s Google, No. 1, and Apple, No. 2. Too bad for Nokia, Sony and all those others.”

Google, extending beyond its dominant position in search, offers a variety of Web software that ranges from communications to e-commerce, all of which poses a potential threat to Microsoft.

While investing heavily in search technology to challenge Google on the Web and the desktop, Microsoft has seen some of its senior executives defect to Google.

Google’s stock has enjoyed a dizzying ascent since its initial public offering in August 2004, and it now has a market capitalization of $123 billion, nearing IBM’s market value. By contrast, Microsoft’s share price has been stagnant over the last five years.

Asked if Google represents the most formidable threat of the company’s 30-year history, Gates replied with a curt “No.”

“The biggest company in the computer industry, by far, is IBM. They have the four times the employees that I have, way more revenues than I have. IBM has always been our biggest competitor. The press just doesn’t like to write about IBM,” Gates said.

IBM, which offers computer services, software and hardware, poses a challenge to Microsoft in defining how Web services will work together in the future.

Also, IBM–along with Toshiba and Sony–has developed the Cell microprocessor, which will power Sony’s PlayStation 3 video game console, a competitor to the Xbox 360, Microsoft’s next-generation game unit.

While Microsoft faces competition across its software offerings, Gates said it is still mostly unchallenged in new applications, such as Internet Protocol television.

Redmond, Wash.-based Microsoft’s deep pockets allow the company to make large initial investments on emerging technologies and to maintain its commitments until those technologies reach the mainstream.

“The stuff in the labs today, with speech recognition, visual recognition, ink recognition, reading everything online and new devices that enable that–in five years, that will just be common sense,” Gates said.

“We’re pretty simple, because 30 years ago, we said we were a software company, and five years, 10 years from now, we will say we’re a software company.”