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March 13, 1996

Microsoft Gives Demonstrations on New Technologies

By JOHN MARKOFF

SAN FRANCISCO -- Microsoft Corp. gave a series of technology demonstrations Tuesday that disclosed new details of how the company intends to leverage its dominance of personal computing software into a dominant role in the Internet market.

The new technologies, to become available later this year in Microsoft's Windows 95 operating system, would be a key component of the alliance that the company announced with America Online.

Under that deal, America Online will distribute Microsoft's Internet software in return for Microsoft including access to America Online's information service as a standard option in Windows 95.

The new extension of the Windows 95 operating system will draw a clearer battle line between Microsoft and companies like Netscape Communications Inc. and Sun Microsystems, which are trying to make the desktop operating system irrelevant compared with Internet software. Microsoft, meanwhile, is attempting to subsume all crucial Internet software as part of its desktop operating system.

"Are there going to be two separate worlds out there?" said Paul Moritz, the executive vice president in charge of Microsoft's world wide product group. "We think that is a wasteful exercise. It's not what customers want."

Microsoft also introduced a series of its own technical standards, called ActiveX Controls, designed to extend the company's Internet software into areas like three-dimensional graphics and multimedia. He called the strategy one of "embracing and extending" current Internet technology.

Analysts see the moves as Microsoft wielding its long-standing power in new ways. "The Internet is causing Microsoft to do business arrangements that were unimaginable six or eight months ago," said David Readerman, a computer industry analyst at Montgomery Securities. "It might be 'embrace and extend,' but it is also intended contain and kill Netscape."

The company's main competitor to Netscape's software is the Microsoft Internet Explore program for browsing the World Wide Web. Microsoft said Tuesday that it plans this summer to release a third version of its Explorer browser, which will include support for its ActiveX control technology.

By the end of this year the company said it would follow with an Internet add-on for Windows 95 and the corporate-network software Windows NT. That add-on, codenamed Nashville, is intended to make it possible for the personal computer user to employ a single program to control, view and retrieve files whether they are on the PC or anywhere on the Internet.

Separately, Moritz said that there were now 20 million Windows 95 users and that the company expected to have 50 million licensees by the end of 1996. He also said that the company had made final its licensing arrangement for Sun Microsystems' Java programming language for the Internet and that it would be possible to run Java software applications with Microsoft's Explorer in the future.

Microsoft has enlisted at least one surprising ally in its Internet crusade. At Tuesday morning's technology session Moritz introduced Steve Jobs, a founder and former chief executive of Apple Computer, who was once one of Microsoft's bitterest rivals.

Jobs, now the chief executive of Next Software Inc., showed how his current company's software can work easily with Microsoft's new standards.

Acknowledging his past rivalry with Microsoft, Jobs said that the company is now taking a much more open approach in its business dealings. Of late, he said, Netscape has taken the more closed, controlling approach to outside software companies.

"This is really weird," Jobs said when he walked on stage. "Netscape is treating us just the way you would expect Microsoft to treat us."


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