Is Microsoft breathing down NCI's neck?

But Network Computer (NCI), can only wait to see what impact the investment will have on its own business.

Just a week earlier, NCI had announced that NTL, Britain's No. 3 cable operator, would launch NTL TV-Internet, its new interactive television service, using NCI's software.

Now, after the Microsoft investment, will the Redmond, Washington-based giant be breathing down NCI's neck?

"There are no stipulations in our agreement with NTL dictating who they can partner up with," said Alan Yates, director of platform marketing for Microsoft's WebTV unit.

But Yates added, perhaps ominously, "we do expect to supply our software for future boxes that have more capability."

Microsoft said that NTL had previously approached it to essentially put its browser on low-end set-top boxes. At the time, Redmond declined, citing that NTL's set-top box had too little memory to support the software.

NCI, however, jumped at the opportunity.

"Our technology is based on an Internet standard," said Charlie Tritschler, NCI's vice president of marketing. "Our technology is fully scalable, and it means that our customers can easily integrate our technology into their environment."

Microsoft began to see the merits in NTL once the company said it wanted to aggressively roll out more high-end digital services.

Microsoft is hoping that its investment in NTL will help to accelerate the development of new, broadband services, including high-speed voice, video, and data services to customers in the United Kingdom and Ireland.

But more importantly, the move may give the company entry into the United Kingdom's high-speed cable market.

NTL is also a new-entrant local telecommunications competitor, with more than 1.4 million telephone, cable television, and Internet customers.

Redmond also plans to invest in United Pan-Europe Communications, the Netherlands' largest cable company. Microsoft plans to buy about $300 million worth of UPC shares when the company goes public.

Europe is shaping up to be the next battlefield for cable operators vying for broadband users.

"Their wanting to be more aggressive piqued our interest," said Yates. "We would not have invested if we didn't think we had the same technology and service roadmap as NTL."

NCI said it was not fazed by Microsoft's investment in its customer, pointing to the fact that the software giant has investments in many other companies that did not wind up widely using its technology. Tritschler mentioned Microsoft's investments in Comcast and Time Warner's MediaOne, cable operations.

"Of course, when you invest money you expect to drive some business your way," said Tritschler.

"Cable operators have a history lesson in looking at what happened to the PC industry and software companies," Tritschler added, pointing to the harsh criticism in the landmark antitrust suit filed against Microsoft by the Justice Department and attorneys general from 19 states.

"Companies are wary of others owning their businesses," he said.

NCI is led by Mitchell Kertzman, former chief executive at Sybase, and has major investors including Oracle and Netscape Communications, whose executives have appeared as witnesses in the Microsoft antitrust suit.