Microsoft, Banyan deal to push NT, Exchange

Microsoft's $US10 million investment in Banyan Systems confirms Microsoft's commitment to expand networking services for the Windows NT operating system and Exchange messaging product, and at the same time solidifies Banyan's move into services, officials said this week.

The deal, announced on Tuesday, calls for Microsoft to provide $10 million to Banyan for the training of personnel and the purchase of Banyan stock.

The money will be used over a three-year period to train at least 500 professionals on Microsoft software, mainly its NT operating system. In addition, Microsoft will use part of the money to purchase 1.75 million common stock warrants in Banyan -- equivalent, if exercised, to Microsoft owning around 7.5 per cent of the company -- Banyan officials said.

Best known for its Vines TCP/IP-based network operating system, which competes with Microsoft's NT, Banyan's product portfolio also includes its StreetTalk network directory service and an Internet subsidiary, Switchboard, which specialises in offering a white and yellow pages directory.

But as Banyan moves more heavily into services and de-emphasises revenue from its products, Microsoft and Banyan will work together to make their products interoperate, officials said on Wednesday.

"The purpose of the alliance is to enhance the interoperability of Microsoft and Banyan products, provide a migration path from Banyan to Microsoft products -- and we have collaborated on a product migration roadmap in that regard," said Ian Rogoff, general manager of enterprise partnerships at Microsoft.

"Customers have been telling us for some time that with the product momentum of NT and Exchange we need to focus on interoperability and we need to focus on making sure that both products coexist well in their environments," Rogoff said.

As NT and Exchange have been adopted into corporate network environments, Microsoft has needed to bolster its networking services and expertise, Rogoff acknowledged.

"One of the things they've been telling us to do is to form a tighter relationship with Banyan. This is primarily because of Banyan's experience in networks," he said.

The two companies will work to enhance interoperability among products and product groups, including: Windows NT Server and Banyan's Vines; NT Server directory services, Windows 2000 Server, MS Active Directory, and Banyan's StreetTalk for Windows NT; Microsoft's Exchange and Outlook, and Banyan's Beyond Mail intelligent messaging products, Rogoff said.

As part of this effort, the two companies will work to improve Microsoft's LDAP (lightweight directory access protocol) capabilities with respect to the StreetTalk directory, officials said.

On his part, William Ferry, chairman and chief executive officer at Banyan, said the company "has been working through a fairly challenging transition over the past couple of years."

After a troubled year in 1997, Banyan got a $10 million capital injection from venture capital company HarbourVest that helped stabilise the company financially. Now, the company is looking to "rejuvenate" itself, Ferry said.

The future for the company lies more in services than in its current product portfolio, Ferry said.

"We recognise that we had an installed base of network operating systems, mail messaging, and directory oriented customers and products, but that our future would not necessarily be in those areas," Ferry said.

In Microsoft, Banyan gets an industry leader that can bring to the alliance standards-compliant and popular products that customers can use to expand their networks and eventually migrate to, he said.

Banyan has no specific plans to discontinue its current products, Ferry said, but added: "The family of Banyan products . . . has been on the market for a number of years, and it's logical over time, just like any other company, that we'll manage that portfolio consistent with what our customers are asking us for."

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