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MS, Digital plan NT lovefest

The two companies will stay cozy next week with the announcement of an extension to a close partnership that has reaped benefits for both sides.

    Microsoft (MSFT) and Digital Equipment (DEC) will stay cozy next week with the announcement of an extension to a close partnership that has reaped benefits for both sides.

    The Redmond, Washington-based software behemoth and systems giant have been close ever since they originally decided to ally themselves in late 1995, largely to benefit Digital's systems sales and Microsoft's fast-growing Windows NT operating system (OS). Next Wednesday at a press conference in San Francisco, Microsoft CEO Bill Gates and his Digital counterpart, Robert Palmer, will continue their version of a mutual admiration society.

    But the two firms' roots go deeper. David Cutler was hired away from Digital several years ago to oversee development of what has become Microsoft's fastest growing franchise: the Windows NT Workstation and server OSes. Digital also houses a large engineering team on Microsoft's ever-growing Redmond campus.

    Like the first stage of the duo's Alliance for Enteprise Computing, next week's gathering will reportedly include developments in software integration, application development, and service and support between the two companies.

    Though some presume that Digital gains more from a relationship than Microsoft, it is not that simple. "Microsoft wants to be a major force in server software, especially for large systems where the margins are big. They aren't there yet. They don't yet have the keys to the lock. Digital is there," said Dan Kusnetzky, an analyst with International Data Corporation.

    In 1997, Microsoft continued to try to persuade customers that Windows NT is ready to handle large-scale computing needs. The server-side portion of the OS continues to gain more and more services which will culminate in the delivery of Windows NT 5.0, which may not officially ship until 1999. But critics continue to hound Windows NT, noting that the OS does not yet have some of the industrial-strength features of most Unix OS variants.

    "Microsoft has not cracked the enterprise nut yet," Kusnetzky said. "They're getting there."

    Microsoft refused to comment on the upcoming announcement. A Digital spokeswoman said: "We will be enhancing our relationship in a number of areas. There will be technology enhancements."

    Microsoft is not placing its bets on one horse. In a delicate balancing act, the company also has partnered with other computing giants like Hewlett-Packard, announced in March of last year, and Unisys, rolled out last October.

    Others, such as systems stalwarts NCR and the Tandem Computers subsidiary of Compaq Computer, also enjoy close relations with the software kingpin.

    But Microsoft and Digital seem to have carved out a particularly advantageous mutual niche. From Digital's point of view, a chummy relationship with Microsoft gives it the bouncy marketing expertise the systems veteran has always lacked. Microsoft, in turn, receives the benefits of being associated with a respected veteran of high-end computing.

    "I think they both need each other for different reasons," Kusnetzky noted. "Together they're a potent combination for the enterprise."