December 9, 1996 6:35 PM ET

Microsoft, MCI to announce megadeal for Win 32 deployment
By Charles Cooper and John Dodge

  Who says connections don't pay off?

When Microsoft Corp. and MCI Communications Corp. announce the terms of a multimillion dollar Windows deal next week, the two giants will ratchet up their long-standing partnership a notch.

MCI has agreed to deploy the Windows operating system-involving a mix of NT Workstation and Windows 95-on more than 50,000 desktops as part of a BackOffice licensing accord. The three-year deal, which also involves licenses for 40,000 copies of Microsoft Office Professional, includes plans to deploy Internet Explorer on 7,000 systems.

Considering the growing collaboration between the two companies, this latest deal was a slam dunk. In February, Microsoft, of Redmond, Wash., and MCI agreed to sell services and products to each other as part of a wide-ranging Internet development partnership.

In sewing up the deal, Microsoft also pushed IBM's OS/2 out of the picture, providing a coda to a five-year internal debate at MCI over operating system futures.

Proponents on both sides of the OS divide had their say about platform directions at the telecommunications company.

"This allows us to do anything from any workstation. Until now, the debate within the company was between OS/2 and NT," said John Gerdelman, president of networkMCI Services. "The significance is that we're getting to a standard. MCI has grown up with NT. I remember when there were only a few people on NT a few years ago, and now it's become a standard where OS/2 was the standard."

IBM did not return calls seeking comment.

However, one analyst said Microsoft's success in convincing MCI to adopt Win 32 came as no surprise.

"Even real OS/2 bigots are not willing to fight the war anymore," said Jon Oltsik, an analyst at Forrester Research Inc. in Cambridge, Mass. Oltsik added that the MCI agreement would have more public relations import than bottom-line impact at Microsoft.

"It's much more valuable to them as a slide and presentation," he said. "Many people have been stalling making the migration from Win 3.1 to NT [Workstation]," he said. "Microsoft may try to make this very visible, but most IT managers will probably say, 'So what? Microsoft is already MCI's business partner.' "

Paul Stanton, director of marketing for Microsoft's Enterprise Customer unit, said the division's consulting services also will play a role in the deployment. The division employs about 1,000 consultants around the globe, serving approximately 800 corporations.

"This agreement is indicative of the broad-scale adoption of Win NT and BackOffice," Stanton said. "It's also significant to Microsoft Office Professional."

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